Stocks are selling off onThursday, April 3 after President, Donald Trump announced reciprocal tariffs on a long list of countries.
Trump says that the higher tariffs on imported goods from U.S. trading partners will help significantly lower the nation’s trade deficit. However, experts are increasingly concerned that they will push the U.S. economy into a recession.
The tariffs have already resulted in a more-than-11% decline in the S&P 500 Index ($SPX) since Feb. 19, but fears of a slowdown ahead are now making investors question if the stock market will crash further in 2025.
Could Tariffs Lead to a Stock Market Crash?
Trump’s trade policies are making analysts lose confidence in the resilience of the U.S. economy.
Concerns of potential retaliation from trade partners, and eventually a full-blown trade war, have even made many analysts lower their year-end targets on the S&P 500 over the past two months.
However, investors should note that no Wall Street firms currently expects a significant further decline in the benchmark index.
In fact, the median year-end target on SPX currently sits at 6,500, which indicates potential upside of more than 20% from current levels.
Stocks to Buy in the Current Macro Environment
According to Mike Wilson, a senior Morgan Stanley analyst, the possibility that Trump is using tariffs simply to restart negotiations with trading partners in hopes of signing better trade agreements remains on the table.
However, until we have more clarity on that front, volatility may remain the name of the game in global financial markets. Amidst such an uncertain economic backdrop, investors are advised to stick with names that are minimally exposed to tariffs.
These include utility companies like Entergy (ETR) and American Electric Power (AEP), as per famed investor Jim Cramer. The former hedge fund manager expects oil and gas stocks like Enterprise Products Partners (EPD) to outperform in this environment as well.
Last month on “Mad Money,” Cramer also argued that Charlotte-headquartered Nucor (NUE) could benefit from Trump tariffs as they may hamper demand for cheaper steel from abroad.
Analysts currently have a mean target of $154 on NUE that indicates potential upside of more than 37% from here.
