S&P 500 Nears Correction as Trump’s Tariff Fears Shake Markets

​The S&P 500 tumbled 0.8 percent on Tuesday, bringing it closer to correction territory as investors grappled with the fallout from Trump’s latest round of tariffs. Volatility surged as the White House announced a 25 percent tariff on Canadian steel and aluminum, initially threatening to double it to 50 percent before later walking it back.

The market’s downturn comes as fears mount over deepening trade wars, rising inflation, and slowing economic growth. With reciprocal tariffs from key U.S. trading partners set to take effect on April 2, analysts warn that the uncertainty could keep stocks under pressure in the coming weeks.

Why Investors Are on Edge
For weeks, traders have been bracing for new trade measures, but Tuesday’s tariff rollercoaster rattled sentiment even further. The S&P 500, which surged 23 percent in 2024, is now down 5.3 percent year-to-date, while the Dow Jones Industrial Average fell 1.1 percent, and the Nasdaq slipped 0.2 percent.

Market strategist Andrew Slimmon of Morgan Stanley believes the selloff reflects investors focusing on the darkest possible outcome, rather than waiting to see the actual economic impact. While he doesn’t expect tariffs to send the economy into a full-blown recession, he acknowledges that uncertainty alone is enough to keep stocks volatile.

Stocks Most at Risk
Tech and semiconductor stocks have been hit hardest, with Nvidia down 19 percent this year and the iShares Semiconductor ETF sliding nearly 11 percent. The Roundhill Magnificent Seven ETF, which tracks Big Tech stocks like Apple, Microsoft, and Tesla, has plunged 14.5 percent year-to-date.

Momentum stocks have also taken a beating, with speculative names suffering their worst decline since 2022. Analysts say that investors are becoming more selective, shifting toward companies with strong earnings and lower exposure to tariffs.

Will the Market Recover?
Despite the selloff, some investors see buying opportunities in the downturn. Slimmon points to Wall Street banks and certain beaten-down semiconductor stocks as attractive bets.

Meanwhile, traders in the federal funds futures market are now pricing in three potential Fed rate cuts by year-end, which could help cushion the market. However, Fed officials have signaled that they will remain cautious on easing policy until inflation shows sustained improvement.

For now, markets remain stuck in a mood cycle of negativity, and with Trump’s tariff fight escalating, the uncertainty isn’t likely to fade anytime soon.





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