By Saqib Iqbal Ahmed and Lewis Krauskopf

NEW YORK (Reuters) -U.S. President Donald Trump's scheduled April 2 tariff policy announcement could clear a fog of uncertainty that has clouded financial markets this year, yet few investors expect to get the definitive guidance they seek.

Investors entered 2025 bullish about pro-growth government policies under Trump, but instead the stock market has swooned since his inauguration. Headlines on tariffs whipsawed Wall Street, knocking the S&P 500 as much as 10% earlier this month.

The benchmark index is on pace to finish the first quarter down about 3%, its biggest decline for the first three months since 2022.

"I'm an eternal bull, but I would tell you that I think that between now and next week, and certainly the beginning of earnings season, I think there's more potential downside than upside right now," Mark Malek, Chief Investment Officer at Siebert Financial said.

The April 2 tariff announcement should reveal which countries and sectors the Trump administration will target as it tries to reduce a $1.2 trillion global goods trade deficit.

Heavy volatility is expected, with stock prices swinging wildly on factors such as how steep the tariffs will be, their duration, which countries and sectors they will target and any retaliatory measures from trading partners.

"Uncertainty has continued to plague the market with volatility," said Michael Arone, chief investment strategist for State Street Global Advisors.

"There is potential for more volatility on April 2 and post that deadline," Arone said.

On Thursday, governments from Ottawa to Paris threatened retaliation after Trump unveiled a 25% tariff on imported vehicles, hammering auto stocks and testing already strained ties with allies.

The April 2 announcement is likely "not a one-and-done event," said Angelo Kourkafas, senior investment strategist at Edward Jones.

"It is an important milestone, but at the end of the day, it doesn't completely really clear out all the uncertainties that potentially still remain," Kourkafas said.

ALL SPINACH AND NO CANDY

The market reaction on April 2 “will depend heavily” on timing for future tariffs, especially sectoral tariffs, and how fast other countries could retaliate to reciprocal tariffs, said Matthew Aks, senior strategist at Evercore ISI.

"If other countries retaliate, that will create the risk of an escalatory cycle that could dampen any feeling of relief," he said.

On Wednesday, strategists at Barclays slashed their 2025 target price for the S&P 500 to 5,900 from 6,600, based on an expectation that earnings take a hit as tariffs feed a material slowdown in U.S. activity that stops short of recession.