The vibes on Wall Street tanked this past week after President Trump’s aggressive tariff rollout sparked recession fears and pushed markets to the brink. The Nasdaq (^IXIC) ended the week in bear market territory, while the Dow (^DJI) entered correction and S&P 500 (^GSPC) logged its worst five-day stretch since 2020.
But one strategist advised against knee-jerk reactions with the fallout of Trump’s tariffs still yet to play out.
“It’s too late to panic,” Ed Yardeni, president of Yardeni Research, told Yahoo Finance on Thursday.
Yardeni, who has a year-end S&P 500 target of 6,100, said it will take time — likely several months — for the full impact of tariffs to play out in the market. Possible negotiations and the impact of retaliation from other countries serve as the biggest catalysts in either direction, according to Yardeni, as investors continue to seek further clarity.
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On Friday, Beijing retaliated with a slew of countermeasures, including an additional 34% tariff rate on all US goods. That matches the reciprocal tariff rate the US levied on China earlier this week, and will arrive on top of the 10% to 15% tariffs the country levied on roughly $21 billion worth of US agricultural trade last month. Stocks escalated losses in the immediate aftermath of the news.
“It’s ironic that so many people thought that so-called ‘Liberation Day’ would be peak uncertainty,” Yardeni said. “But I don’t think that’s the case at all. I think there’s still plenty of uncertainty about how all this plays out.”
Live: The latest developments and reactions to President Trump’s tariffs
Heading into Wednesday’s “Liberation Day,” the massive scope and intensity of Trump 2.0 tariffs had been underestimated by investors, despite the consistent promises from Trump on the campaign trail.
In 2024, then-presidential candidate Trump pledged to impose blanket tariffs of at least 10% on all trading partners.
That promise materialized Wednesday (and then some) when the president slapped reciprocal tariffs on countries around the world, with the new levies ranging from a 10% “baseline” tariff to additional duties for nations the administration considers to be the “worst offenders.”
All told, Trump announced tariffs that will impact some 185 countries, including the United States’s largest trading partners, in a move that has sent markets reeling.
“The problem is the execution of it,” RSM chief economist Joe Brusuelas told Yahoo Finance on Friday. “That nonsensical introduction of the formula. It’s the loss of credibility on the part of the administration, the loss of confidence of markets in them — that’s what’s causing this.”
Bruselas suggested US Treasury Secretary Scott Bessent should “step up” to calm markets, especially if the European Union retaliates in the coming days or weeks.
“I’m telling you right now, the market has not priced that in,” he warned. “They fundamentally think this is just a repeat of 2018. There’s a lot more damage that could go on here.”
Uncertainty has been the word “du jour” as political turmoil threatens to upend the future of the global economy. And despite a US labor market that’s largely held up, Wall Street remains on edge that shifting trade dynamics could induce a self-inflicted recession.
One of the biggest concerns is stagflation, where growth stalls, inflation persists, and unemployment rises. Risks of that scenario have shown up more firmly in Wall Street’s projections following a string of disappointing data releases, along with the administration’s latest trade shocks and other policy unknowns, including recent efforts to cut government jobs from Elon Musk’s Department of Government Efficiency (DOGE).
Read More: What is stagflation, and how does it impact you?
Markets plunged in the days following President Trump’s aggressive tariff rollout. (AP Photo/Seth Wenig) ·ASSOCIATED PRESS
“Right now is a rather intense period,” Brian Jacobsen, chief economist and strategist at Annex Wealth Management, told Yahoo Finance on Friday. “We do have the certainty of the announcement, but now there’s the uncertainty about how this is possibly resolved and at what level do the the tariffs eventually settle.”
“It’s actually understandable why the market would react in a negative way, but we don’t think it necessarily needs to with the uncertainty,” he said.
Gus Faucher, chief economist at PNC Financial Services Group, added the president’s back-and-forth rhetoric has already impacted current and future business activity.
On Friday, reports emerged that several initial public offerings — including ticket platform StubHub, digital payments firm Klarna (KLAR.PVT), fintech company Chime (CHIM.PVT), and ad tech company MNTN — had been put on pause in the midst of Trump’s tariff rollout.
“How do you make a decision under those circumstances? You simply can’t,” Faucher said. “And we need more clarity one way or the other, so businesses feel comfortable making investment decisions, [so] consumers feel comfortable.”
“Until we get some clarity, I think things are going to remain very complicated.”
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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