Stocks sank on Friday as the reality of an all-out trade war following President Trump’s sweeping tariffs set in, fueling Wall Street strategists’ worst fears about how far the S&P 500 (^GSPC) could fall in 2025.
Amid a $2.5 trillion wipeout in markets on Thursday, strategists had warned stock indexes could face further downside should the trade war escalate. On Friday morning, that fear became a reality.
Stock losses accelerated before the bell after China said on Friday it would impose additional tariffs of 34% on all US products from April 10 — matching the extra 34% duties imposed by Trump on Wednesday.
By 11 a.m. ET, The Dow Jones Industrial Average (^DJI) pulled back 3.5%, or about 1,400 points, on pace to close in correction territory. Meanwhile, the S&P 500 (^GSPC) sank about 3.8% as the broad-based benchmark was headed for its worst week since 2020. The tech-heavy Nasdaq Composite (^IXIC) also dropped 4.2%.
Friday’s losses extended a $2.5 trillion wipeout as markets digested President Trump’s launch of the most aggressive tariff plan in a century.
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“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.
The recent move in markets has already pushed some strategists to become less confident in stocks’ ability to rebound from the recent crash. In a note early Friday morning before China’s reciprocal tariffs were announced, RBC Capital Markets head of US equity strategy Lori Calvasina lowered her year-end S&P 500 target to 5,550 from a prior target of 6,200. That target of 6,200 had already been lowered from 6,600 less than a month ago.
“Our old bear case for the index this year has become our new base case,” Calvasina wrote.
As of Friday morning, it doesn’t appear the administration is backing down from its firm tariff stance. In a Truth Social post on Friday, Trump wrote, “MY POLICIES WILL NEVER CHANGE. THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!!!”
At this point, with the administration holding firm and other trade partners retaliating rather than negotiating, some on Wall Street don’t see the tariff turmoil ending anytime soon.
Read more: What Trump’s tariffs mean for the economy and your wallet
