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Yahoo
08-07-2025
- Business
- Yahoo
Investors put 'Liberation Day' lessons to work, scarred by tariff tumult
By Lewis Krauskopf, Saqib Iqbal Ahmed and Laura Matthews NEW YORK (Reuters) -Three months after President Donald Trump's sweeping global tariffs led markets to plunge and then rebound ferociously, investors are grappling with the fallout from the still-shifting trade backdrop and adjusting strategies to withstand sudden policy shifts. Among the lessons for investors from Trump's "Liberation Day" tariff announcement on April 2, and the developments since then: Brace for surprises from the Trump administration and be flexible. Pay attention to trade as you would monetary and fiscal policy. Don't over-react to headlines -- but also make your portfolios as resilient as possible to tariff news. "We're used to just thinking in terms of fiscal and monetary, but now trade policy is almost like this third leg of government policy and how it affects the economy," said Michael Reynolds, vice president of investment strategy at Glenmede. Investors had been laser-focused on Wednesday, which marked the end of a 90-day pause Trump has placed on many of the most severe "reciprocal" tariffs he had imposed in April on trading partners. The White House on Monday delayed the start of tariffs to August 1, while telling 14 nations that they would face levies ranging from 25% for countries including Japan and South Korea, to 40% for Laos and Myanmar. "Investors, and the market more broadly, are used to literal interpretations of announcements and what we're realizing with the Trump administration is that is dangerous because there is often flexibility ultimately in the end result," said Mark Hackett, chief market strategist at Nationwide. "We've learned over the last three months there is flexibility." Stocks tumbled in the days following the "Liberation Day" announcement, with the S&P 500 falling to the brink of a bear market. Stock and bond volatility spiked, with the daily equity index swings among the most severe since the onset of the coronavirus pandemic in early 2020. But stocks began climbing back following Trump's pause. A U.S. deal with the U.K. and a truce with China kept the market's momentum going. Volatility measures moderated significantly as well, with the Cboe Volatility index, Wall Street's "fear gauge", falling to its long-term median level. Helped by a better-than-feared first-quarter earnings season and economic data, the S&P 500 on June 27 hit a record high for the first time in over four months. The benchmark index is now up about 6% for the year. "Uncertainty at Liberation Day was very open-ended," Reynolds said. "But the outline of a couple of these initial trade deals have kind of narrowed the field of what's probable on tariffs... The fact that we don't have this open-ended risk where tariffs could go anywhere I think is pretty constructive." Even so, he said, the rebound has been "so swift and large in magnitude that it wouldn't surprise us to see a near-term pullback." Stocks are not fully factoring in the negative impact to earnings from tariffs that are already in place while investors may be overly optimistic that trade deals will be completed, said Kristina Hooper, chief market strategist at Man Group. "I'm not convinced that all the pieces are there for the stock market to be as positive as it is," Hooper said. One lesson from the past few months, Hooper said, is the potential for tariffs to "come out of left field." She pointed to Trump's threat this week that countries aligning themselves with the "Anti-American policies" of the BRICS bloc will be charged an additional 10% tariff. "What I've learned is to expect to be surprised," Hooper said. Some investors have referred to the acronym "TACO", or Trump Always Chickens Out, as a rationale for why markets should not fear the announcement of harsh tariffs because many believe they will likely be moderated. Heading into this week's initial tariff deadline, King Lip, chief strategist at Baker Avenue Wealth Management, said that market complacency was high and he expects more choppiness as trade uncertainty rises again. "The biggest risk for investors now is that there is no pause after the trade deadlines and large tariffs are imposed by the administration," Lip said. While stocks have rebounded, the U.S. dollar has continued to weaken since Liberation Day, sliding about 6% against a basket of major currencies. Investors have trimmed exposure to U.S. assets while also reassessing the greenback's status as the world's reserve currency because of the uncertain policy backdrop. Gold, which tends to benefit as a safe-haven asset during times of geopolitical uncertainty, has climbed 6% since April 2 and is up 26% on the year. Some investors have shifted strategies to manage through tariff uncertainty. Janus Henderson Investors has been paring back holdings in some portfolios that could be more vulnerable to tariffs, such as Japanese and European automakers and exporters with long supply chains, said Julian McManus, portfolio manager at the firm. Meanwhile, the firm has been favoring service companies that are removed from the crosshairs of the trade war, such as digital services or online music streaming companies. "We've been extending timelines and making portfolios more resilient," McManus said. "It's just important to keep a cool head and not get caught up in the day-to-day headlines that can be unsettling." 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Yahoo
08-07-2025
- Business
- Yahoo
Investors put 'Liberation Day' lessons to work, scarred by tariff tumult
By Lewis Krauskopf, Saqib Iqbal Ahmed and Laura Matthews NEW YORK (Reuters) -Three months after President Donald Trump's sweeping global tariffs led markets to plunge and then rebound ferociously, investors are grappling with the fallout from the still-shifting trade backdrop and adjusting strategies to withstand sudden policy shifts. Among the lessons for investors from Trump's "Liberation Day" tariff announcement on April 2, and the developments since then: Brace for surprises from the Trump administration and be flexible. Pay attention to trade as you would monetary and fiscal policy. Don't over-react to headlines -- but also make your portfolios as resilient as possible to tariff news. "We're used to just thinking in terms of fiscal and monetary, but now trade policy is almost like this third leg of government policy and how it affects the economy," said Michael Reynolds, vice president of investment strategy at Glenmede. Investors had been laser-focused on Wednesday, which marked the end of a 90-day pause Trump has placed on many of the most severe "reciprocal" tariffs he had imposed in April on trading partners. The White House on Monday delayed the start of tariffs to August 1, while telling 14 nations that they would face levies ranging from 25% for countries including Japan and South Korea, to 40% for Laos and Myanmar. "Investors, and the market more broadly, are used to literal interpretations of announcements and what we're realizing with the Trump administration is that is dangerous because there is often flexibility ultimately in the end result," said Mark Hackett, chief market strategist at Nationwide. "We've learned over the last three months there is flexibility." Stocks tumbled in the days following the "Liberation Day" announcement, with the S&P 500 falling to the brink of a bear market. Stock and bond volatility spiked, with the daily equity index swings among the most severe since the onset of the coronavirus pandemic in early 2020. But stocks began climbing back following Trump's pause. A U.S. deal with the U.K. and a truce with China kept the market's momentum going. Volatility measures moderated significantly as well, with the Cboe Volatility index, Wall Street's "fear gauge", falling to its long-term median level. Helped by a better-than-feared first-quarter earnings season and economic data, the S&P 500 on June 27 hit a record high for the first time in over four months. The benchmark index is now up about 6% for the year. "Uncertainty at Liberation Day was very open-ended," Reynolds said. "But the outline of a couple of these initial trade deals have kind of narrowed the field of what's probable on tariffs... The fact that we don't have this open-ended risk where tariffs could go anywhere I think is pretty constructive." Even so, he said, the rebound has been "so swift and large in magnitude that it wouldn't surprise us to see a near-term pullback." Stocks are not fully factoring in the negative impact to earnings from tariffs that are already in place while investors may be overly optimistic that trade deals will be completed, said Kristina Hooper, chief market strategist at Man Group. "I'm not convinced that all the pieces are there for the stock market to be as positive as it is," Hooper said. One lesson from the past few months, Hooper said, is the potential for tariffs to "come out of left field." She pointed to Trump's threat this week that countries aligning themselves with the "Anti-American policies" of the BRICS bloc will be charged an additional 10% tariff. "What I've learned is to expect to be surprised," Hooper said. Some investors have referred to the acronym "TACO", or Trump Always Chickens Out, as a rationale for why markets should not fear the announcement of harsh tariffs because many believe they will likely be moderated. Heading into this week's initial tariff deadline, King Lip, chief strategist at Baker Avenue Wealth Management, said that market complacency was high and he expects more choppiness as trade uncertainty rises again. "The biggest risk for investors now is that there is no pause after the trade deadlines and large tariffs are imposed by the administration," Lip said. While stocks have rebounded, the U.S. dollar has continued to weaken since Liberation Day, sliding about 6% against a basket of major currencies. Investors have trimmed exposure to U.S. assets while also reassessing the greenback's status as the world's reserve currency because of the uncertain policy backdrop. Gold, which tends to benefit as a safe-haven asset during times of geopolitical uncertainty, has climbed 6% since April 2 and is up 26% on the year. Some investors have shifted strategies to manage through tariff uncertainty. Janus Henderson Investors has been paring back holdings in some portfolios that could be more vulnerable to tariffs, such as Japanese and European automakers and exporters with long supply chains, said Julian McManus, portfolio manager at the firm. Meanwhile, the firm has been favoring service companies that are removed from the crosshairs of the trade war, such as digital services or online music streaming companies. "We've been extending timelines and making portfolios more resilient," McManus said. "It's just important to keep a cool head and not get caught up in the day-to-day headlines that can be unsettling." 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Time of India
18-06-2025
- Business
- Time of India
US stocks end lower as conflict between Israel and Iran adds caution
U.S. stocks declined on Tuesday amid escalating tensions in the Middle East, as the Israel-Iran conflict intensified and the U.S. military increased its presence in the region. Investors also reacted to disappointing U.S. retail sales and factory production data, while awaiting the Federal Reserve's monetary policy decision. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads U.S. stocks ended lower on Tuesday as the Israel-Iran conflict raged on for a fifth day and kept investor anxiety high, with the U.S. military moving fighter jets to the Middle added to losses in afternoon trading. The Cboe Volatility index reported, citing three U.S. officials, that the U.S. military is deploying more fighter aircraft to the Middle East and extending the deployment of other Donald Trump called for Iran's "unconditional surrender." The war began on Friday when Israel attacked Iran's nuclear facilities."We're in a period where visibility is not great, uncertainty is high, and the wall of worry is under construction," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis, the Middle East conflict, investors are closely watching for any new information on Trump's tariffs, his tax-cut bill and U.S. interest Federal Reserve is expected to announce a monetary policy decision on Wednesday, although policymakers are expected to leave rates unchanged. All of the major S&P 500 sectors were lower except for energy , which gained along with sharply higher oil prices. Investors have worried that the conflict could create bottlenecks for oil exports from the oil-rich Middle to preliminary data, the S&P 500 lost 51.06 points, or 0.85%, to end at 5,982.05 points, while the Nasdaq Composite lost 180.12 points, or 0.92%, to 19,521.09. The Dow Jones Industrial Average fell 305.20 points, or 0.72%, to 42, Tuesday, data showed U.S. retail sales dropped more than expected in May, while factory production barely rose last month."A data-dependent Fed is going to have a lot of explaining to do about why it's not responding to the data," said Brian Jacobsen, chief economist at Annex Wealth declining stocks, solar stocks fell after U.S. Senate Republicans late on Monday unveiled proposed changes to Trump's tax-cut bill, including a phase-out of solar, wind and energy tax credits by of Enphase Energy and Sunrun dropped. Eli Lilly shares eased after it agreed to acquire Verve Therapeutics for up to $1.3 billion. Shares of Verve surged.
Reuters
11-04-2025
- Business
- Reuters
Wall St Week Ahead Broadening asset volatility intensifies worries for tariff-tossed US stocks
NEW YORK, April 11 (Reuters) - Wild swings in global markets are poised to keep U.S. stock investors on edge in the coming week, as a weakening dollar and a selloff in Treasuries compound extreme equity volatility that erupted after President Donald Trump launched his sweeping tariffs. The S&P 500 (.SPX), opens new tab was set for solid gains on the week after Trump pulled back on the heftiest tariffs on many countries, relieving Wall Street's worst-case scenario. Still, the benchmark index still was down about 13% from its February 19 all-time closing high. Concerns about lasting economic damage remained as the U.S. and China ratcheted up their trade battle and questions lingered over levies elsewhere as Trump only paused many of the most severe tariffs. Investors punished U.S. assets in the wake of Trump's tariffs, with the dollar plunging against other major currencies and benchmark U.S. Treasury yields, which move opposite to bond prices, surging. The stock market is "very unsettled" as investors weigh how to price in any economic fallout from the changing tariff backdrop, said Mark Luschini, chief investment strategist at Janney Montgomery Scott. The market is "kind of trapped by the level of uncertainty that lurks out there," Luschini said. "And therefore investors are largely unwilling to make big bets in one direction or another." A volatile week in stocks was highlighted by Wednesday's 9.5% jump for the S&P 500, the index's biggest one-day rise since October 2008 during the heart of the financial crisis. The Cboe Volatility index (.VIX), opens new tab, an options-based measure of investor anxiety, stood at around 40, more than twice its historic median level. Stock investors were warily watching moves across asset classes, in particular the dollar and Treasuries. An index that measures the dollar against a basket of currencies on Friday fell below 100 for the first time in nearly two years, while the yield on the benchmark 10-year Treasury was on pace for its biggest weekly jump in decades. In many prior risk-off events, the dollar and Treasuries have acted as safe havens, but that has not been the case over the last week as stocks have tumbled, said Walter Todd, chief investment officer at Greenwood Capital in South Carolina. 'We are the reserve currency and the risk free asset of the world, and our markets are not acting as such," Todd said. The yield on the 10-year Treasury on Friday topped 4.5%, which investors have cited as a level that could cause turbulence for stocks. Higher yields translate into higher borrowing costs for consumers and businesses, while potentially making bonds more competitive investments against stocks. "Until Treasuries stabilize and start to behave normally, risk assets will struggle," Barclays analysts said in a note on Friday. Quarterly U.S. corporate results in the coming week provide another test for investors. Goldman Sachs (GS.N), opens new tab, Johnson & Johnson (JNJ.N), opens new tab and Netflix (NFLX.O), opens new tab are among the major U.S. companies set to report. Bryant VanCronkhite, senior portfolio manager at Allspring Global Investments, said he would be looking for companies which can show confidence in their businesses despite the shifting tariff landscape. "I'm looking for companies that have the competence and the desire to invest through this cycle," VanCronkhite said. Data on U.S. retail sales for March will shed light on the health of the consumer, but investors may discount the report to some extent because it covers a period before Trump's April 2 tariff announcement. A survey on Friday showed U.S. consumer sentiment fell sharply in April and 12-month inflation expectations surged to the highest level since 1981 amid unease over escalating trade tensions. Markets will remain highly sensitive to developments on the trade front. Investors will hope for evidence of progress between the U.S. and countries for which Trump has paused hefty levies for 90 days. The faceoff between the U.S. and China -- the world's two largest economies -- will also consume attention. Beijing increased its tariffs on U.S. imports to 125% on Friday after Trump's move to hike duties on Chinese goods. "China negotiations remain key for markets," Citi strategists said in a note.
Zawya
11-04-2025
- Business
- Zawya
Wall Street's week of whiplash brought fear, relief and caution
NEW YORK - Wall Street traders and investors have been sent to the brink over the past week by President Donald Trump's tariff policy, scrambling to figure out strategies and calming clients as trillions were wiped off stock market values. A massive relief rally, however, comes with a caution sign. Since announcing sweeping tariffs on April 2, the S&P 500 has done a near round-trip of historic proportions. The benchmark index extended its slide from its February high to the brink of confirming a bear market, as investors priced in dire scenarios for the economy after Trump announced tariffs that would raise U.S. trade barriers to the highest levels in over a century. The Cboe Volatility index, Wall Street's "fear gauge," soared earlier this week to its highest closing level since the COVID-19 pandemic five years ago. Then, in a stunning reversal on Wednesday, Trump said he would temporarily lower the hefty duties on dozens of countries while further ramping up pressure on China, prompting a massive relief rally, sending the S&P 500 up nearly 10%, its biggest one-day jump since October 2008. The rapid policy changes translated into non-stop action, stress and drama on trading floors and investment houses. "It's been a quite a wild ride," said Joe Tigay, portfolio manager for Rational Equity Armor Fund, who said it brought back memories of trading through massive swings during the pandemic. "Personally, honestly, this is what I live for." The rapid pace of unfolding events in recent days prompted a deft juggling of priorities, including client calls, trading and making sense of markets, said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group, as the market drama surpassed the wild trading seen during the COVID-induced market crash of March 2020. "This is more headline driven than what we saw in COVID," Murphy said. "There's just not enough time because you're going from one thing to the next." Clients wanted frequent updates as market losses stacked up, advisers said. "We reached out to as many clients as possible via a client letter and phone calls," said Gina Bolvin, president of Bolvin Wealth Management Group in Boston. "Some of my nervous clients were comforted when they learned that as the market was declining I had been investing some of my own money." But while some have embraced the volatility, others caution that the market remains fragile, U.S. policy remains unpredictable and that the U.S. is not out of the woods. "It's definitely good news because it shows that the negotiations are in good enough shape that they think that they've accomplished what they needed to by this initial conversation," said Mark Hackett, chief market strategist, Nationwide Investment Management Group in Philadelphia. "But I want to put a pretty big caveat out there because 8% rallies in 20 minutes in the Nasdaq aren't a heck of a lot healthier than 8% declines." TRUMP PUT BACK ON? After a week of concern that Trump was no longer worried about stock market losses, some investors speculated that markets had prompted Trump's decision, including a rout in the bond market that came to a head on Wednesday and led to a massive spike in Treasury yields. Investors had previously relied on the theory of a Trump put, a reference to investor belief that Trump would reverse policy if markets ran into trouble. "I think this is a reminder that Trump does not want a bear market in stocks, and he does not want a recession, so this is forcing a rethink of the approach," said Talley Leger, chief market strategist, The Wealth Consulting Group. But many investors said persistent uncertainty around tariff policy could still have broad fallout, impeding the ability of companies to plan and influencing consumer behavior. "They hit the pause button and the market rejoiced," said Alex Morris, chief investment officer at F/m Investments. "But of course, there is no promise that we'll manage to solve anything in 90 days." Deutsche Bank said in a note that while the Trump put appears back on, the policy back-and-forth will cause lasting damage. "Even if the tariffs are permanently suspended, damage has been done to the economy via a permanent sense of unpredictability in policy." Market volatility on Wednesday had been trained on the bond market, which saw a bruising selloff in U.S. Treasuries, with some market participants saying funds had been selling such liquid assets such as Treasuries to meet margin calls. "There's definitely sensitivity to what happens in the Treasury market," said Matt Orton, chief market strategist at Raymond James Investment Management. "If something breaks in the Treasury market, that could be very, very bad." Trump said on Wednesday the bond market had recovered well after investors became queasy about it in reaction to his tariffs. "The bond market now is beautiful," he told reporters. The White House said Trump's move to hike tariffs on China and pause tariffs on other countries came after receiving "good-faith commitments from a majority of our trading partners willing to strike favorable trade deals." "The only interest guiding President Trump's decision making is the best interest of the American people," White House spokesman Kush Desai said. "The Trump administration remains committed to using every tool at our disposal to address the national emergency posed by chronic trade deficits – including both tariffs and negotiations.' 'STRESSFUL WEEK' Some investors felt the relentless string of bad news for markets and wild gyrations were impossible to maintain. "We had assumed that some form of capitulation would be forthcoming," said Christopher Hodge, chief economist for the US at Natixis in New York, citing the financial carnage and expectation of economic pain. Since Trump unveiled his tariff plan on April 2, the stock market has undergone some record-breaking gyrations. It notched an 8.1% intra-day price swing in the benchmark S&P 500 index on Monday, while Tuesday's market saw one of the biggest reversals for the benchmark index in at least the last 50 years. Wednesday's market about-face was even more stark, with the day's 10.7% range stacking up as the fifth largest in at least the last fifty years. Bolvin said this had been "a stressful week." "When my 3 year old woke up and asked if the market was down, I knew we were close to the bottom," Bolvin said. (Additional reporting by Lewis Krauskopf, Laura Matthews, Chuck Mikolajczak, Carolina Mandl, Davide Barbuscia; editing by Megan Davies and Deepa Babington)
