The first quarter of 2025 has been anything but smooth for the U.S. stock markets.

Thanks to a whirlwind of tariff announcements from President Donald Trump, investors are facing some of the worst market performances in years.

S&P 500 & Nasdaq’s Rocky Quarter

The S&P 500 saw a 4.6% drop in the first quarter, while the Nasdaq Composite plunged to 10.5%, both experiencing their worst performances since 2022.

Other tech powerhouses, who were once Wall Street’s golden children, were hit the hardest.

Tesla saw a staggering 36% drop, while Nvidia tumbled nearly 20%.

The “Magnificent Seven” stocks, which had previously driven a bullish market, saw significant sell-offs as investors fled growth stocks.

Tarriffs, Tarriffs, Tarriffs

The market slump comes as the Trump administration prepares to announce a sweeping round of tariffs on Wednesday, April 2nd, 2025.

Already, tariffs have been slapped on aluminum, steel, and autos, with further increases on Chinese goods.

Trump has hinted that every country could impact every country, which means global trade uncertainty is at an all-time high right now.

The CBOE Volatility Index (VIX), which is Wall Street’s fear gauge has spiked to a two-week high of 22.28, who is a tell-tale sign of investor unease.

But Not All Sectors Are Suffering

Despite this broad market selloff, some sectors are holding up.

The energy sector led the way with a 9.3% increase, which is fueled by rising crude oil prices.

Consumer staples, which are often seen as a safe haven investments, also saw gains, with the S&P 500 Consumer Staples Index going up 1.6%.

Financial stocks also had a strong showing. Discover Financial Services surged 7.5%, and Capital One Financial climbed 3.3% as investors bet their merger would win regulatory approval.

However, with economic uncertainty growing, Goldman Sachs has raised the probability of a U.S. recession from 20% to 35%. The firm also cut its year-end target for the S&P 500 to 5,700 and expects the Federal Reserve to implement more interest rate cuts.

Markets are turning their attention to:

• The Trump tariff announcement on Wednesday, April 2, 2025.
• Economic data, including ISM business surveys and the non-farm payrolls report.
• Fed Chair Jerome Powell’s upcoming speeches, which could hint at future rate cuts.

For now, diversify your holdings, and keep an eye on defensive sectors like energy and consumer staples.