Wall Street tells investors to ‘sell any bounce’ as the Dow Jones plunges at first market open of Q2

Wall Street opened the second quarter of 2025 with a drop across the board as tech stocks got hammered and the Dow Jones Industrial Average fell 114 points on Tuesday morning. This came as the market waited for President Donald Trump’s upcoming tariff announcement, scheduled for Wednesday, April 2.

The S&P 500 closed the day barely positive at +0.08%, and the Nasdaq Composite ended up 0.5% higher, but the morning plunge made it clear: any bounce is not built to last.

Investors didn’t need more signals. They already saw the warning signs through Q1. The S&P 500 dropped 4.6% over the last three months—its worst quarter since 2022. On Monday, it hit its lowest point in six months, tried to recover, and then dropped again, sliding into a correction—down 10% from its February high.

Traders say sell while tariffs shake the market

JPMorgan analysts wrote in a note that “We remain Tactically Bearish,” adding that policy uncertainty is what’s killing momentum right now. They said they don’t expect any intervention from the Trump Put or the Fed Put, at least in the short term. Investors have started treating every bounce as an opportunity to unload positions before things get worse.

Adam Crisafulli, founder of Vital Knowledge, said, “The April 2 tariff announcement remains a black box in terms of specifics and objectives.” Trump said the decision has already been made, but no documents or briefings have explained what’s coming.

Crisafulli warned that the S&P 500 looks like it could bounce short-term because it’s oversold. But that rebound should be sold fast. “It remains extremely difficult to articulate a bullish fundamental case for this tape,” he said, pointing to what he called “enormous headwinds” from Washington. That includes the tariffs and possibly new tax hikes as Republicans try to make their reconciliation math work in the budget.

The pressure is spreading to individual names, too. On Tuesday morning, Wells Fargo dropped Tesla to its tactical underweight list for Q2. Analyst Colin Langan said, “A continuation of deteriorating fundamentals in the core autos business remains undeniable.” He added that the stock is heavily overvalued compared to the Mag 7, based on 2025 earnings estimates.

Trump’s tariffs shake markets as analysts warn of more downside

Meanwhile, Mike Wilson, chief investment officer at Morgan Stanley, tried to map out the potential outcomes. He said the April 2 announcement “is likely a stepping stone for further negotiations, as opposed to a clearing event.”

Wilson said the baseline forecast includes higher tariffs on Chinese goods, product-level duties on imports from the European Union, and possible de-escalation with Mexico and Canada. On top of that, he expects product-specific tariffs to hit Asian countries, including Vietnam, India, Japan, and South Korea.

That’s not great news for stocks. Wilson said product-level tariffs will hit certain sectors harder than others. But he doesn’t see a full market collapse—just a limited upside. Even if tariffs come in lighter than expected, he capped the near-term upside for the S&P 500 at 5,800 to 5,900.

To even get there, the market needs softer tariffs and a real pickup in earnings revisions, and he said that’s “something we are currently not seeing at the index level.”

His forecast for the first half of the year is between 5,500 and 6,100. The only way to hit the upper range is with weaker tariffs and stronger earnings. Otherwise, it’s a grind lower. If the White House drops broader tariffs on the EU, or adds a 10% duty on Chinese goods, Wilson said the S&P 500 could fall closer to 5,500. That includes country-wide taxes on imports from Vietnam, Korea, Japan, and India.

He said, “This is perhaps the outcome the market was starting to price on Friday.” That came after a rough week where traders began to assume the White House would go harder than expected. By Monday and Tuesday, that fear looked like reality.

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