Trump's chaotic tariffs further exacerbate expectations of economic decline, leading to widespread downgrades of stock ratings on Wall Street.

After US President Trump announced a large-scale increase in tariffs which sparked expectations of an economic recession, sell-side analysts over the past weekend overturned old models and downgraded stock ratings comprehensively. Investors found that the ratings, target prices, and performance expectations of well-known companies including Starbucks Corporation (SBUX.US) and Carter's Incorporated (CAT.US) were significantly downgraded by Wall Street. Even Wall Street itself was not spared, as the stock rating of Goldman Sachs Group, Inc. (GS.US) was also downgraded. Analysts who analyze companies from the bottom-up and offer buy or sell recommendations are downgrading stock ratings at a speed only seen in extreme pressure situations. Economists warn that Trump's tariffs could trigger an economic recession, squeezing business profits and disrupting investment logic from oil to chips, to clothing, and home goods manufacturers. Chief Market Strategist at Nationwide, Mark Hackett, said: "Considering the severe decline in the past week, the expectations of many stocks have been reset, which requires analysts to respond." "We are entering earnings season, and corporate management has a strong incentive to provide more cautious outlooks." Recession expectations spread Investment bank Baird downgraded the stock ratings of Starbucks Corporation and Chicago chain restaurant Portillo's Inc. (PTLO.US) from "outperform" to "neutral," stating that tariffs would hit consumer confidence and increase the likelihood of a significant decrease in consumer spending. Other analysts from the bank also downgraded the stock ratings of Target Corporation (TGT.US) and Arhaus (ARHS.US) to "neutral," and advised investors to reduce exposure to "relatively high-risk" non-essential demand companies. Bernstein analysts downgraded the stock rating of General Motors Company (GM.US) from "market perform" to "underperform," expecting that tariff pressure and weakening consumer confidence would put pressure on General Motors Company's stock price. Meanwhile, due to the rising risk of a US economic recession, UBS Group AG downgraded the ratings of Delta Air Lines, Inc. (DAL.US), United Airlines Holdings, Inc. (UAL.US), and Alaska Air Group, Inc. (ALK.US). Morgan Stanley pointed out that the likelihood of an economic recession is increasing, and as a result, its analysts have lowered expectations for large and mid-sized banks. It is worth noting that Morgan Stanley downgraded its stock rating for Goldman Sachs Group, Inc. from "outperform" to "hold," citing Goldman Sachs Group, Inc.'s dependence on investment bank revenue, which is particularly sensitive to the deteriorating market environment. The bank's analysts also downgraded ratings for financial advisory and consumer finance sectors. In the technology sector, Wedbush significantly lowered the target price for Apple Inc. (AAPL.US), citing the "tariff economic apocalypse" sparked by Trump. In the media stock sector, Raymond James downgraded the rating for Pinterest (PINS.US) from "outperform" to "market perform," stating that tariff-related uncertainty would affect brand and discretionary advertising spending. Mechanical stocks were not spared either. UBS Group AG downgraded the stock ratings of Carter's Incorporated and Cummins Inc. (CMI.US) to "sell," warning that demand could further decline. Analysts also downgraded the ratings of building materials companies Martin Marietta Materials (MLM.US) and Vulcan Materials (VMC.US). Chief Strategist at Interactive Brokers Group, Inc. Class A, Steve Sosnick said: "Everyone is trying to simulate supply and demand relationships, but we don't really have a precedent for this." He added that although there have been tariffs in the past, they were well-communicated and targeted, "the US government's language makes it unclear whether these tariffs are permanent or if there is room for negotiation." Bright spots still exist Despite the downgrades, analysts managed to find a few bright spots. Discount retailers are seen as beneficiaries in the context of tariffs. Citigroup analysts upgraded the rating for Dollar Tree, Inc. (DLTR.US) to "buy," expecting the overall increase in tariffs to benefit the company as it will excel in the context of retail price increases. The rating for Dollar General (DG.US) was also upgraded to "neutral" in this adjustment. Jefferies upgraded the rating for Scotts Miracle (SMG.US) to "buy," citing its defensive attributes. The bank believes that lawn and garden spending will remain resilient during an economic contraction, and DIY activities will rebound. Even for stocks that were downgraded, analysts still believe they have room for growth. For example, although Baird downgraded the rating for Target Corporation to "neutral," the target price for the stock is $110, higher than the current stock price. Similarly, UBS Group AG maintained new target prices higher than the current stock prices for Delta Air Lines, Inc. and Alaska Air Group, Inc. english:Irene Tunkel, Chief Stock Strategist at BCA Research, said: "The stock market will only truly bottom when the full impact of tariffs on corporate profits and economic growth is fully reflected in stock prices." "The bottom of the market still seems far off, unless there is a reversal in trade policy to alleviate the damage that has already been caused, the S&P 500 index may fall to 4000 points."