Meanwhile, the S&P 500 (
^GSPC
) sank roughly 9% as the broad-based benchmark approached a 20% drawback from its most recent all-time high. The tech-heavy Nasdaq Composite (
^IXIC
) led the losses, cratering 10% and ending in a bear market as it's officially down 20% from its most recent all-time high.
In the week ahead, investors will watch for updates on the status of tariff negotiations with other nations, as well as announcements of reciprocal tariffs on the US. Trump's first round of 10% baseline tariffs is set to go into effect on April 5, and other wide-ranging additional tariffs are set to take hold on April 9.
In other news, big bank earnings slated for Friday will mark the unofficial start to first quarter earnings season. JPMorgan (
JPM
), BlackRock (
BLK
), Wells Fargo, (
WFC
), and Morgan Stanley (
MS
) are all set to release results. Delta (
DAL
) and Constellation Brands (
STZ
) will report on Wednesday.
In economic data releases, the Consumer Price Index (CPI) on Thursday is set to headline the week, with other releases on producer prices and consumer sentiment also in focus.
The 'bear case' becomes the base case
One key question on investors' minds is whether the stock market rout is over. Wall Street strategists have warned retaliatory tariffs
would likely intensify the selling.
"If high tariff rates stay in place, negotiations are drawn out over a multi-month period and additional measures are taken with key trading partners, the risk of a recession/our bear case is likely to rise more materially," Morgan Stanley chief investment officer Mike Wilson wrote in a note to clients on Thursday night. Wilson's bear case projects the S&P 500 to end at 4,600, a level not seen on the benchmark index since December 2023.
Market experts have pointed out that the tariff retaliation fallout likely isn't over. RSM chief economist Joe Brusuelas pointed out to Yahoo Finance that the European Union, one of the US's largest trading partners, hasn't directly responded to the US tariffs yet. Brusuelas argued the market doesn't have "that priced in."
"Investors fundamentally think this is just a repeat of 2018," Brusuelas said. "So there's a lot more damage that could go on here."
Fed in wait-and-see mode
With Trump holding steady on his policy stance for now, investors have moved quickly to price in more Fed interest rate cuts for this year. The moves come as economists have argued the risks of recession are rising as the tariffs stand to sharply hinder economic growth, and the broad-based equity market sell-off is proving to be an increasing risk to the health of the US economy.
But on Friday, Fed Chair Jerome Powell made no such concessions.
"It's just too soon to say what the appropriate monetary policy response will be to these new policies," Powell said. "It is just too soon to say. We can't say with any confidence today."
Powell added that tariffs are "highly likely to generate at least a temporary rise in inflation" and that it's also "possible that the effects could be more persistent."
Another key inflation reading for the Fed will come on Thursday with March's Consumer Price Index. Wall Street expects an annual gain of 2.6% for headline CPI, which includes the price of food and energy, down from 2.8%
.
Prices are set to rise 0.3% on a month-over-month basis, up from 0.2% in February.
On a "core" basis, which strips out volatile food and energy prices, inflation is expected to have risen 3% year over year, a slowdown from the 3.1% increase seen in February. Monthly core price increases are expected to clock in at 0.3% after falling more than 0.1%
Typically, a drop in inflation would be a welcome sign for markets. But in the current market moment headlined by uncertainty about what's to come, it might not be enough.
"The abrupt change in U.S. trade policy this week will make the March CPI feel like old news when it is released on Thursday," Wells Fargo's team of economists led by Jay Bryson wrote in a note to clients on Friday. "Even as we forecast headline CPI to come in flat month-over-month in March, the looming effects of higher tariffs looks to throw a wrench in the fight against inflation."
Staying private
For all of two trading days, it looked like the initial public offering (IPO) market was reopening. Shares of conservative news network Newsmax (
NMAX
) soared more than 1,000% in its first few trading days. AI software play CoreWeave (
CRWV
) spiked 41% on Tuesday.
Then Trump's tariffs sent markets into a tailspin. Multiple companies that had recently announced they'd be filing for an IPO are now backing off those plans.
On Friday, Ticket platform StubHub delayed its road show presentations slated for next week,
according to a report
from the Wall Street Journal.
Axios reported
exchange platform eToro (
ETTO.PVT
) also halted its IPO plans.
A crucial earnings season is set to kick off this week. Amid all the policy uncertainty, the underlying question for investors has been just how badly Trump's widespread tariffs will impact corporate profits. Given this, what companies say about their outlooks for the rest of 2025 will be in particular focus.
Companies will be reporting first quarter earnings, which largely won't include the impact of any new Trump policies. Still, analysts have slashed their estimates for the first quarter by 4.2%, per FactSet. That's higher than the five-year average of 3.3% and 10-year average of 3.2%.
Still, consensus expects the S&P 500 to grow earnings by 7% year over year in the first quarter and by 11.3% in 2025.
That number is likely to come down. Analysts often cut earnings estimates as the year goes on. But the big question from investors is just how far those estimates will come down and how different the chart below will look in a month's time.
Weekly calendar
Monday
Economic data:
No notable economic releases.
Earnings:
Dave & Buster's (
PLAY
), Levi's (
LEVI
)
Tuesday
Economic data:
NFIB small business optimism, March (100.7 prior)
Economic data:
Wholesale inventories, month-over-month February final (+0.3% prior); FOMC meeting minutes, March
Earnings:
Constellation Brands (
STZ
), Delta (
DAL
)
Thursday
Economic data:
Consumer Price Index, month over month, March (+0.1% expected, +0.2% previously); Core CPI, month over month, March (+0.3% expected, +0.2% previously); CPI, year over year, March (+2.6% expected, +2.8% previously); Core CPI, year over year, March (+3% expected, +3.1% previously); Real average hourly earnings, year over year, March (+1.2% previously); Initial jobless claims, April 5 (219,000 expected)
Economic data:
Producer Price Index, month over month, March (+0.2% expected, +0.0% previously); PPI, year over year, March (+3.4% previously); Core PPI, March month over year (0.3% expected, -0.1% prior); Initial jobless claims, week ending March 8 (221,000 previously); University of Michigan consumer sentiment, April preliminary (55 expected, 57 prior)
Earnings:
BlackRock (
BLK
), BNY (
BNY
), JPMorgan Chase (
JPM
), Morgan Stanley (
MS
), Wells Fargo (
WFC
)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X
@_joshschafer
.
