Continued uncertainty will likely force the S & P 500 to retest the lows seen last month, according to Wells Fargo. “We keep getting the absolutely rational question: ‘Have we seen the bottom in stocks?’ As much as we would like to boldly answer that question with a resounding ‘yes!’ that just isn’t the case,” Wells Fargo Investment Institute senior global market strategist Scott Wren said in a note published Wednesday. “Tariff and growth concerns are the main market drivers right now, but there will likely be a few other issues that result in road bumps in the months ahead.” The S & P 500, which captures roughly 80% of the value of all U.S. stocks, is on track to recover its steep losses sparked by President Donald Trump’s “reciprocal” tariff announcement in early April. Stocks are higher so far on Thursday , underpinned by strong earnings reports from technology titans Meta Platforms and Microsoft. After slumping more than 13% in just five days less than a month ago, the S & P 500 is now down a little more than 4% in 2025. The president’s efforts to reshape 80 years of postwar U.S. trade policy saw the S & P 500 reach a low of roughly 4,385 on April 7, pushing the index into a brief bear market, or a decline of 20% or more from its record high reached in February. “We wouldn’t be surprised if the SPX retested its lows as additional uncertainties create headwinds,” Wren said. .SPX YTD mountain The S & P 500 in 2025. One issue that could weigh on stocks in coming months, apart from trade, includes potential roadblocks in pushing Republican budget legislation through Congress by Memorial Day. While Wren noted that a fully fleshed out trade agreement with Europe or China could be a tailwind for the S & P 500 in the near term, history also suggests that such a deal will take more time than the White House is letting on. No such trade agreements have been made between the U.S. and its global trading partners. Earlier this week, China flat out denied statements from both Trump and members of his administration that suggested the U.S. and Beijing were engaged in talks to forge a deal. “We think in the nearer term the SPX could spend a lot of time in a relatively wide range from 5,000 to 5,500,” Wren said. “The SPX has been just above the top end of that range the last couple trading days, but it seems a catalyst will be needed to push the market noticeably higher.” While Wren forecasts uncertainty will continue, he suggested using the market’s recent revival to reallocate investments toward sectors such as information technology, communications services, financials and energy. In bonds, he said he’s partial to intermediate-length fixed income instruments with maturities between three and seven years.
