President Donald Trump steps off Air Force One in Maryland (Brendan Smialowski/Getty Images)

Tariff talk rattles global markets as Q1 draws to a close, Goldman cuts S&P 500 price target

Markets in Europe and China were modestly red, while Japan’s Nikkei 225 dropped 4%.

David Crowther, Hyunsoo Rim, Claire Yubin Oh

3/31/25 9:58AM

The final trading session of Q1 2025 is shaping up to be a microcosm of the three-month period that it will close out, with markets around the world turning red as investors second-guess US trade policy.

Speaking about tariffs aboard Air Force One, President Trump told reporters, “You’d start with all countries, so let’s see what happens” — a comment that’s spooked investors when combined with reports that advisers have been considering a blanket 20% tariff on all US trading partners, ahead of Wednesday’s “Liberation Day.”

Japan’s Nikkei 225 dropped sharply in early trading and never dug itself out of its hole, ending today’s session down 4%, officially entering correction territory. Europe’s flagship index, the STOXX 600, is down 1.6%, and US markets are following it into the red, with the SPDR S&P 500 Trust currently down 1.4%. Though tariff-sensitive stocks like General Motors are down modestly, the price action in early trading suggests that high-beta names like Palantir and Super Micro Computer — many of which are associated with the AI trade — may be hit hardest.

Growth scare

After a flurry of soft economic data, US stocks closed out last week with a 2% drop as investors reevaluate their assumptions about the economy. Cracks in certain areas, like the credit market, signal that Wall Street is officially in “growth scare” mode. In a note published yesterday evening, Goldman Sachs officially slashed its S&P 500 forecasts for the second time this month, citing higher tariffs and growing recession risks. The bank now expects the index to dip to 5,300 over the next three months, before rebounding to 5,700 by year-end and 5,900 in 12 months.

The new year-end target marks a sharp downgrade from the earlier 6,200 and stands just 2% above where the index closed on Friday, putting it among the lowest forecasts on Wall Street, per Bloomberg. Goldman now assigns a 35% chance of a US recession over the next 12 months — up from the previous 20% — warning that if history repeats, stocks could fall another 17% from current levels, down to ~4,600. Event contract platforms like Kalshi now predict a 42% chance of a US recession this year, up from ~18% in mid-January.

Tariff fever

In the summer of 2022, fear of inflation peaked, with Google Trends data revealing that searches for the term reached their highest volume in August — just two months after US inflation itself topped out, with the CPI Index clocking a 9.1% year-on-year increase in June.

At the time, it was hard to imagine an economic term becoming more prevalent than that in our everyday lives. But the endless tariff talk since, as consumers buzz about Trump’s favorite trade policy instrument, has seen searches for “tariffs” skyrocket since the start of the year.

Company leaders are also obsessed with discussing them: for the latest quarter, the terms “tariff” and “tariffs” were featured in S&P 500 companies’ earning calls more than any other since early 2018. Interestingly, however, the number of S&P 500 companies citing the word “recession” was the lowest in over five years, per FactSet data.

So long, Q1

Though quarters are as arbitrary a measurement as any other, the end of March brings a chance to reflect on the market’s winners and losers so far.

Winners: Topping the S&P 500 Index this quarter, barring any major moves in afternoon trading, is CVS Health, which has gained a whopping 50%. Other defensive names like tobacco giant Philip Morris and AT&T are also near the top of the leaderboard, as are a number of energy stocks, which is the best-performing sector year-to-date.

Losers: We won’t labor the point on Tesla. It’s having a terrible, horrible, no good, very bad year. But it’s actually not the worst-performing S&P 500 stock; that dubious honor falls to Deckers Outdoor, owner of shoe brands like Hoka and Ugg, which has fallen 45% as growth slows at its key brands.

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Max Knoblauch3m

GM soars after Q1 earnings impress, with automaker boosting full-year guidance

Detroit automaker GM reported its first-quarter earnings before markets opened on Tuesday. Its shares climbed more than 5% in premarket trading.

For Q1, General Motors reported:

Adjusted earnings of $3.70 per share, compared to Wall Street estimates of $2.60 per share by analysts polled by FactSet.
Revenue of $43.62 billion, compared to the $43.51 billion estimates.

Looking ahead, GM raised its full-year earnings guidance to between $11.50 and $13.50. It previously forecast between $11 and $13. In its earnings deck, the automaker said the change was due in part to “lower gross tariff costs from the $0.5B IEEPA tariff adjustment.”

Earlier this month, GM reported that its Q1 sales were down 9.7% from last year, though it called year-over-year comparisons “significantly skewed” due to last year’s tariff-induced panic buying.

GM has been steadily retreating from its once-lofty EV ambitions in recent months, recording $7.6 billion in EV-related writedowns last year (the figure was far lower than Ford’s $19.5 billion).

David Crowther19m

OpenAI-linked stocks suffer after WSJ reports that the company has missed key revenue and user targets

It was once a blessing to be associated with the world's hottest startup.

Supplying chips, general data center hardware, or even just announcing a tangential partnership with the ChatGPT-maker used to be enough to send a stock spiking. But those days are gone, with OpenAI once again weighing on a raft of its suppliers and partners after the Wall Street Journal reported that the company had missed a number of internal revenue and user targets, as its competition with Anthropic and others heats up.

As of 6:45 a.m. ET, CoreWeave is off 5.4%, Oracle is down 5.5%, Advanced Micro Devices and Broadcom are off roughly 4% . With billions of dollars — and in some cases tens of billions of dollars — worth of contracts with each of those companies, any sign that OpenAI is struggling to reach the escape velocity that its remarkable "spend big to win big" strategy is based on is understandably seen as a negative. Even stocks less explicitly tied to OpenAI are under pressure — the company's sheer size is enough to weigh on pretty much the entire AI ecosystem.

Per the WSJ, Sarah Friar, the company's CFO has "told other company leaders that she is worried the company might not be able to pay for future computing contracts if revenue doesn’t grow fast enough."

The goals missed reportedly include:

A target to hit 1 billion weekly active users by the end of 2025.
Its annual revenue target for ChatGPT last year.
Multiple monthly revenue targets this year, as Anthropic has surged ahead in the enterprise markets.

Although some investors might be spooked, for what it's worth, those missed targets haven't exactly dampened the investor enthusiasm too much; the company recently announced that it had raised $122 billion, valuing it an eye-watering $850+ billion.

It's already been a busy week for OpenAI. Yesterday, the company announced a revised agreement with Microsoft, while Sam Altman sent out a memo, in which he said that "A lot of the things that we do that look weird — buying huge amounts of compute while our revenue is relatively small..."

This morning, the markets are deciding that kind of weird is marginally more bad than it was yesterday, in light of the missed targets.

OpenAI Misses Key Revenue, User Targets in High-Stakes Sprint Toward IPO

The goals missed reportedly include:

A target to hit 1 billion weekly active users by the end of 2025.
Its annual revenue target for ChatGPT last year.
Multiple monthly revenue targets this year, as Anthropic has surged ahead in the enterprise markets.

This morning, the markets are deciding that kind of weird is marginally more bad than it was yesterday, in light of the missed targets.

Tasha Matsumoto

15h

Stocks eke out new record close as traders await Big Tech earnings and peace talk updates

In the absence of further developments for resolving the US-Iran conflict, gains in stocks were muted during today’s trading.

Cowboy Riding a Bull - stock illustration

Matt Phillips16h

Memory stocks shine in messy day for markets

Micron and Sandisk shook off an otherwise “meh” tech sector performance Monday after the two memory bellwethers received an analyst initiation.

It was a “buy” on both counts from Melius Research, adding to the growing consensus view that there’s no end in sight for data center-related storage demand as the AI capital-spending boom continues.

The newly minted Sandisk watchers at Melius slapped a target price of $1,350 on the stock — a 36% premium to Friday’s close. Their target for memory chip maker Micron was $700, a 40% premium to Friday’s close.

The reason? (At this point do we even have to ask?)

Obviously it’s optimism that the parabolic surge in pricing power for memory products amid the AI boom can last.

Analyst Ben Reitzes argues that memory sellers may effectively offer “subscriptions” — aping the software business model that they’re helping to displace — in a way that protects their margins over time.

Other AI memory plays had something of a mediocre day: hard disk drive maker Seagate Technology Holdings was up, while its arch rival, Western Digital, was down. But the optimistic tone of the note was enough to send Micron and Sandisk to new record highs on an intraday basis. (Sandisk has to close above Friday’s $2,965.66 and Micron has to close above Friday’s $541.59 for the records to stick.)

Obviously, new records are an old hat for both companies. Micron and Sandisk have been on a romp for much of the past 12 months, in which they’re up a cool 550% and 3,100%, respectively.

The reason? (At this point do we even have to ask?)

Obviously it’s optimism that the parabolic surge in pricing power for memory products amid the AI boom can last.

Obviously, new records are an old hat for both companies. Micron and Sandisk have been on a romp for much of the past 12 months, in which they’re up a cool 550% and 3,100%, respectively.

Luke Kawa18h

AI data center and networking stocks take a breather after parabolic run

AI infrastructure and data center stocks are swooning on Monday after an exceptionally hot run, with the likes of Applied Optoelectronics, Lumentum, Astera Labs, Coherent, Marvell Technology, Nebius, IREN, and Applied Digital all off at least 3% as of 1:08 p.m. ET.

Most of these names didn’t fall in tandem on news of the amended agreement between Microsoft and OpenAI, but rather began to sharply extend losses shortly ahead of the open (by which time the Copilot creator was already well off its lows).

So it’s tough to cite that as a catalyst for the group. If you wanted to try to pigeonhole that as a cause of the decline: Microsoft and OpenAI’s simplified relationship points to a world where AI spend is increasingly rationalized by the underlying economics, with cash-burning behemoths forced to stand on their own two feet. That may ultimately restrain what appears to be the present eye-popping demand for AI infrastructure.

On the other hand, there have been myriad signs in recent weeks of just how intense supply crunches are across networking, CPUs, and AI accelerator chips as well as elevated end user appetite, so it’s difficult to suggest this is something fundamental as opposed to the space taking a breather ahead of hyperscalers’ earnings reports on Wednesday.

The capex budgets for Meta, Amazon, Microsoft, and Google effectively serve as sales guidance for the rest of the AI ecosystem.

For some parts of the AI trade, Monday’s tape may be a reminder that parabolic moves don’t end by going sideways. For other core contributors to the 2025-26 advance, the skyward marches are still intact: Sandisk and Micron are zooming higher.

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