Here’s your key takeaway from this morning’s Brief, which you can subscribe to receive daily in your inbox along with:
As we approach the end of the first quarter, President Trump has hit the 50-day mark in his second term at the White House.
It’s clear that this year is going to be a challenging one for investors.
Expect heightened market volatility. More earnings disappointments and cautionary warnings. Increased negative economic surprises. More downgrades in stock ratings. And trades that once thrived, like Nvidia (NVDA), are now faltering.
Watch: Reasons for Lego’s CEO’s concerns about tariffs
Just when it appears that the turmoil has subsided and things are looking up, the cycle of negativity tends to repeat itself — triggering more tumultuous moments on your trading screen or in conversations with a financial advisor.
“We’ve enjoyed a few calm years without the usual two or three pullbacks of 5% to 15%,” Edward Jones CEO Penny Pennington shared with me on Yahoo Finance’s Opening Bid podcast (watch the video above or listen below). “Considering the current uncertainties regarding policy and tariffs, the markets are inevitably responding. This was anticipated. Investors are acting accordingly.”
And indeed, they are reacting strongly!
Currently, the S&P 500 (^GSPC) is down 10% from its high on February 19.
Nvidia has dropped 14% so far this year, while Tesla (TSLA) has plummeted 40%. So much for previous momentum stocks!
On Thursday, the S&P 500 declined by 1.4%, marking the 10th time this year it has registered a daily loss exceeding 1%, according to Charlie Bilello, chief markets strategist at Creative Planning. At this time last year, the S&P 500 only experienced three significant down days, which Bilello noted was an “abnormally” low count.
“The market is increasingly worried about a potential economic slowdown,” said Keith Lerner, co-chief investment officer at Truist, during our conversation.
Listen: Rubbermaid’s CEO discusses the negative impact of tariffs on business
Despite much of the troubling news being already known to investors, what’s there to feel optimistic about in the markets right now?
Sure, if you choose to buy and hold a dividend-yielding company (or even an Nvidia) for the next 25 years, you’ll likely find yourself wealthier down the line. However, in the short term, the market outlook appears grim, and there are indications of an impending wave of negative corporate and economic news (for instance, look at the recent warnings from Delta (DAL), Southwest (LUV), and American Airlines (AAL) ahead of the first quarter earnings season).
