Tariff talk rattles global markets as Q1 draws to a close, Goldman cuts S&P 500 price target

The final trading session of Q1 2025 is shaping up to be a microcosm of the three-month period that it will close out, with markets around the world turning red as investors second-guess US trade policy.

Speaking about tariffs aboard Air Force One, President Trump told reporters, “You’d start with all countries, so let’s see what happens” — a comment that’s spooked investors when combined with reports that advisers have been considering a blanket 20% tariff on all US trading partners, ahead of Wednesday’s “Liberation Day.”

Japan’s Nikkei 225 dropped sharply in early trading and never dug itself out of its hole, ending today’s session down 4%, officially entering correction territory. Europe’s flagship index, the STOXX 600, is down 1.6%, and US markets are following it into the red, with the SPDR S&P 500 Trust currently down 1.4%. Though tariff-sensitive stocks like General Motors are down modestly, the price action in early trading suggests that high-beta names like Palantir and Super Micro Computer — many of which are associated with the AI trade — may be hit hardest.

Growth scare

After a flurry of soft economic data, US stocks closed out last week with a 2% drop as investors reevaluate their assumptions about the economy. Cracks in certain areas, like the credit market, signal that Wall Street is officially in “growth scare” mode. In a note published yesterday evening, Goldman Sachs officially slashed its S&P 500 forecasts for the second time this month, citing higher tariffs and growing recession risks. The bank now expects the index to dip to 5,300 over the next three months, before rebounding to 5,700 by year-end and 5,900 in 12 months.

The new year-end target marks a sharp downgrade from the earlier 6,200 and stands just 2% above where the index closed on Friday, putting it among the lowest forecasts on Wall Street, per Bloomberg. Goldman now assigns a 35% chance of a US recession over the next 12 months — up from the previous 20% — warning that if history repeats, stocks could fall another 17% from current levels, down to ~4,600. Event contract platforms like Kalshi now predict a 42% chance of a US recession this year, up from ~18% in mid-January.

Tariff fever

In the summer of 2022, fear of inflation peaked, with Google Trends data revealing that searches for the term reached their highest volume in August — just two months after US inflation itself topped out, with the CPI Index clocking a 9.1% year-on-year increase in June.

At the time, it was hard to imagine an economic term becoming more prevalent than that in our everyday lives. But the endless tariff talk since, as consumers buzz about Trump’s favorite trade policy instrument, has seen searches for “tariffs” skyrocket since the start of the year.

Company leaders are also obsessed with discussing them: for the latest quarter, the terms “tariff” and “tariffs” were featured in S&P 500 companies’ earning calls more than any other since early 2018. Interestingly, however, the number of S&P 500 companies citing the word “recession” was the lowest in over five years, per FactSet data.

So long, Q1

Though quarters are as arbitrary a measurement as any other, the end of March brings a chance to reflect on the market’s winners and losers so far.

Winners: Topping the S&P 500 Index this quarter, barring any major moves in afternoon trading, is CVS Health, which has gained a whopping 50%. Other defensive names like tobacco giant Philip Morris and AT&T are also near the top of the leaderboard, as are a number of energy stocks, which is the best-performing sector year-to-date.

Losers: We won’t labor the point on Tesla. It’s having a terrible, horrible, no good, very bad year. But it’s actually not the worst-performing S&P 500 stock; that dubious honor falls to Deckers Outdoor, owner of shoe brands like Hoka and Ugg, which has fallen 45% as growth slows at its key brands.