Wall Street thinks there's more downside to go as a new risk emerges in April

Stocks got off to a strong start to the week after after President Donald Trump revealed the two countries had “productive” conversations about potentially ending the hostilities. Despite the surge that ensured, few think the bottom is in for stocks — as selling resumed later in the week — with some warning of a new headwind on the horizon." Wolfe Research analyst Rob Ginsberg in a Tuesday note said he thought Monday’s jump was a “dead cat bounce,” and believed the lows of the sell-off hadn’t been hit. In a Thursday appearance on CNBC’s " Money Movers ," Fairlead Strategies founder Katie Stockton said market momentum “is obviously to the downside.” “There’s just still too many unknowns,” said Phil Blancato, chief market strategist at Osaic, in an interview. “My base case, as is most of the Street’s, is that this thing is closer to an end than a beginning. But let’s be honest, no one really knows for sure.” .SPX mountain 2026-02-27 .SPX since Feb. 27, 2026 chart. The Nasdaq Composite and Dow Jones Industrial Average tipped into correction territory on Thursday and Friday, respectively. Both benchmarks, along with the S & P 500 , also posted their fifth weekly declines in a row, as U.S. crude prices popped back to around $100 per barrel. Driving the uncertainty is headline risk. Investors are balancing the possibility that something as simple as a truth social post by Trump ending the war could send equities surging, as Monday’s sign at de-escalation did, or a strike by either party against a key piece of energy infrastructure could sink the market. But while investors are nervous about massive swings higher or lower, Barclays in a Tuesday note came out with a different perspective. The bank wrote the “shock phase” of the war is behind traders. If renewed selling comes, the bank thinks it will be less violent than the initial fall. “We expect markets are likely to continue to trade in a 2022-style, grind-lower fashion, should the selloff continue,” wrote strategist Anshul Gupta, referring to the last bear market U.S. equities experienced. He believes that selling though will be induced by economic data. “Any further leg lower in equities is likely to come from further macro reassessment of higher inflation & lower growth (‘stagflation’), which tends to produce slow, gradual declines rather than violent flashes,” Gupta wrote. While most data for economic activity since the war’s start will begin to come in April, the war’s impact is already appearing in some surveys, according to Edward Jones senior economist James McCann. He pointed to the S & P Global Flash U.S. PMI report on Tuesday, which showed an upswing in prices and weaker output growth. He added sentiment surveys will be the first hints at how the oil shock is affecting the U.S. economy, until the March Consumer Price Index report is released on April 10. McCann is particularly focused on the March retail sales report — which is set for release April 21 — to understand consumers’ behaviors amid the chaos. “Do they sort of immediately cut back?” he asked. “Do they try and smooth through this by saving a little bit less? I think that’ll be interesting.” He’s also watching data in the interest rate-sensitive housing sector , particularly as mortgage rates jump thanks to rising long-term rates. The U.S. 10-year Treasury yield again crossed 4.4% on Thursday . But Wells Fargo in a note argued the U.S. economy is better positioned to weather an oil shock today than in the past, meaning fears may not actually manifest in data. The bank pointed to the U.S. status as a net exporter of fossil fuels, historically low percentages of household budgets spent on energy and larger tax refunds due to Trump’s " big beautiful bill " as some supports against the headwinds. UBS in a Thursday note said that the domestic economy could theoretically absorb the impacts of oil prices up to $200 per barrel, essentially double where they are today. While the market stares down incoming data about March, Truist Wealth chief investment officer Keith Lerner predicted investors won’t focus on it too much. “They’re really focused on what that data will look like in three to six months,” he said. “Ultimately, the duration of this war is still going to be impactful. … One eye on the data, one eye on the war.” Lerner added that the market will brush off poor economic data if it comes amid progress to end the military conflict. @CL.1 mountain 2026-02-27 @CL.1 since Feb. 27, 2026 chart. Blancato voiced a similar perspective. He thinks that the U.S. can easily manage the oil shock, and the data won’t move the markets all that much. Though, he is still watching closely for what happens with core inflation in March, which excludes energy prices. “The core numbers, assuming they’re relatively stable, then you don’t have an issue, and the market pushes higher because of it,” he said. — CNBC’s Michael Bloom contributed reporting.