MW 'Peak uncertainty' on tariffs still looms over stock market despite Monday bounce

By William Watts

'You don't know what's going to be implemented until it's actually implemented,' one portfolio manager says

The stock market was behaving Monday as if investors no longer had anything to worry about when it comes to the Trump administration's tariff plans and their potential to slow economic growth.

The Dow Jones Industrial Average DJIA was up 405 points, or 1%, in afternoon trading, after rising nearly 600 points at its session high. The S&P 500 SPX remained up 1.4%, while the Nasdaq Composite COMP surged 2%, with beaten-down tech stocks extending a recent bounce.

News reports that the White House was planning a more targeted approach to the reciprocal tariffs that are due to be unveiled on April 2 were credited with providing the lift. But investors warned that the period ahead of that deadline could be particularly fraught, given President Donald Trump's pattern of rapidly shifting tariff proposals so far in his second term.

"There's still plenty of uncertainty, and you don't know what's going to be implemented until it's actually implemented," Thomas Martin, senior portfolio manager at Atlanta-based Globalt Investments, said in a phone interview.

Bob Savage, head markets strategist at BNY, said in a Monday note to clients that investors "may be at peak uncertainty now," albeit with early April set to offer some clarity and "perhaps something less than feared."

Trump had floated announcing sector-based tariffs on April 2, but reports from the Wall Street Journal and Bloomberg News said the administration is currently not planning to roll out sectoral levies on that date. The action would still amount to wide-ranging reciprocal tariffs against major U.S. trade partners.

While talk of more targeted tariffs was welcome, "we expect a repeat of the recent trend of conflicting messages and stop-start implementation," Savage wrote. "One goal of tariffs is to drive negotiation and those will be important for the week ahead."

The chart below from Deutsche Bank's latest global markets survey, conducted between March 17 and 20, indicates perceived tariff risk has risen since December, though 62% of respondents thought the tariffs would be softer than the 60% tariffs on China and a universal baseline tariff of 10% that Trump had pledged during the presidential campaign. Expectations for tariffs in line with Trump's campaign plans are reflected in Column 7.

Uncertainty surrounding tariffs has contributed to a sharp deterioration in consumer sentiment, although "hard" economic data has largely held up so far. Stocks retreated sharply, with the S&P 500 on March 13 falling into a correction as it ended more than 10% below its Feb. 19 record finish. The swoon was the result of an "uncertainty shock" tied to the "ever-evolving tariff policy" and investor fears it could lead to a slowdown or recession, members of the Morgan Stanley Global Investment Committee said in a Monday note.

Investors have argued that it's the uncertainty around what the tariff regime will ultimately look like that's the biggest weight on the market, as well as the biggest danger to the economic outlook.

"Whatever it looks like and regardless if one agrees with the application or not, let's hope that it's then done so businesses, households and investors can at least have some visibility from all of this and can plan around them," Peter Boockvar, chief investment officer at Bleakley Financial Group, said in a note.

-William Watts

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March 24, 2025 15:07 ET (19:07 GMT)

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