Investors are facing significant challenges as ongoing market volatility continues, largely influenced by the repercussions of President Trump’s fluctuating tariff policies. Recent moves to reduce some of the steepest global tariffs brought temporary relief, but uncertainties surrounding the trade battle with China, a major source of U.S. imports, remain prominent. The announcement of a 90-day pause on additional tariffs indicates that the trade issues are far from resolved. Michael Brown, senior research strategist at Pepperstone, noted, “The worst-case scenario on trade has been avoided, but we still face considerable uncertainty.”
This uncertainty weighed heavily on markets, with the S&P 500 plunging 3.5% on Thursday after a considerable rise of 9.5% the day before—the largest one-day gain since the financial crisis. The index is now down 14.3% from its February peak, highlighting the pronounced swings in market sentiment. Despite hopes for de-escalation of trade tensions, Angelo Kourkafas from Edward Jones cautioned that meaningful progress is unlikely to happen quickly. Volatility is notably increasing, as evidenced by the Cboe Volatility Index reaching levels not seen since the onset of the COVID-19 pandemic.
Following Trump’s tariff announcements, the stock market has experienced substantial fluctuations. Investors who missed the chance to sell during prior declines might have seized the opportunity to discharge their holdings during the recent gains. Sameer Samana of Wells Fargo remarked that the selloff reflects a broader uncertainty about future market conditions. Concerns about the economy persist, despite the recent easing of tariffs.
Analysts from JPMorgan predict that a contraction in economic activity is more probable later this year. The existing tariffs, including a baseline 10% on some goods, exacerbate fears of a recession. Adam Hetts from Janus Henderson advises investors to adjust their portfolios by reducing stock holdings and increasing allocations to investment-grade sovereign bonds. As companies prepare to disclose quarterly results, there are apprehensions about their outlooks amid the prevailing trade uncertainties.
Marta Norton, chief investment strategist at Empower, emphasized the importance of insights related to supply chains and investment strategies, as any shortfalls in earnings could significantly impact stock values in this new trade landscape.