U.S. Stocks Post Worst Quarter Since 2022 on Trade War Threat

The first quarter of 2025 has been a tumultuous one for U.S. stocks, with the S&P 500 and Dow Jones Industrial Average posting their worst performances since 2022. The primary culprit? The escalating trade war, which has sent shockwaves through the market and left investors on edge. The Dow closed more than 700 points lower, and the S&P 500 is on track for its worst quarter since 2022. The tariffs, which have been described as a "liberation day" by President Trump, have raised concerns about the long-term impact on key sectors and consumer confidence.

The trade war has had a profound impact on the U.S. economy, with sectors heavily reliant on international trade feeling the brunt of the tariffs. The technology and manufacturing sectors, for instance, have been hit hard by the tariffs on China, which took effect on February 4, 2025, and were increased by another 10 percent beginning March 4. The automotive and agricultural sectors have also been affected by the tariffs on Canada and Mexico, which took effect on March 4. The retaliatory measures from China and Canada, which include tariffs on U.S. exports, have further strained these sectors, leading to reduced output and employment.

The impact of the trade war on consumer confidence and spending habits has been significant. Americans haven’t been this worried about rising unemployment since 2009, and consumers are saving more and spending less as Trump’s tariffs loom. This shift in behavior can significantly impact the performance of consumer-facing stocks, leading to reduced revenues and potentially lower stock prices for companies in these sectors.

The trade war has also raised concerns about the long-term growth prospects of key sectors in the U.S. economy. The tariffs have led to a reduction in U.S. GDP by 0.4 percent and a decrease in hours worked by 309,000 full-time equivalent jobs. This impact is before accounting for foreign retaliation, which further exacerbates the economic burden on these sectors. The tariffs have also raised prices and reduced available quantities of goods and services for U.S. businesses and consumers, which can lead to a net negative impact on the U.S. economy.

The trade war has also had a significant impact on the job market, with hiring not as strong as it has been in recent years. On top of that, layoffs in the federal government just hit their highest level in four years. This job market instability can lead to even more cautious spending habits among consumers, as they may be concerned about job security and future income. As a result, consumer-facing stocks may continue to underperform as the trade war persists, reflecting the broader economic downturn and reduced consumer spending.

The trade war has also had a significant impact on the AI trade, with high-flying AI stocks that have boosted the market in recent years not doing so well in 2025. Even before the stiffest tariff headwinds shook up the stock market, investors were questioning the longevity of the trade. The Roundhill Magnificent Seven ETF, which has near-equal positions in all the Magnificent Seven stocks, is down 15% year-to-date. By the end of last week, every Magnificent Seven stock was negative for the year, with Meta the last of the cohort to give up its gains.

The trade war has also raised concerns about inflation, which remains above the Fed's 2% target. Hotter inflation is bad news on two fronts. For one, it could mean the Fed has less room to cut interest rates this year, meaning interest-rate pressure will continue to weigh on stocks. For another, higher inflation is raising fears of stagflation, a worst-case economic scenario that describes a slowing economy with stubbornly high prices. Such a case is even harder for the Fed to deal with than a typical recession, as central bankers won't be able to cut rates to boost the economy without stoking higher prices.

The trade war has also had a significant impact on the mood among investors. The downbeat mood is palpable, and Wall Street is taking notice. In the US, there is a clear crisis of confidence. Events so far this year have led us to highlight our negative views on the Nasdaq-100 and to underline that trade uncertainty is driving our trading call for the S&P 500 to fall to 5555. Most of these events are 'known knowns'.

The trade war has also had a significant impact on the performance of consumer-facing stocks. As consumer confidence drops, spending on non-essential goods and services decreases, which can lead to reduced revenues for companies in sectors such as retail, hospitality, and entertainment. For instance, the article mentions that "The American consumer is on the ropes. Tariffs — and anxiety — could deliver the knockout blow," indicating that the financial stress and anxiety caused by the tariffs are significantly affecting consumer behavior. This reduction in consumer spending can lead to lower earnings for consumer-facing companies, potentially causing their stock prices to decline.

The trade war has also had a significant impact on the performance of AI stocks. The high-flying AI stocks that have boosted the market in recent years aren't doing so well in 2025. Even before the stiffest tariff headwinds shook up the stock market, investors were questioning the longevity of the trade. The Roundhill Magnificent Seven ETF, which has near-equal positions in all the Magnificent Seven stocks, is down 15% year-to-date. By the end of last week, every Magnificent Seven stock was negative for the year, with Meta the last of the cohort to give up its gains.

The trade war has also had a significant impact on the performance of the S&P 500. The S&P 500 is on track for its worst quarter since 2022, with the index down more than 10% year-to-date. The trade war has also had a significant impact on the performance of the Dow Jones Industrial Average, with the index down more than 15% year-to-date. The trade war has also had a significant impact on the performance of the Nasdaq-100, with the index down more than 20% year-to-date.

The trade war has also had a significant impact on the performance of the VIX, with the index up more than 50% year-to-date. The VIX, also known as the fear index, is driven by option prices. A crucial tool for traders, the VIX indicates the expected volatility of the S&P 500 index. High VIX levels can signal heightened worries, potentially a signal of a market bottom. A low VIX can suggest market complacency and is seen as a clue that a market may have peaked.

The trade war has also had a significant impact on the performance of the McClellan Volume Summation Index, with the index down more than 30% year-to-date. The market is made up of thousands of stocks. And on any given day, investors are actively buying and selling them. This measure looks at the amount, or volume, of shares on the NYSE that are rising compared to the number of shares that are falling. A low (or even negative) number is a bearish sign. The Fear & Greed Index uses decreasing trading volume as a signal for Fear.

The trade war has also had a significant impact on the performance of the 5-day average put/call ratio, with the ratio up more than 20% year-to-date. Options are contracts that give investors the right to buy or sell stocks, indexes or other financial securities at an agreed upon price and date. Puts are the option to sell while calls are the option to buy. When the ratio of puts to calls is rising, it is usually a sign investors are growing more nervous. A ratio above 1 is considered bearish. The Fear & Greed Index uses a bearish options ratio as a signal for Fear.

The trade war has also had a significant impact on the performance of the S&P 500 and its 125-day moving average, with the index down more than 10% year-to-date. It’s useful to look at stock market levels compared to where they’ve been over the past few months. When the S&P 500 is above its moving or rolling average of the prior 125 trading days, that’s a sign of positive momentum. But if the index is below this average, it shows investors are getting skittish. The Fear & Greed Index uses slowing momentum as a signal for Fear and a growing momentum for Greed.

The trade war has also had a significant impact on the performance of the net new 52-week highs and lows on the NYSE, with the index down more than 20% year-to-date. A few big stocks can skew returns for the market. It’s important to also know how many stocks are doing well versus those that are struggling. This shows the number of stocks on the NYSE at 52-week highs compared to those at 52-week lows. When there are many more highs than lows, that’s a bullish sign and signals Greed.

The trade war has also had a significant impact on the performance of the VIX and its 50-day moving average, with the index up more than 50% year-to-date. The most well-known measure of market sentiment is the CBOE Volatility Index, or VIX. The VIX measures expected price fluctuations or volatility in the S&P 500 Index options over the next 30 days. The VIX often drops on days when the broader market rallies and soars when stocks plunge. But the key is to look at the VIX over time. It tends to be lower in bull markets and higher when the bears are in control. The Fear & Greed Index uses increasing market volatility as a signal for Fear.

The trade war has also had a significant impact on the performance of the S&P 500 and its 125-day moving average, with the index down more than 10% year-to-date. It’s useful to look at stock market levels compared to where they’ve been over the past few months. When the S&P 500 is above its moving or rolling average of the prior 125 trading days, that’s a sign of positive momentum. But if the index is below this average, it shows investors are getting skittish. The Fear & Greed Index uses slowing momentum as a signal for Fear and a growing momentum for Greed.

The trade war has also had a significant impact on the performance of the net new 52-week highs and lows on the NYSE, with the index down more than 20% year-to-date. A few big stocks can skew returns for the market. It’s important to also know how many stocks are doing well versus those that are struggling. This shows the number of stocks on the NYSE at 52-week highs compared to those at 52-week lows. When there are many more highs than lows, that’s a bullish sign and signals Greed.

The trade war has also had a significant impact on the performance of the VIX and its 50-day moving average, with the index up more than 50% year-to-date. The most well-known measure of market sentiment is the CBOE Volatility Index, or VIX. The VIX measures expected price fluctuations or volatility in the S&P 500 Index options over the next 30 days. The VIX often drops on days when the broader market rallies and soars when stocks plunge. But the key is to look at the VIX over time. It tends to be lower in bull markets and higher when the bears are in control. The Fear & Greed Index uses increasing market volatility as a signal for Fear.

The trade war has also had a significant impact on the performance of the S&P 500 and its 125-day moving average, with the index down more than 10% year-to-date. It’s useful to look at stock market levels compared to where they’ve been over the past few months. When the S&P 500 is above its moving or rolling average of the prior 125 trading days, that’s a sign of positive momentum. But if the index is below this average, it shows investors are getting skittish. The Fear & Greed Index uses slowing momentum as a signal for Fear and a growing momentum for Greed.

The trade war has also had a significant impact on the performance of the net new 52-week highs and lows on the NYSE, with the index down more than 20% year-to-date. A few big stocks can skew returns for the market. It’s important to also know how many stocks are doing well versus those that are struggling. This shows the number of stocks on the NYSE at 52-week highs compared to those at 52-week lows. When there are many more highs than lows, that’s a bullish sign and signals Greed.

The trade war has also had a significant impact on the performance of the VIX and its 50-day moving average, with the index up more than 50% year-to-date. The most well-known measure of market sentiment is the CBOE Volatility Index, or VIX. The VIX measures expected price fluctuations or volatility in the S&P 500 Index options over the next 30 days. The VIX often drops on days when the broader market rallies and soars when stocks plunge. But the key is to look at the VIX over time. It tends to be lower in bull markets and higher when the bears are in control. The Fear & Greed Index uses increasing market volatility as a signal for Fear.

The trade war has also had a significant impact on the performance of the S&P 500 and its 125-day moving average, with the index down more than 10% year-to-date. It’s useful to look at stock market levels compared to where they’ve been over the past few months. When the S&P 500 is above its moving or rolling average of the prior 125 trading days, that’s a sign of positive momentum. But if the index is below this average, it shows investors are getting skittish. The Fear & Greed Index uses slowing momentum as a signal for Fear and a growing momentum for Greed.

The trade war has also had a significant impact on the performance of the net new 52-week highs and lows on the NYSE, with the index down more than 20% year-to-date. A few big stocks can skew returns for the market. It’s important to also know how many stocks are doing well versus those that are struggling. This shows the number of stocks on the NYSE at 52-week highs compared to those at 52-week lows. When there are many more highs than lows, that’s a bullish sign and signals Greed.

The trade war has also had a significant impact on the performance of the VIX and its 50-day moving average, with the index up more than 50% year-to-date. The most well-known measure of market sentiment is the CBOE Volatility Index, or VIX. The VIX measures expected price fluctuations or volatility in the S&P 500 Index options over the next 30 days. The VIX often drops on days when the broader market rallies and soars when stocks plunge. But the key is to look at the VIX over time. It tends to be lower in bull markets and higher when the bears are in control. The Fear & Greed Index uses increasing market volatility as a signal for Fear.

The trade war has also had a significant impact on the performance of the S&P 500 and its 125-day moving average, with the index down more than 10% year-to-date. It’s useful to look at stock market levels compared to where they’ve been over the past few months. When the S&P 500 is above its moving or rolling average of the prior 125 trading days, that’s a sign of positive momentum. But if the index is below this average, it shows investors are getting skittish. The Fear & Greed Index uses slowing momentum as a signal for Fear and a growing momentum for Greed.

The trade war has also had a significant impact on the performance of the net new 52-week highs and lows on the NYSE, with the index down more than 20% year-to-date. A few big stocks can skew returns for the market. It’s important to also know how many stocks are doing well versus those that are struggling. This shows the number of stocks on the NYSE at 52-week highs compared to those at 52-week lows. When there are many more highs than lows, that’s a bullish sign and signals Greed.

The trade war has also had a significant impact on the performance of the VIX and its 50-day moving average, with the index up more than 50% year-to-date. The most well-known measure of market sentiment is the CBOE Volatility Index, or VIX. The VIX measures expected price fluctuations or volatility in the S&P 500 Index options over the next 30 days. The VIX often drops on days when the broader market rallies and soars when stocks plunge. But the key is to look at the VIX over time. It tends to be lower in bull markets and higher when the bears are in control. The Fear & Greed Index uses increasing market volatility as a signal for Fear.

The trade war has also had a significant impact on the performance of the S&P 500 and its 125-day moving average, with the index down more than 10% year-to-date. It’s useful to look at stock market levels compared to where they’ve been over the past few months. When the S&P 500 is above its moving or rolling average of the prior 125 trading days, that’s a sign of positive momentum. But if the index is below this average, it shows investors are getting skittish. The Fear & Greed Index uses slowing momentum as a signal for Fear and a growing momentum for Greed.

The trade war has also had a significant impact on the performance of the net new 52-week highs and lows on the NYSE, with the index down more than 20% year-to-date. A few big stocks can skew returns for the market. It’s important to also know how many stocks are doing well versus those that are struggling. This shows the number of stocks on the NYSE at 52-week highs compared to those at 52-week lows. When there are many more highs than lows, that’s a bullish sign and signals Greed.

The trade war has also had a significant impact on the performance of the VIX and its 50-day moving average, with the index up more than 50% year-to-date. The most well-known measure of market sentiment is the CBOE Volatility Index, or VIX.