The US stock market is in a terrible place. What it needs to see next.

Subscribe to enjoy similar stories. Stocks have taken a beating—but this week may provide a more definitive direction for the coming months. All three major U.S.

indexes were deeply in the red for a second consecutive day Friday. The S&P 500 is down 17% from the record close it notched in late February, and marked its worst week since March 2020. Stocks are sliding after President Donald Trump announced his “Liberation Day" tariffs plan this week, as investors remain uncertain about how much the global economy will suffer.

On Wednesday, Trump announced 10% tariffs on all goods imported to the U.S., additional ones for goods from certain countries, and 34% higher tariffs on goods from China, all of which go into effect this month. The implications: the cost of over $3 trillion worth of global goods will skyrocket, according to Office of the United States Trade Representative. Consumers will likely pull back on spending, which is forcing the stock market to reduce its expectation for sales and earnings.

Compounding the economic concern, China retaliated Friday morning by implementing 34% tariffs on U.S. goods. China imported $140 billion of goods from the U.S.

in 2024—and U.S. companies that sell to China will likely see a hit to demand in 2025. The market won’t fully understand the damage to companies’ profits until investors can examine economic data and quarterly earning reports over the coming quarters.

That is why the market won’t stage any kind of meaningful recovery in the next few weeks unless a few saving graces emerge. Negotiations between the U.S. and its major trading partners, China, Mexico, Canada, and the European Union, could provide a significant boost.