President Donald Trump’s tariffs have soured confidence in the U.S. stock market, and the S&P 500 is trying to recover from a significant decline that put it in danger of going into correction territory.
According to Andrew Slimmon, a senior portfolio manager for U.S. equities at Morgan Stanley Investment Management, stock market investors appear to be “listening to the very dark side of tariffs,” during a phone interview. “I’m just not as convinced that it’s going to be as inflationary or it’s going to kill the economy.”
FactSet data shows that following a volatile trading session, the S&P 500 SPX ended Tuesday’s trading session 0.8% lower at 5,572.07. According to Dow Jones Market Data, the S&P 500 would enter a correction if it fell below 5,529.74, which is defined as a 10% decline from a recent top.
As investors process a number of new and impending tariffs that the White House has threatened or implemented, volatility in the U.S. stock market has been increasing in recent weeks. Because tariffs run the risk of intensifying trade conflicts, which would harm the US economy and raise inflation, many investors are concerned.
On his Truth Social platform (DJT) on Tuesday, President Trump said that the United States would raise the overall tariff on Canadian steel and aluminum imports to 50% by imposing an extra 25% tax on all imports. “Based on Ontario, Canada, placing a 25% Tariff on ‘Electricity’ coming into the United States,” he claimed, the new tariffs will go into force on Wednesday.
Later on Tuesday, Ontario Premier Doug Ford backed down from imposing a 25% fee on power exports to the United States, prompting President Trump to withdraw his 50% tariffs on specific Canadian commodities. Now, the White House will continue to impose 25% tariffs on steel and aluminum imports from Canada and all other trading partners of the United States.
News of tariffs has caused investors to panic as they attempt to understand the implications for the US economy.
“There is no question that there is uncertainty,” said Slimmon, adding: “I don’t think the goal of the [Trump] administration is to drive the economy into recession.”
President Trump has stated that reciprocal tariffs will go into force on April 2, and the stock market is preparing for this. Slimmon noted that “the mood cycle has shifted very negative” in the market due to tariff concerns, suggesting that it could be difficult for U.S. stocks to “rally heavily” before that date.
However, Slimmon claims that there are some “good” purchasing opportunities as a result of the widespread selloff in the US stock market.
“When the stock market is reacting to Washington, D.C. in a negative way, that’s when you have to focus on fundamentals,” he said. “I think the market is going to be higher this year, but I wouldn’t be surprised if it’s a single-digit return.”
According to FactSet statistics, the S&P 500 index surged 23.3% in 2024 and 24.2% in 2023, while U.S. stocks are plunging this year. So far in 2025, the index has down 5.3% as of Tuesday.
In a report released on Tuesday, Sevens Report creator Tom Essaye stated that “if fears of a policy-inspired growth slowdown don’t occur, then this market is now in a ‘fair value’ range that could invite nibbling on the long side, if you can withstand the volatility.”
See More : Inflation fears returned before Trump raised tariffs. Expect angst to persist.
According to FactSet statistics, the Cboe Volatility Index VIX, a measure of investor fear in the U.S. stock market, has increased by around 55% this year to almost 27 on Tuesday.
It equates to “a lot of volatility,” according to Slimmon, as stocks experience significant fluctuations around an anticipated single-digit return for the S&P 500 in 2025.
The current decline has “absolutely crushed” the most “speculative” stocks, he continued, with momentum shares being particularly hard affected.
Major Wall Street banks that are in “fundamentally good shape” and a few Big Tech companies that were “hit hard” in the recent selloff are among the equities Slimmon mentioned as being among his favorites. “Some of the semiconductor stocks are more intriguing today than they were three weeks ago,” he remarked.
The majority of Big Tech stocks have suffered this year; as of Tuesday, Nvidia Corp. (NVDA), a manufacturer of artificial intelligence chips, was down 19% in 2025. This year, shares of the iShares Semiconductor ETF SOXX, an exchange-traded fund that tracks an index of semiconductor stocks listed in the United States, have fallen nearly 11%.
Additionally, the Roundhill Magnificent Seven ETF, or MAGS, has dropped 14.5% so far this year. It consists of seven Big Tech stocks: Nvidia, Apple Inc. (AAPL), Microsoft Corp. (MSFT), Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), Tesla Inc. (TSLA), Facebook parent Meta Platforms Inc. (META), and Google parent Alphabet Inc.
According to the CME FedWatch Tool’s most recent check on Tuesday, traders in the federal-funds futures market are pricing in the possibility of three interest rate cuts by the Federal Reserve by the end of the year amid concerns about slowing economy. Slimmon stated that the Fed might serve as a “counterbalance” to investors’ “perceptions of what the [Trump administration’s] fiscal policies” might do to the American economy, and that he does not anticipate a U.S. recession this year.
Nevertheless, the selloff on Monday seems to have spooked investors.
According to Nicholas Colas, co-founder of DataTrek Research, the S&P 500’s significant 2.7% decline on Monday was “not a full-throated sell signal, but it does say we shouldn’t just shrug and chalk it up to normal market volatility,” he wrote in an email on Tuesday.
