Stocks Swings on Trump Tariff Threat as Q1 Ends Worst in 2 Years

Stocks experienced significant volatility on Monday ahead of President Trump's anticipated announcement of new tariffs on April 2nd. The market initially declined in early trading before rebounding later in the day, although these gains were insufficient to offset substantial losses recorded earlier in the month. Notably, the S&P 500 registered its worst quarterly performance since 2022.

Trump's "Liberation Day" and the Impact on Investors

President Trump has designated April 2nd as "Liberation Day," claiming that the new reciprocal tariffs will restore trade balances between the U.S. and other nations. However, investors remain cautious about the implications of these tariffs, which are import fees primarily passed onto U.S. consumers in the form of higher prices. Consumer confidence plummeted to a 12-year low this month as more Americans express concerns about tariffs and rising inflation.

Market Performance in the First Quarter of 2025

During the first three months of 2025, the S&P 500 incurred a loss of 4.6%, marking the worst quarter in two-and-a-half years. The tech-heavy Nasdaq composite ended the first quarter with a 10.4% decline, while the Dow Jones Industrial Average shed 2.2% over the same period. This recent market volatility reflects the uncertainty surrounding President Trump's tariff policies.

Economic Concerns Amid Tariff Uncertainty

The current economic landscape is characterized by a potentially toxic mix of worsening inflation and a slowing U.S. economy. Households are hesitant to spend due to escalating trade tensions fueled by President Trump's actions. "Consumers are getting fed up, sending confidence to recession levels amid growing fears of higher inflation and deteriorating economic prospects," wrote Bob Schwartz, senior economist at Oxford Economics, in a March 28 research note.

Details of the Upcoming Tariff Round

While the specifics of President Trump's next round of import taxes remain unclear, it is anticipated that he will announce plans for reciprocal tariffs—designed to match the import duties imposed on U.S. goods and services by other nations. Economic analyses generally indicate that average U.S. families would bear the brunt of these tariffs in the form of higher prices and reduced incomes, posing a significant challenge for inflation-sensitive Americans.

Market Movements on Monday

On Monday, the Dow Jones Industrial Average surged 418 points, or 1%, to close at 42,002. The S&P 500 finished 0.6% higher, while the Nasdaq slipped approximately 0.1%. Tesla stock continued its downward trend, declining 1.7% on Monday. Since President Trump's inauguration on January 20th, Tesla shares have plummeted by about 39%, partly attributed to public perception of CEO Elon Musk's leadership of the newly established Department of Government Efficiency, which is implementing significant spending cuts.

Other Notable Market Developments

Apple shares fell less than 1% after France's antitrust watchdog imposed a fine of $162 million on the tech giant for its rollout of a privacy feature that was deemed to constitute an abuse of competition law. Rocket Mortgage, in a significant move, announced its acquisition of competitor Mr. Cooper in an all-stock deal valued at $9.4 billion. Mr. Cooper's shares surged more than 26%. This acquisition follows closely on the heels of Rocket's recent purchase of real estate listing company Redfin.

Gold Prices Reach Record High

The price of gold soared to a record high before moderating slightly to $3,149 an ounce. Investors continue to shift away from equities in search of traditional safe havens like gold amidst heightened market uncertainty.