The market’s current downturn hasn’t reached its conclusion, according to Deutsche Bank, as uncertainty surrounding tariffs erodes confidence among both consumers and corporations. Binky Chadha, the bank’s chief strategist, expressed on Saturday that he anticipates the downward trend in U.S. equities will persist. “Given that trade policy uncertainty is unlikely to dissipate before April 2, we foresee a continued unwinding of market positions,” Chadha remarked. He further noted that should the market move to the lower end of its positioning band—similar to the last trade war—the S&P 500 could slump down to 5,250.
Chadha’s prediction indicates a potential further drop of 6.9% from the close of 5,638.94 recorded on Friday, with the S&P 500 already trailing about 8% from its all-time high reached just a month prior. Central to Chadha’s projections are worries over an economic slowdown exacerbated by persistent tariff uncertainties, anticipated to persist over the coming weeks. Recent earnings reports reveal a troubling trend: CEOs are reining in capital expenditures and scaling back their earnings forecasts. Chadha speculates that President Trump might not ease his market-disrupting policies until a significant dip in his approval ratings occurs.
“The current approval rating remains relatively high compared to consumer confidence levels, suggesting there’s substantial room for a downturn, which could accelerate should negative economic growth or inflation developments occur,” Chadha elaborated. He further posits that the administration may only consider policy adjustments if the net approval rating slides to at least -5%.
Despite his cautious outlook, Chadha, known for his earlier optimistic forecast for 2025, insists it’s premature to abandon his S&P 500 year-end target of 7,000—a substantial rise of more than 24% from Friday’s figures. He argues that should the tariff uncertainties be resolved, a robust market rebound could unfold in the year’s latter part. Encouragingly, Monday saw a modest uptick in the broader index, as it sought to recover from its recent dips. This slight rise followed a U.S. retail sales report indicating continued consumer spending, albeit at a somewhat reduced pace. “While the risks have undeniably increased, we are presently holding firm on our year-end S&P 500 target of 7,000,” Chadha affirmed.
