Investors over the weekend got more tariff announcements from President Donald Trump. Yet, Wall Street still doesn't believe the U.S. will move forward with these steep levies. Stock futures were only slightly lower Monday after Trump on Saturday announced a 30% duty on goods imported from Mexico and European Union countries starting Aug. 1. "Will the market continue to look through elevated tariff levels believing Trump will pivot to lower levels or any near-term downside is bought going into the Aug 1 deadline? We think Yes and thus maintain our Tactical Bullish view as the market focuses on earnings," traders at JPMorgan wrote. Investors have taken the latest tariff headlines in stride. The S & P 500 lost just 0.3% last week even after Trump unveiled new tariffs on several countries, including South Korea and Japan. Those relatively muted moves are in stark contrast to the sell-off that ensued following "liberation day" on April 2. The S & P 500 fell to a closing low of 4,982.77. Since then, it's up a whopping 25.6%. .SPX mountain 2025-04-08 SPX since April 8 "Maybe we should all learn to expect these sorts of head fakes, anyway, because the sub-5,000 Liberation Day lows might just have taught the Administration a lesson," Morgan Stanley's trading desk wrote. Wall Street is wondering whether investors believe Trump will back down from these latest tariff threats and instead agree to lower levies, or if the president actually follows through, potentially knocking equities and dampening the earnings outlook for companies around the world. Right now, Wall Street is betting on the former. "While current location to add risk isn't overly attractive, my instinct is there's some gas left in the tank, and that U.S. large cap is the best horse to ride," Goldman Sachs' Tony Pasquariello wrote. "If you're constructive, yet wary of risk/reward, take advantage of the meltdown in volatility to keep a few lines in the water via upside."
