The stock market is taking President Donald Trump’s tariff threats in stride as investors expect milder duties on U.S. trading partners than initially feared. Goldman Sachs looked at the first day performance in the S & P 500 as well as a basket of stocks with high tariff exposure on dates of key trade developments, such as Liberation Day on April 2 and a hike in China duties on April 7. The Wall Street firm found that the market seems to be reacting less and less to the headlines. “The equity market appears to be unconcerned by the recent tariff hike announcements,” David Kostin, Goldman’s head of U.S. equity strategy, said in a note to clients. “Our client conversations indicate that many investors believe tariff rates will eventually settle lower than what the recent announcements have indicated.” The broad equity benchmark plunged 5% on Liberation Day when Trump announced “reciprocal tariffs” on more than 180 countries and territories. On April 7 when Trump raised China levies to a whopping 145%, the S & P 500 dropped another 3%. In contrast, stocks have largely ignored the most recent tariff announcements on July 7 when Trump started to send out tariff letters as well as news of a potential 30% levy on European Union on July 13. The S & P 500 notched a new record high last week, while Goldman Sachs’s tariff risk basket is just 4% off its record high. .SPX YTD mountain S & P 500 year to date Goldman said investors have shifted focus on the outlook for economic and earnings growth in 2026. “Consensus earnings revision breadth has recently jumped to the highest level since 2022, and the outperformance of cyclical industries suggests the equity market is pricing an outlook for solid GDP growth despite consensus expectations for sluggish growth in coming quarters,” Kostin said. The firm also noted that the recent dollar weakness should provide a small tailwind to S & P 500 earnings. International sales account for 28% of S & P 500 companies’ revenue, so a 10% decline in the greenback could give a 2%-3% boost to S & P 500 earnings, Goldman said.
