The S&P 500 index, one of the most closely monitored stock market indicators in the United States, has just experienced its most tumultuous week since March 2020. Wall Street analysts, reflecting on the market's performance, are expressing a pervasive sense of unease, suggesting that the recent sell-off may be far from over.

Stuart Kaiser, the head of U.S. equity strategy at Citigroup, shared his thoughts in a note to clients on Sunday, cautioning that there is still "ample space to the downside" for stock prices. He pointed out that the potential worst-case scenarios regarding tariffs have yet to be fully integrated into both earnings forecasts and stock valuations. Kaiser raised concerns that if the economy is indeed on the brink of a slowdown, as many analysts fear, the current state of the stock market does not adequately reflect this looming uncertainty.

In his assessment, Kaiser remarked, "We remain very cautious." He elaborated that although certain improvements have been made regarding stock valuation and risk assessment, projected earnings per share (EPS) and economic growth forecasts remain significantly higher than what would be justified given the potential impact of the tariffs. Kaiser suggested that scenarios predicting the S&P 500 could fall into the mid-4000s are entirely plausible.

On Sunday evening, equity futures indicated further potential declines. Futures linked to the S&P 500 (ES=F) slid more than 4%, those on the technology-heavy Nasdaq (NQ=F) plunged nearly 5%, and Dow Jones Industrial Average futures (YM=F) fell by 3.7%. This downward movement signals a lack of confidence in the market's ability to recover in the short term.

The economic climate has grown increasingly fraught as discussions intensify about President Trump's proposed implementation of the largest tariff increase seen in over a century. A recent note from JPMorgan made waves as it became the first prominent Wall Street bank to predict that these tariffs could trigger a recession by 2025.

Kaiser emphasized that should a recession become a reality, the S&P 500 would likely experience even more substantial declines. Currently, the S&P 500 is down more than 17% from its record high observed on February 19. Historical patterns since 1948 reveal that during economic recessions, the median decline of the S&P 500 has been around 22.1%. If such a downturn were to occur, this would push the index below 4,800, which is roughly the position futures are suggesting for the market's opening on Monday.

Despite some progress made regarding stock valuations and risk pricing, Kaiser pointed out that earnings expectations still exceed levels that would be consistent with the announced tariffs. This disconnect raises alarms for investors who are wary of the broader implications for economic growth.

As 2025 kicks off, the stock market has stumbled due to rising uncertainties surrounding policy changes from the new administration. There is increasing chatter among economists and investors about potential “puts”—thresholds at which policymakers might intervene to stabilize the market and restore investor confidence.

However, as the market continues its downward trend, it appears that no such “Trump put” is currently in play. Commerce Secretary Howard Lutnick made a firm declaration on CBS's Face the Nation, stating, "The tariffs are coming," and emphasized that Trump "announced it and he wasn’t kidding." This commitment to the tariff increases adds another layer of complexity to the already unstable financial landscape, leaving investors on edge.