As President Donald Trump ‘s tariffs rattle U.S. equities, investors are rethinking their market forecasts and the outlook for the economy. In fact, firms including RBC and Wells Fargo have slashed their outlooks for the S & P 500 in 2025 over the past week as the new duties rolled out, anticipating slowing economic growth and stronger inflation. The broad market index is now down 13% in 2025, and it touched bear market territory on Monday at its session lows — a decline of more than 20% from the February high. Stocks across the globe saw a steep sell-off last week in response to Trump’s tariff announcement, which targets more than 180 countries . Further, Trump threatened an additional 50% levy on Beijing on Monday. This bout of volatility has raised questions as to how best ride out the tumult on Wall Street, particularly as trade policy remains in flux. Canaccord Genuity mapped out how the firm thinks the tariff uncertainty will play out for markets, and described four key scenarios. For context, the firm posits that the S & P 500 ‘s next key support level is roughly 4,950, reflecting a decline of about 2.4% from Friday’s close. 7% probability — A “quick bounce back”: This scenario would see an abatement of the tariff concern in the coming months that could result in the S & P 500 climbing to 5,700 by June. While Canaccord Genuity analyst Michael Graham said volatility is likely to continue in the near term, “it is more likely that policy uncertainty improves from here” overall. 55% probability — A “slow work out”: The most likely outcome according to Canaccord is a resolution to some of the tariff concern over the course of the summer, including negotiations tied to the United States-Mexico-Canada Agreement, or USMCA. The firm added that in this scenario, the Federal Reserve could cut interest rates to help avoid a major recession, while investor focus shifts back to economic growth. Graham forecast the S & P 500 stabilizing at roughly 5,100 in this situation, before climbing to 6,000 at the end of 2025. 35% probability — A “significant” recession: Tariff worries would damage investor confidence and economic growth, hypothetically sparking a recession beginning in May, Graham said. In this scenario, the S & P 500 would reach a bottom in the first quarter of 2026 at roughly 4,400 to 4,950. 3% probability — The U.S. loses its dominance in global trade: The least likely scenario, yet still troubling, would see the U.S. deficit continue to soar while the cost of servicing the debt equals Social Security costs by 2028. At the same time, the dollar would be dethroned as the world’s reserve currency. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
