AE Wealth Management: Market Minute — More Market Madness
More market madness
After President Trump declared Wednesday as the U.S.’s “Liberation Day,” markets sold off hard on Thursday from fear the announcement would trigger a trade war. Those fears materialized somewhat, as China responded with 34% tariffs on U.S. imports and markets plunged once again to end the week.1
Are we done? It could depend on how quickly — or even if — the countries identified as “bad players” come back to the table. We tend to look at this a little differently and look for the bright side of what’s going on. The one thing markets are fearful of is uncertainty, and it seems some of that has been eliminated.
True, there is still uncertainty about how other targeted countries will react, which will most likely be greeted with higher tariffs from our administration. But markets are currently selling off because they’re assuming the worst will happen — and we don’t foresee that coming to pass.
Wednesday’s announcement went a long way toward dissipating some of the uncertainty. The market and businesses don’t care how long the field is or how high the grass is on the field — they just want (and need) to know what the rules are and that the field isn’t going to constantly change. They will find a way forward from here.
The Dow, S&P 500 and Nasdaq are all in correction territory, defined as a 10% decline from the most recent high.2 So, again, are we done? We may be close to a bottom at this point. Unless the economy falls off a cliff (which we don’t see happening), tariffs will become less of a headline and the focus will shift to taxes, foreign policy and economic growth.
Markets go up and they go down, but, in the end, they go up far more often than they go down. This latest bout of volatility will pass. Remember, volatility is the price we pay for higher returns. Ten years ago, the S&P 500 was just over 2,000 points; five years ago, it stood at 2,500 and one year ago we were at 5,200. Drops like these are part of the normal market cycle, and it seems unlikely we will be lower five years from now. Stay the course, avoid giving in to panic and stay focused.
1 David Goldman and John Towfighi. CNN. April 4, 2025. “Dow tumbles 1,600 points after China retaliates against Trump’s tariffs.” https://www.cnn.com/2025/04/04/investing/stock-market-dow-tariffs/index.html. Accessed April 4, 2025.
2 Stephen Wisnefski. Investopedia. April 4, 2025. “Dow Jones Today: Stocks Tumble as Trump Tariff Rout Accelerates; Dow Drops 1,500 Points to Correction Territory, Nasdaq on Track for Bear Market.” https://www.investopedia.com/dow-jones-today-04042025-11709025. Accessed April 4, 2025.
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