Wall St Week Ahead-Wobbly US stocks face test with tariffs, jobs data

NEW YORK, March 28 (Reuters) - A rocky U.S. stock market will be tested in the coming week by a pivotal deadline for President Donald Trump's tariff plans and an employment report that could reveal a slowing economy.

The S&P 500 posted a weekly loss, selling off on Friday after data pointed to underlying price pressures. Earlier this month, the benchmark index marked a correction, dropping more than 10% from its record high.

The index is down 9.17% from its February 19 high as uncertainty over the health of the U.S. economy and trade policy has kept investors on edge.

Investors remain worried about signs that Trump's trade war could reignite inflation.

"April is going to have a lot of moving parts and probably a lot of volatility following a really difficult March," said Eric Kuby, chief investment officer at North Star Investment Management Corp. "There's a lot of information that could move markets in a variety of different directions."

Investors have been hoping the coming days will clarify the tariff landscape. Trump has pointed to April 2 for a broad batch of tariffs to be announced, including "reciprocal" levies on countries, calling it a "Liberation Day" for the U.S. economy.

The tariff situation has led Wall Street analysts to pull back on economic and corporate earnings forecasts, while uncertainty over how trade policy will play out is weighing on businesses and consumers.

A survey this week showed U.S. consumer confidence plunged in March to its lowest in more than four years, with households fearing a recession and higher inflation because of tariffs.

"Everybody wants clarity because however it plays out, it gives the roadmap and we're going to adapt, adjust," said Jack McIntyre, portfolio manager for Brandywine Global. "It's this cloud of uncertainty that's creating some angst."

On Wednesday, Trump announced a 25% tariff on auto imports, a measure that could add thousands of dollars to the average cost of a vehicle in the U.S. Shares in carmakers such as General Motors ( GM ) and Ford tumbled on Thursday.

Data from options analytics service ORATS show the equity options market pricing higher volatility for near-term S&P 500 option expirations, including contracts expiring on March 31 and April 4, compared to those further out.

"Traders are paying a premium for near-term protection," Matt Amberson, principal at ORATS, said.

After annual gains of over 20% for years, the S&P 500 is logging a 5.12% decline so far in 2025 as the end of the first quarter nears. The index has lost its gains since Trump's November election, which had stoked excitement on Wall Street about the president's expected pro-growth agenda that has been deflated by worries over tariffs.

The forward price-to-earnings ratio on the S&P 500 has moderated to less than 21 times as of Wednesday, compared to about 22 to start the year, but remains well above its long-term average of 15.8, according to LSEG Datastream.

"We came into the year with an expensive market coupled with high expectations. And now we're getting uncertainty," said Jack Ablin, chief investment officer at Cresset Capital. "Those ... don't work very well together."

Tariff worries have compounded concerns about the U.S. economic outlook. Investors will focus on the monthly U.S. jobs report due on April 4.

Employment growth is expected to have slowed in March to 128,000 from 151,000 in February, according to a Reuters poll.

One focus on Wall Street is how much light the jobs data will shed on an effort led by Trump ally Elon Musk to reduce the federal government workforce.

The end of the first quarter on Monday could bring asset price fluctuations, as portfolio managers make last-minute adjustments. Investors also will begin eyeing the start of first-quarter earnings season, with reports arriving in earnest later in the month.

"We're generally in a risk off environment. That's been the tone since we've entered this correction phase," said Charlie Ripley, senior investment strategist for Allianz Investment Management. "So it remains to be seen whether we've seen the bottom." (Reporting by Lewis Krauskopf and Carolina Mandl and additional reporting by Saqib Ahmed, in New York; Editing by Saqib Iqbal Ahmed, David Gregorio and Richard Chang)