US stocks staged a late-day rebound on Monday after opening sharply lower, with investors nervously positioning ahead of President Donald Trump’s highly anticipated tariff announcement due midweek. The S&P 500 rose 0.55% to close at 5,611.85, recovering from an early drop of more than 1.6% that briefly pushed the index 10% below its all-time high. The Dow Jones Industrial Average added 417 points, or 1%, while the Nasdaq Composite slipped 0.14%.
The gains masked what has been a bruising month and quarter for Wall Street. The S&P 500 fell 5.8% in March, its worst monthly performance since December 2022, snapping a five-quarter winning streak. The Nasdaq fared even worse, down 8.2% for the month and 10.4% for the quarter, while the Dow ended March down 4.2%.
Tech stocks remain under pressure, with Nvidia falling 1.2% and Tesla down 1.7% as the artificial intelligence-driven rally of 2023 continues to unwind. Investors rotated into more defensive names such as Coca-Cola and Walmart, which helped support the Dow.
Tariff fears dominate
At the heart of the market’s anxiety is President Trump’s plan for “reciprocal tariffs,” which he says will be unveiled on Wednesday. In comments made aboard Air Force One on Sunday, Trump rejected speculation that the tariffs would focus only on the US’s largest trading partners. “You’d start with all countries,” he said. “So let’s see what happens.”
The White House has signalled a willingness to accept short-term economic pain in the pursuit of what it calls trade fairness. While earlier reports had suggested the tariffs might target 10 to 15 countries with the largest trade imbalances — the so-called “Dirty 15” — Trump made clear that the levies would be applied broadly, defying market hopes for a narrower launch.
Goldman Sachs responded by increasing its forecast for the average US tariff rate in 2025 from 10 to 15 percentage points, saying the situation now matches its previous “risk case.” Even after likely product and country exclusions, the bank sees an effective increase of 9 points — still a historically large shift.
In a note to clients, the company warned that the tariff shock could reignite inflation and severely slow growth. It now sees a 35% chance of a US recession within the next 12 months — the highest risk estimate since the regional banking crisis two years ago. Inflation is projected to hit 3.5% this year, up from 3%, and unemployment is expected to rise to 4.5%. Goldman also downgraded its 2025 GDP forecast to just 1%, from 1.5%.
While the Trump administration insists the tariffs will lead to a manufacturing renaissance, economists are increasingly concerned that the combination of higher prices, weaker consumer sentiment, and falling real incomes could push the US into a stagflationary environment — slow growth combined with persistent inflation.
Australian markets brace for RBA decision
In Australia, attention turns to the Reserve Bank of Australia, which will deliver its interest rate decision at 2:30pm AEDT. The RBA is widely expected to keep the cash rate on hold at 4.10%, with markets and economists awaiting first-quarter CPI data on 30 April and wage growth figures in mid-May for clues on the path forward.
Governor Michele Bullock will hold a press conference at 3:30pm — a rare occurrence that underscores the market sensitivity around the central bank’s next moves. NAB continues to forecast the first rate cut as soon as May, with a total of four reductions expected by February 2026, bringing the cash rate to 3.1%.
Earlier this morning, the ABS will release February’s retail sales and dwelling price data, while overseas investors will parse a raft of manufacturing reports from China, the US and Europe for signs of global trade strain.
Commodities and the dollar
Brent crude is 1.51% higher at US$74.74 a barrel.
Spot gold is flat at US$3,123.61 an ounce, near record highs.
One Australian dollar is buying 62.46 US cents.
Futures
The SPI futures are pointing to a 67 point rise.
