The S&P 500 has shed 7.3% since January as tariff concerns cast a long shadow over what started as a promising year.
Today's session put an exclamation point on the dismal quarter, with the index sliding another 1.9% to close at 5,134.
The Nasdaq has fared even worse, down 9.1% year-to-date after today's 2.7% drop. That's a stark reversal from last year's AI-fueled rally.
"We're seeing a fundamental reassessment of growth expectations," explained Fidelity portfolio manager Janet Williams during our quarterly investment call this morning. "The market was priced for perfection, and these tariffs are anything but perfect timing."
The upcoming trade measures — set to hit everything from Chinese electronics to European luxury goods — have investors on edge about potential ripple effects through the global economy.
Corporate earnings expectations have been trimmed accordingly. FactSet now projects Q2 earnings growth of just 3.2% for S&P 500 companies, down from 5.7% at the start of the year.
Some of the hardest-hit stocks this quarter include:
- Tesla (TSLA): -23.4% amid production challenges and Chinese competition
- Intel (INTC): -19.8% as it continues to lose market share to AMD and Nvidia
- Boeing (BA): -18.7% following new production quality concerns
- Meta Platforms (META): -16.2% after disappointing ad revenue guidance
It hasn't been all doom and gloom, though. Energy stocks have bucked the trend, with the sector gaining 6.2% for the quarter as oil prices climbed above $85 per barrel. Occidental Petroleum (OXY) is up 11.3% year-to-date, while Exxon Mobil (XOM) has added 8.7%.
Healthcare has also shown resilience, with defensive names like Merck (MRK) and Eli Lilly (LLY) posting modest gains.
Looking ahead to Q2, much depends on how the tariff situation unfolds. A last-minute compromise could trigger a relief rally, while implementation without exemptions might send stocks tumbling further.
One thing's for sure — the market's complacency from late 2024 has completely evaporated. The VIX volatility index, which briefly dipped below 12 in December, closed today at 27.3.
Buckle up. It could be a bumpy ride.
