The trade war is escalating, and as President Donald Trump touts his April 2 tariff deadline as America’s “liberation day,” once-bullish investors are feeling shellshocked as they navigate the volatility.

A quick glance at the stock market shows the damage the president’s trade policy has inflicted on investor confidence so far. After back-to-back years of double-digit gains, the S&P 500 is down 5% year-to-date, with the recent sell-off gaining steam and tipping stocks into a correction as the market approaches the day Trump said he plans to levy even more tariffs on US trading partners.

The plunge shows just how much Trump has surprised markets since returning to the White House, and not in a good way. Even as he campaigned on hammering out trade deals that would benefit America, investors are clearly shocked at how far he’s gone.

What started out as predictions of Trump versus the Fed amid forecasts for tariffs to fuel a slight rebound in inflation, has become Trump versus the market.

The White House has telegraphed its position stating as much. While Trump was known in his first term for using the stock market as a gauge for his presidency, his team has signaled they don’t mind the decline in equity prices for now.

Treasury Secretary Scott Bessent has said the administration isn’t worried about the volatility, while Trump insists tariffs will be an economic windfall. Instead, the president appears to be focusing his attention on the 10-year US Treasury yield in order to lower borrowing costs.

Now, forecasters and investors on Wall Street are slashing their expectations for this year.

The AAII’s latest Investors Sentiment Survey shows 52% of investors said they felt bearish on the stock market over the next six months, double the historical average of 31%. CNN’s Fear and Greed index is at “extreme fear” levels, deepening its descent from a week ago, and plunging from a year ago when it hovered around “extreme greed” territory.

Fund managers also sold stocks at a record pace in in recent weeks, according to a Bank of America survey conducted between March 7 and 13, with investors now positioned 23% underweight the US market, the lowest since last June.

Meanwhile, analysts at the biggest banks are adjusting their outlooks downward.

Goldman Sachs was the first major bank to pull back on its stock forecast, with strategists cutting their target for the S&P 500 to 6,200 from 6,500 in early March.

It then slashed its outlook for the benchmark index again at the start of this week, adding in a note that it sees stocks dropping as much as 5% over the next three months and 6% over the next 12 months.

“Higher tariffs, weaker economic growth, and greater inflation than we previously assumed lead us to cut our S&P 500 EPS growth forecasts to +3 in 2025 (from +7%) and +% in 2026 (from +7%),” Goldman strategists said in a note on Sunday. “We expect a further valuation decline in the near term,” they added.

Citi also dimmed its view of stocks earlier this month, trimming its rating from “overweight” to “neutral” on a weaker growth forecast stemming from tariffs. HSBC made a similar move, downgrading the US market to “neutral” last week on growth concerns.

“Prevailing uncertainty around tariffs could see US equities remain challenged in the next few weeks,” the bank wrote in a note last week.

Others, including RBC, UBS, and Barclays, have all slashed their year-end forecasts for the benchmark index. Barclays, which cut its target for the S&P 500 last week to 5,900, now holds one of the lowest forecasts for stocks this year among major banks on Wall Street.

“Our base case assumes that earnings take a hit as tariffs (higher China tariffs stick but do not escalate, reciprocal tariffs amount to 5% on RoW) contribute to material slowing in US activity that nonetheless stops short of outright recession,” Barclays analysts wrote on Wednesday.