The stock market has been anything but quiet this year. Ripples first appeared when the emergence of China’s DeepSeek started to raise questions on valuations of large artificial intelligence stocks. Then weaker economic data pointed to a slowing economy.
Following this, President Donald Trump imposed tariffs on imports to the United States, spooking investors. Then Trump announced even steeper tariffs on many countries, ratcheting up trade tensions, and all hell broke loose.
Even after the president announced a 90-day pause on the higher tariffs for most countries, the stock market has remained volatile, as investors continue to digest a lot of news with major ramifications. So after everything that’s happened, should you buy the broader benchmark S&P 500 index (SNPINDEX: ^GSPC) while it trades below 5,670, the level it traded at before Trump launched steeper tariffs?
When Trump initially launched steeper tariff rates on a wide range of countries including China, Cambodia, Vietnam, and the European Union, many market strategists and economists sounded the alarm, saying the steep levies would stymie growth and quickly tip the U.S. economy into a recession, while challenging many companies as Trump attempted to reconfigure the global supply chain all at once.
The bond market also sounded the alarm, with the yield on the 10-year U.S. Treasury note initially tumbling but then surging in a bizarre move, considering so many expected economic growth to stall.
Following Trump’s announcement on April 9 that he would pause most higher-tariff rates for 90 days, stocks ripped at a dizzying speed. The Dow Jones Industrial Average blasted close to 3,000 points higher, while the S&P 500 mooned over 9.5% in the third-best day of trading since World War II. Trump cited the fact that many countries had reached out to the White House to negotiate a trade agreement. While the president left high tariffs in place on China, and actually raised them to 145% (and now faces up to 245% tariffs per a White House fact sheet as of this writing), he also sounded optimistic that the two countries would work out some kind of trade agreement.
That still remains to be seen and the U.S. economy had already been showing signs of deterioration in recent months. U.S. consumer sentiment has plummeted and economists have revised U.S. gross domestic product lower, citing Trump’s first batch of tariffs, which are very much in place. Twenty-five percent tariffs remain in place on steel, aluminum, and automobiles and there is still a base 10% tariff layer in place on imports from all countries during the 90-day pause.
