While the market has made up its losses following President Donald Trump’s reciprocal tariffs announcement in early April, trouble could still be in store, if history is any guide, according to Goldman Sachs. Last month, stocks tumbled in the days after Trump unveiled his steep U.S. tariff rates, with the S & P 500 at one point briefly entering bear market territory . The president then said he was temporarily dropping the rates for most countries to 10% for 90 days, sending the market soaring. The S & P 500 rocketed higher by 9.5% during the April 9 session, while the Nasdaq Composite and Dow Jones Industrial Average surged 12.2% and almost 8%, respectively. .SPX mountain 2025-04-03 S & P 500 since April 3 But Goldman finds that other more sizable rallies — like those in the Nasdaq in 2001 and in the S & P 500 in 2008 — didn’t “mark the trough in their respective bear markets,” signaling that more big gains in the market may not be all that likely. “This raises a key question facing investors: Is this rally sustainable or not? In our bear market framework, an event-driven downturn — triggered by a specific event — does tend to be short and sharp,” chief global equity strategist Peter Oppenheimer wrote in a Tuesday note. “If the tariff announcements are reversed quickly with little lasting economic damage, this does suggest that the downside risks are limited. Nonetheless, at current valuations, we also think the upside is limited,” he continued. Investor hopes that the U.S. would reach agreements with its trading partners have been higher as of late, but Oppenheimer cautioned that “while new trade deals may be announced, the details are likely to be complicated and could well drag on and it is unlikely that tariffs will be cut back to the previous lows.” Even with China, which signaled last week that it may be open to talks with the U.S., he stressed that both countries are “still facing an effective trade embargo.” “In the meantime, sufficient damage may well have already been done to trigger renewed fears of recession as hard data weakens,” the strategist added.
