^{The Standard & Poor’s 500 index rose 1.1% to bounce back from a sell-off that had erased all of its “Trump bump” since election day. Above, the front of the New York Stock Exchange in 2023. (Peter Morgan / Associated Press)}

Monday marked the final trading session of a turbulent quarter, and U.S. stocks suffered their worst three-month performance since 2022. Both the S&P 500 and Nasdaq Composite ended their five-quarter winning streaks, with the Nasdaq officially in correction territory. The downward spiral comes amid escalating trade tensions as President Donald Trump pushes forward with sweeping tariffs set to take effect Wednesday.

While Trump calls it a "liberation day" for American manufacturing, many investors and analysts see trouble ahead. Goldman Sachs has revised its U.S. economic forecast downward, citing heightened recession risks, while also predicting inflationary pressures will rise in 2025. With economic uncertainty mounting, the second quarter could bring even more volatility than the first.

Key Developments You Need to Know

1. Trump’s Tariffs: A Global Shake-Up

President Trump announced Sunday that his reciprocal tariff policy will target "all countries" rather than just the so-called "Dirty 15," a group of nations responsible for 15% of U.S. trading volume while imposing heavy tariffs on American exports.

• The White House confirmed that tariffs will take effect immediately on Wednesday.
• Goldman Sachs has increased the probability of a U.S. recession in the next 12 months from 20% to 35%.

2. Automakers in the Crosshairs

Shares of major Japanese car manufacturers have been plummeting since Trump’s announcement last Wednesday. The new 25% tariffs on non-U.S.-made cars will hit Japanese automakers particularly hard since automobiles were Japan’s top U.S. export in 2024, according to customs data.

Among the hardest hit:

• Toyota: With massive sales in the U.S., analysts from Frost & Sullivan believe Toyota will bear the biggest blow.
• Honda & Nissan: Also at risk due to heavy reliance on U.S. demand.

3. A Brutal Quarter for U.S. Stocks

Wall Street closed out a disastrous first quarter, with major indexes showing deep losses:

• S&P 500: Down 4.6% for the quarter, despite a 0.55% gain on Monday.
• Dow Jones: Lost 1.3% in Q1 but rose 1% on the final trading day.
• Nasdaq Composite: Dropped 10.4%, with a 0.14% decline on Monday.

International markets also showed mixed reactions:

• Europe’s Stoxx 600 rose 1.07% on Tuesday.
• Japan’s Nikkei 225 struggled to stay afloat after falling into correction territory the previous day.

4. OpenAI’s Historic $40 Billion Funding Round

Despite broader market struggles, the AI industry continues to attract massive investment. OpenAI announced a record-breaking $40 billion funding round, valuing the company at an astounding $300 billion.

• SoftBank is leading the round with a $30 billion investment.
• Microsoft, Altimeter, and Thrive are also participating.
• The funding could shrink to $30 billion if OpenAI doesn’t restructure into a for-profit entity by December 31.

5. Tesla’s Nightmarish Quarter: $460 Billion Wiped Out

Tesla had a devastating first quarter, with its stock price plunging 36%, the worst performance since 2022.

• Market Cap Loss: Over $460 billion evaporated.
• Musk’s Role in Government Backlash: CEO Elon Musk acknowledged at a Wisconsin town hall that his involvement with the Department of Government Efficiency is drawing negative attention to Tesla, further pressuring the stock.

6. Goldman Sachs Slashes S&P 500 Forecast

In response to the worsening economic outlook, Goldman Sachs has revised its projection for the S&P 500, offering the lowest year-end target among major Wall Street firms.

• The investment bank warns of stagnant growth due to Trump’s aggressive trade policies.
• The new forecast suggests weaker corporate earnings and a slower recovery than previously anticipated.

What’s Next for Markets?

With tariffs kicking in this week and investors on edge, the outlook remains highly uncertain. Analysts suggest watching key economic indicators such as inflation rates, job reports, and corporate earnings over the coming weeks. Whether the markets stabilize or enter a deeper downturn will largely depend on how global trade partners respond to Trump’s tariff war.

For now, Wall Street is bracing for a bumpy ride in the months ahead.

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