We have been talking with clients about the increased market movements we've been experiencing in 2025, which has largely been fueled by evolving policy shifts. Yesterday's announcement of a new 10% baseline tariff contributed to one of the largest single-day market declines since 2022, with the Dow dropping approximately 1,400 points. The current trade and tariff scenarios are still unfolding, and the market is responding to the uncertainty.
In our Q1 outlook, we noted that 2025 would likely bring a "buckle up" year with more market swings ahead, and Q1 proved to be just that. The long-term economic impacts of these new tariffs remains unclear, but we do know that tariffs tend to increase inflation and decrease growth. With that in mind, the Fed has already priced in rate cuts for the end of this year, anticipating an economic slow down. While tariffs will continue to create volatility, investors should remain focused on overall strategic goals and diversification rather than reacting to short-term news.
Our investment partners at BlackRock share this view, noting that despite headlines about tariffs, the fundamentals of the U.S. economy remain resilient:
- Unemployment remains at a healthy 4.1%
- Consumers continue to spend confidently
- Housing values are holding strong
- Many companies are still reporting solid profits
As we navigate this evolving market environment, a few important reminders:
- It is not uncommon for stocks to sell off on tariff news, and then rebound once pressure eases.
- The volatility we're seeing is expected and will continue to ebb and flow in the short-term
- These periods often create potential opportunities for patient, long-term investors
- We actively manage portfolios to take advantage of both market upside and to buffer against downside
If you have any questions about how recent market movements might impact your specific financial situation, please don't hesitate to reach out to our Client Service Manager, Becka, to schedule some time to chat with your Advisor. We're here to help you navigate this market cycle with confidence.
