The financial markets experienced significant volatility once again, just a day after the S&P 500 celebrated its most substantial single-day rally since 2008. The surge was largely attributed to investor optimism following President Donald Trump's announcement of a 90-day delay on tariffs. However, this optimism quickly turned to trepidation when the White House reiterated that the total tariffs imposed on China would now amount to a staggering 145%, factoring in the previous 20% duties that had already been in effect.

On Thursday morning, this unexpected news sent shockwaves through the market, with many investors caught off guard. President Trump had previously indicated on his social media platform, Truth Social, that the tariff rate charged to China would be set at 125%. This discrepancy between his statements created confusion and led to a sharp decline in stock prices. Throughout the session, the S&P 500 (GSPC) plummeted more than 3.9%, while the tech-heavy Nasdaq Composite (IXIC) sank 4.5%. The Dow Jones Industrial Average (^DJI) was not spared either, falling over 1,300 points, which translates to a decline of more than 3%.

This sudden reversal in market sentiment sheds light on the ongoing discourse among Wall Street strategists and economists regarding the tumultuous current economic climate. Just a day earlier, President Trump's announcement had seemingly diffused some of the worst fears surrounding tariffs and their potential to hinder economic growth. However, with the latest updates indicating only a temporary reprievea mere '90-day pause'it became evident that uncertainty surrounding his fiscal policies remains deeply entrenched.

Neil Dutta, head of economics at Renaissance Macro, articulated the prevailing sentiment among investors: 'I still think this is more "sell the rip" than "buy the dip" [in stocks]. There are still numerous challenges ahead, but it's encouraging to see the President easing up and addressing China.' He emphasized, however, that the overarching issue is the prolonged uncertainty surrounding economic policies.

Concerns about a potential recession in the United States later this year continue to swirl among economists, including Dutta. With economic growth data reflecting a slowdown at the beginning of 2025, there remains apprehension that businesses might curtail investments while they await clarity on the tariff situation. This hesitation casts a long shadow over the outlook for equities.

'Overall, we're kind of still where we were,' noted Brent Schutte, Chief Investment Officer at Northwestern Mutual Wealth Management Company, during an interview with Yahoo Finance. He explained that while some of the immediate tensions may have eased, the ambiguity surrounding the future remains a significant concern. 'To me, uncertainty means that both CEOs and consumers are more indecisive, and that poses a risk moving forward in the next 90 days.'

Given this climate of uncertainty, the outlook for publicly traded companies appears clouded as well. Analysts are not optimistic about the forthcoming round of first-quarter financial reports. Major banks, such as JPMorgan (JPM), are set to kick off earnings season on Friday, but expectations are low that these reports will provide any meaningful clarity.

'One of the big concerns we have right now is that the upcoming reporting season feels a bit like a box of potentially bittersweet chocolateswere uncertain about what it will yield,' stated Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, in a note to clients on Thursday morning.