S&P 500 marks its worst quarter since 2022 amid tariff and inflation fears

Stocks whipsawed on Monday ahead of President Trump’s plan to announce more tariffs on April 2, with the market initially dipping in early trading before recovering later in the day. Even so, those gains couldn’t offset steep losses recorded earlier in the month, with the S&P 500 marking its worst quarterly performance since 2022. 

Mr. Trump has dubbed April 2 “Liberation Day” because the new reciprocal tariffs, he says, will restore trade balances between the U.S. and other nations. 

But investors are cautious about the impact of a round of new tariffs, which are import fees that are largely passed onto U.S. consumers in the form of higher prices. Consumer confidence this month slumped to a 12-year low as more Americans are expressing concerns about tariffs and a pick-up in inflation. 

During the first three months of 2025, the S&P 500 lost 4.6%, marking the worst quarter in two-and-a-half years. The tech-heavy Nasdaq composite ended the first three months of the year with a 10.4% decline, while the Dow Jones Industrial Average shed 2.2% over the same period.

Monday’s neck-twisting turn has become routine for the U.S. stock market recently because of uncertainty about what Mr. Trump will do with tariffs. Investors are anxious over a potentially toxic mix of worsening inflation and a slowing U.S. economy because households are afraid to spend due to a deepening trade war escalated by Mr. Trump. 

“Consumers are getting fed up, sending confidence to recession levels amid growing fears of higher inflation and deteriorating economic prospects,” wrote Bob Schwartz, senior economist at Oxford Economics, in a March 28 research note. 

The details of Mr. Trump’s next round of import taxes are still sketchy, although the president is expected to announce plans for so-called reciprocal tariffs, which are designed to match the import duties placed on U.S. goods and services by other nations. 

Most economic analyses say average U.S. families would have to absorb the cost of his tariffs in the form of higher prices and lower incomes, a tough proposition for inflation-weary Americans.

On Monday, the Dow Jones Industrial Average rose 418 points, or 1%, to 42,002, while the S&P 500 closed 0.6% higher. The Nasdaq slipped about 0.1%. 

Tesla stock slump

Tesla’s woes continued as CEO Elon Musk’s electric car company slid 1.7% on Monday. Tesla is down about 39% since Trump took office Jan. 20, with losses driven in part by the public perception of Musk’s oversight of the new Department of Government Efficiency that’s slashing government spending.

Tesla sales in Europe and the U.S. have fallen, partly due to Musk’s political shift to the right. Protestors have targeted the automaker’s showrooms, vehicle lots and charging stations, with some resorting to vandalism, including burning privately owned vehicles.

Apple shares were down less than 1% after France’s antitrust watchdog fined the tech giant $162 million over the rollout of a privacy feature resulted in abuse of competition law.

Shares of the mortgage company Rocket fell 3.5% after it announced that it is buying competitor Mr. Cooper in an all-stock deal valued at $9.4 billion. Mr. Cooper shares soared more than 26%. The deals comes just weeks after Rocket acquired real estate listing company Redfin.

The price of gold hit a record high before inching back down to $3,149 an ounce. Investors continue to pull out of equities in search of traditional safe havens like gold.

contributed to this report.