Will Tariff Turmoil Linger?

Last week was undeniably painful for most investors found this week to be painful, with scant refuge to be found. At the end of the month and quarter on Monday, we saw the S&P 500 down 5.8% in March, the worst month since December 2022. The index also snapped a five-quarter win streak, declining 4.6%. The Nasdaq fared worse, with a monthly decline of 8.2% and a quarterly pullback of 10.4%.

President Trump’s tariff announcement – which he proclaimed to be “Liberation Day” – obviously added to that pain, as did China’s not-unexpected retaliatory response on Friday. Head of Technical Strategy Mark Newton acknowledged that “most technical support levels have been broken with ease this past week.” Alas, he isn’t sure the pain is over yet. In his view, various technical indicators – cycle work, seasonal studies, and certain DeMark indicators, for example – suggest that this might take a little more time. “In my view, the next two weeks should represent an important time window which should have some importance,” he told us, stressing the importance of vigilance. “For now, however, my view is that it’s nearly impossible to call a bottom.”

Fundstrat Head of Research Tom Lee acknowledged the near-term fear gripping equity markets, but he suggested that “the extreme nature of the proposed measures points to a high likelihood that these will ultimately prove short-lived.”  In his view, the reciprocal rates as calculated by the White House “are so absurd that these look to be a negotiating tactic,” with a methodology that reflects “an effort to impose leverage rather than economic realism.” 

It might work, he suggested: “If we look at the early responses, India and Israel have pledged to drop tariffs by April 9, Canada has issued conciliatory remarks, and South Korea plans to negotiate,” he pointed out. On Friday, Trump also posted about a “productive call” with President Tô Lâm of Vietnam, which the U.S. had threatened with 46% tariffs.

Lee viewed this as more evidence that the tariff proposals are a negotiation ploy rather than the beginning of a deliberate trade war. “To me, this is also an olive branch [from Trump] to equity markets which have been getting crushed,” he said – further supportive of the “Trump put” in play. Despite this week’s shock, Lee’s view is that the proposed tariffs might be “more tactical than permanent.”

Sector Allocation Strategy

These are the latest strategic sector ratings from Head of Research Tom Lee and Head of Technical Strategy Mark Newton – part of the April 2025 update to the FSI Sector Allocation Strategy. FS Insight Macro and Pro subscribers can click here for ETF recommendations, precise guidance on strategic and tactical weightings, detailed commentary, and methodology.

Will Tariff Turmoil Linger?

Chart of the Week

Will Tariff Turmoil Linger?

Although Trump’s tariffs caused pain throughout the financial markets, there’s no denying that some industries and sectors were hit harder than others. Fundstrat’s data science team created our Chart of the Week above, showing which sectors were hit hardest and which suffered less pain relative to the S&P 500 index as a whole.

Recent ⚡ FlashInsights

Note that CCC spreads, the “Junkiest” level of fixed income, have been rising but still have a ways to go to indicate recession territory and remain still below last year’s peaks
Apr 4 · 10:27 AM
This was posted on truth social minutes ago
  • Trump making positive statements about free trade convo with Vietnam Sec General
  • Definitely showing Trump wants to “negotiate” with countries on tariffs
  • To me, this is also an olive branch to equity markets which have been getting crushed
SPY -5.91%  QQQ -6.26%  IWM -4.55%
Apr 4 · 11:43 AM
Sentiment polls like AAII showed a 61.9% % Bears, which is the 3rd highest bearish reading of all time, exceeded the height of Retail bearishness following the bear market in 2022. Only 3/5/09 and 10/19/90 showed higher negativity. Bullish responses were 21.8%, ranking among the 100 lowest readings ever. It goes without saying that bearishness, in of itself, cannot cause markets to reverse, and we’ll need to see a drying up of selling on this decline, or evidence of Capitulation, which didn’t happen yesterday. Given announcements forthcoming for 4/5 (tomorrow) 4/9 for Europe. It would seem imperative for negotiation of some sort to happen to prevent a larger trade war from developing
Apr 4 · 10:27 AM

FS Insight Video: Weekly Highlight

Will Tariff Turmoil Linger?

Key incoming data

  • 4/1 9:45 AM ET: Mar F S&P Global Manufacturing PMI Tame
  • 4/1 10:00 AM ET: Mar ISM Manufacturing PMI Tame
  • 4/1 10:00 AM ET: Feb JOLTS Job Openings Tame
  • 4/2 10:00 AM ET: Feb F Durable Goods Orders MoM Tame
  • 4/3 8:30 AM ET: Feb Trade Balance Tame
  • 4/3 9:45 AM ET: Mar F S&P Global Services PMI Tame
  • 4/3 10:00 AM ET: Mar ISM Services PMI Tame
  • 4/4 8:30 AM ET: Mar Non-farm Payrolls Hot
  • 4/7 9:00 AM ET: Mar F Manheim Used Vehicle Index
  • 4/8 6:00 AM ET: Mar Small Business Optimism Survey
  • 4/9 2:00 PM ET: Mar FOMC Meeting Minutes
  • 4/10 8:30 AM ET: Mar Core CPI MoM
  • 4/11 8:30 AM ET: Mar Core PPI MoM
  • 4/11 10:00 AM ET: Apr P U. Mich. 1yr Inf Exp
Will Tariff Turmoil Linger?

Stock List Performance

Will Tariff Turmoil Linger?
Will Tariff Turmoil Linger?

In the News

Markets could have the 'right pieces' for a bottom this week

Markets could have the 'right pieces' for a bottom this week

logo image
Odds of a V-shaped recovery in stocks that come after April 2 is extremely high

Odds of a V-shaped recovery in stocks that come after April 2 is extremely high

logo image
Don’t think the economy nor earnings justify this level of fear, says Fundstrat’s Mark Newton

Don’t think the economy nor earnings justify this level of fear, says Fundstrat’s Mark Newton

logo image
More News Appearances

Disclosures (show)

Don't Miss Out
First Month Free

Events

Trending tickers in our research

Stay up to date with the latest articles and business updates. Subscribe to our newsletter

Articles Read 0/2

🎁 Unlock 1 extra article by joining our Community!

Stay up to date with the latest articles. You’ll even get special recommendations weekly.

Already have an account? Sign In