“The level of tariff increases announced so far is significantly larger than anticipated, and the same is likely to be true of the economic effects, which will include higher inflation and slower growth,” U.S. Federal Reserve chair Jerome Powell said on Wednesday during a speech at the Economic Club of Chicago, Fortune’s Paolo Confino reports. 

Tariffs also weigh heavily on the expectations that companies and consumers have about the economy. According to surveys of households and businesses, there’s a “sharp decline in sentiment and elevated uncertainty” largely due to concerns about trade policy, Powell said. The economy now faces “heightened downside risks,” he said.

In its assessments of the economy, the Fed monitors long-term inflation expectations. “If those rise, it means business leaders, investors, and the public at large see inflation as a chronic problem that won’t go away,” Confino writes. “When that happens, they’re much more likely to cut back on spending, which only raises the likelihood of a recession. The latest consumer price index report from March measured inflation at 2.4%, slightly lower than expected. However, that read came before Trump implemented his tariff policy.”

Powell said the Fed is positioned to wait for further clarity before considering any adjustments to its rate stance. The market is currently pricing in between two and three rate cuts in 2025 starting in the second half of the year, Confino writes. You can read the complete report here. 

Powell also acknowledges that the markets are struggling with uncertainty. Tariff concerns continue roiling the markets, leaving major companies in a state of heightened alert. To get a sense of which companies are getting hit hardest by tariff turmoil, Fortune parsed stock market data from Morningstar. The findings identify 14 Fortune 500 companies and show how their share prices performed since tariffs began to bite.

For example, between April 1 and 14, the stock price of VF Corporation (No. 355) was hit particularly hard, declining 30%. The global apparel and footwear company is known for its portfolio of brands, including The North Face, Timberland, and Vans. VF has a strong reliance on China and Vietnam—both prime targets for Trump’s tariffs—for its suppliers.

Wayfair (No. 346), the online retailer of home goods, experienced a 15% drop. The company has higher exposure to Vietnam than some of its competitors. Shares of athletic apparel retailer Lululemon (No. 411) fell 7%.

Some companies hardest hit have reevaluated where they source their products. The stock price of Williams-Sonoma (No. 474) dipped about 9%. “We’ve been moving goods away from China,” Williams-Sonoma CEO Laura Alber said during the most recent earnings call. “We’ve cut it substantially. We intend to continue to cut it substantially.”

The supply chain and exactly how to transform it is currently at the top of the agenda in many corporate war rooms.

Sheryl Estrada
sheryl.estrada@fortune.com

Leaderboard

Iain Brown, CFO of Alkermes (Nasdaq: ALKS) a neuroscience company, passed away on April 14 after a courageous battle with cancer. Brown had been on a medical leave of absence since February 2024. Before joining Alkermes in 2003, he managed EMD Serono’s North American financial operations, after being group corporate controller based in Geneva, Switzerland. Blair Jackson will continue to serve in the role of interim principal financial officer and Sam Parisi will continue to serve in the role of interim principal accounting officer while the company’s board of directors identifies Brown’s successor.

John Sims, SVP and CFO of Sylvamo (NYSE: SLVM), a global paper company, has been promoted to chief operating officer, effective May 1, and will become CEO on Jan. 1, 2026. Jean-Michel Ribiéras, current chairman and chief executive officer, will retire on Dec. 31. Sims became Sylvamo’s first SVP and CFO in 2021, at the company’s inception as a spinoff from International Paper. Don Devlin has been elected SVP and CFO to succeed Sims, effective May 1. Devlin joins Sylvamo from International Paper, most recently serving as vice president of transformation and strategy deployment.

Big Deal

Morgan Stanley Wealth Management has released the results of its quarterly retail investor pulse survey of 912 self-directed investors conducted from April 1 to April 14. The majority (51%) of investors are now bearish—up 9 percentage points from last quarter. More than two out of five (41%) investors say inflation is their top portfolio concern, followed by tariffs (35%), and market volatility (24%).

The survey finds that Fed rate-cut optimism fades for investors as less than half (48%) believe the U.S. economy is healthy enough for rate cuts, down from 59% last quarter. However, 37% of investors do not plan to make changes to their portfolio, down just two percentage points from last quarter. And 17% plan to move to the sidelines in cash.

For Q2, there’s continued interest in AI and chips, as technology remains the top choice for investors (48%)—though interest dropped four percentage points. Traders also continue to see opportunities in energy (41%) despite oil prices dipping. Interest in health care remained steady (32%), according to the report.

Going deeper

“A new tariff paradigm: How businesses can respond” is a new report by Grant Thornton. The firm provides a timeline of tariff actions by the Trump Administration as well as a guide on how tariffs will affect various industries, and recommendations for maintaining stability.

Overheard

"No matter how severe they seem, short-term disruptions rarely derail the long-term growth trajectory of well-constructed portfolios. The key is to maintain perspective, avoid rash decisions, and trust the process you have embraced."

—Katie Nixon, chief investment officer for Northern Trust Wealth Management, writes in the Fortune opinion piece, "Here’s the advice I’m giving wealthy clients through tariff fears and market uncertainty."