US stocks post worst quarter since 2022 as tariff worries swirl

Wall Street suffered its worst quarterly performance in nearly three years as concerns mounted that Donald Trump’s tariffs could trigger a period of stagflation in the world’s largest economy.

The S&P 500 declined 4.6 percent over the first quarter of 2025, marking its weakest showing since the third quarter of 2022, according to FactSet data. The blue-chip index edged up 0.6 percent on Monday.

This sharp downturn comes amid growing unease among Wall Street banks and investors that Trump’s tariffs on key trading partners could stifle economic growth while simultaneously driving up prices. Surveys in recent weeks have also shown a significant decline in confidence among consumers and businesses.

Investors are on edge ahead of Trump’s upcoming “Liberation Day” event on Wednesday, where the president is expected to unveil additional tariffs on top of existing duties on imports such as steel and aluminum.

“I don’t think anyone anticipated this sustained level of uncertainty or the lack of clarity regarding how the administration intends to achieve its objectives,” said Jesse Mark, global head of equity capital markets at Jefferies. “It feels largely self-inflicted.”

Sharon Bell, a senior equities strategist at Goldman Sachs, added, “I don’t think we’ve hit the floor yet [in stock prices].”

Over the weekend, Goldman Sachs raised its year-end forecast for a key inflation measure closely watched by policymakers and increased the probability of a U.S. recession within the next year from 20 percent to 35 percent.

The tariff concerns “increase the risk premium on equities,” Bell noted, though she pointed out that the U.S. stock market faced additional headwinds, including slowing economic growth and cuts to public sector spending.

Big Tech stocks, which have led market gains in recent years, saw steep losses in the first quarter. The Nasdaq Composite tumbled 10.4 percent as fears grew over economic uncertainty and the possibility that the surge in AI-related infrastructure investment had been overhyped.

Nvidia, a major supplier of high-end chips used in AI development, saw its stock drop nearly 20 percent. Tesla, Elon Musk’s electric vehicle company, plunged 36 percent. Meanwhile, Apple and Microsoft each declined around 10 percent.

Companies reliant on consumer spending and other economically sensitive sectors also struggled. Nike slid 16 percent after warning that the trade war and weakened consumer demand were complicating its turnaround efforts. FedEx fell 13 percent after slashing its 2025 profit forecast and citing “continued weakness and uncertainty in the U.S. industrial economy.”

In contrast, European markets outperformed Wall Street, reversing the trend of 2023 and 2024 when U.S. stocks significantly outpaced their global counterparts. London’s FTSE 100 and the pan-European Stoxx 600 both climbed around 5 percent in local currency terms.

Asian markets were mixed over the quarter. Japan’s Topix dropped 4.5 percent, China’s CSI 300 slipped 1.2 percent, while Hong Kong’s Hang Seng jumped 15 percent and South Korea’s Kospi rose 3.4 percent.

Investors shifted toward safer assets in early 2024. Gold surged to a record high of $3,128 per troy ounce. Meanwhile, the yield on the 10-year U.S. Treasury bond, which moves inversely to its price, declined from 4.57 percent at the end of 2024 to 4.21 percent.

“It’s really the overall uncertainty weighing on investor sentiment,” said Charles De Boissezon, global head of equity strategy at Société Générale. “The [tariff] announcements keep changing, but the common thread is that they’re simply not good for global growth.”