The stock market’s problem goes far beyond Trump

With President Trump at the helm, the S&P 500 dropped into correction territory this week, and Wall Street’s been tossing around the word “recession” like candy. People are quick to tie the whole thing to Trump and his new tariff push, but the mess is bigger than him.

The U.S. stock market has problems coming from every direction, and blaming one man in the White House doesn’t explain what’s actually happening across sectors, earnings, and investor confidence.

According to data from The Wall Street Journal, equity markets started the week in neutral. There was some optimism after reports suggested Trump’s tariffs scheduled for April 2 might be more selective than originally planned.

But by Wednesday, that hope got crushed. New info showed that foreign carmakers weren’t getting an exemption after all, and stocks tanked. The S&P 500 lost gains fast as automakers got slammed by the news.

Every sector is struggling as earnings expectations drop

Multiple economists, including analysts from the Federal Reserve, have pointed to tariffs as a reason to pull back growth projections. But it’s not just tariffs. There’s also the drop in federal jobs, the sharp slowdown in immigration, and a spending cut by consumers. It’s hitting the S&P 500 consumer-discretionary sector, which includes automakers and specialty shops, harder than most. That sector is down 11% since the start of the year.

There’s also been a quiet shift in why people are still investing at all. A lot of it is based on the hope that the U.S. might return to more predictable, structured policymaking. But leaning on that hope is risky. Throwing every single market dip at Trump’s feet is a stretch. The numbers show that the damage started earlier.

Companies are about to start reporting their first-quarter earnings, and it’s not looking good. FactSet data says that earnings-per-share for the S&P 500 are expected to be up 7.1% from the same quarter last year. That might look fine on paper, but it’s down 4% from what analysts predicted at the end of last year. That 4% drop in expectations is bigger than usual.

All 11 sectors in the S&P 500 are now underperforming. Nine of them have seen slowing growth. Some of the biggest names—American Airlines, Nike, and FedEx—have all cut their business forecasts. And it’s not just a one-time thing. FedEx has been cutting its outlook over and over since 2023. Even before the new tariff announcements, companies were already pulling back.

Consumer spending and tech profits started dropping early

Consumer-discretionary companies didn’t start slowing down after the 2024 U.S. election—they started way before that. Back in mid-2024, their earnings-per-share began falling. For hotels and restaurants, the slowdown started almost a year before that. This wasn’t caused by Trump’s recent moves. These declines started building before he even won a second term.

And then there’s tech. Technology stocks are getting beat up too. This year, tech is the second worst-performing sector. That might surprise people considering how big AI still is, but numbers don’t lie. Profit growth in the tech space hit its high point in 2024. It’s been sliding since then. The heavyweights—Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta—were trading at sky-high levels earlier this year. In February, their forward price-to-earnings ratio was near 45. Now it’s at 35. That’s a massive pullback. They’ve lost a combined 11.3%.

Their size inside the market-cap weighted S&P 500 is what’s dragging the whole thing down. That index has dropped 2.9% in 2025, but if you strip out those giants and weigh everything equally, the market’s flat. The Cboe Volatility Index (VIX), often called the market’s fear gauge, has only seen a small bump, meaning panic hasn’t really set in. But there’s a lot of uncertainty right now.

Investors are preparing for a recession—but not everyone agrees

History shows that profits can slow down without a full recession. But when they do lead to one, it tends to get messy. Economist Robert Shiller’s data going all the way back to 1871 shows that it’s possible to have a market correction—defined as a 20% drop—without a recession. It’s happened three times: in 1962 during the “Kennedy Slide,” again in 1987 after Black Monday, and in 2022 during a period of high inflation and aggressive rate hikes. All three times, the market bounced back fast.

That’s the good news. The bad news? In 54% of past corrections, a recession followed. That kind of drop doesn’t go away quickly. The pain tends to last. So while this might just be another cycle, there’s a decent chance the slowdown turns into something worse.

Right now, most of the weak signals are coming from “soft data.” On Tuesday, the Conference Board published its latest consumer expectations survey, and the results were brutal. People’s outlook on income, business conditions, and the job market fell to a 12-year low. That doesn’t mean everything’s falling apart though. Official government data is more stable. After a bad retail month in January, February showed a bounce. Still, it’s clear the economy is slowing down.

The post-pandemic boom is done. It’s been cooling off for a while. Shoppers are cutting back, mortgage rates are still high, and construction is slowing. The labor market is still solid, but fewer hours are being worked, and companies in sensitive industries are hiring less. AI helped boost spending for a while, especially from the bigger corporations. But now that profits are shrinking, it’s not clear if those companies are willing to keep spending like they were. Their profit margins are getting thinner.

Tariffs and budget cuts make the chance of a recession higher. But getting rid of them wouldn’t prevent one either. The economy has been running on fumes for months. And now, Trump is adding more pressure.

Trump announces permanent tariffs as futures fall

On Wednesday night, President Trump said he would introduce 25% tariffs on all foreign cars not made in the United States. Those tariffs are set to start on April 2. He also said those tariffs would stay in place for his entire second term. This is not temporary. This is now official White House policy.

Trump has talked for years about slapping duties on countries that tax American goods. Now he’s doing it. This new move is hitting automakers hard. In premarket trading, General Motors dropped 6.5%. Stellantis fell 1.8%, and Ford lost about 0.5%. These companies are being punished directly by the president’s decisions.

On Thursday morning, stock futures showed little change. Futures tied to the Dow Jones Industrial Average rose by 8 points, just barely above flat. The S&P 500 futures dropped 0.2%, and Nasdaq-100 futures slipped 0.3%.

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