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29 Apr, 2025 Stock market volatility shows no sign of calming as trade questions linger By Brian Scheid Uncertainty around President Donald Trump's new tariff regime has upended the US stock market, triggering a state of extreme volatility in April that is unlikely to settle in the short term. Equities have been tied to trade news out of the White House all month, moving in sudden directions on announcements, clarifications and social media posts. Neither policy clarity nor a clear market forecast have emerged and volatility continues. "Policy volatility has become the biggest factor for the market," said George Pearkes, a macro strategist at Bespoke Investment Group. In addition to the sudden directional changes in the market caused by White House headlines, the relentless focus on Trump administration news has resulted in higher overall volatility and risk premiums, according to Pearkes. "Market rallies can only go so far when they can be snuffed out by a single Truth Social post or a random comment at a daily media availability," Pearkes said. On April 23, for example, the S&P 500 rallied as much as 3.4% in intraday trading from the previous close after Trump indicated that tariffs against China may be far lower than initially proposed. Then, the index declined 2% over the rest of the trading day as the White House stressed that tariffs would not be reduced, and then rallied briefly on further administration clarifications before closing about 1.8% higher on the day. "Markets hate uncertainty and the administration's 'on-again, off-again' approach to global trade has fueled that uncertainty, weighing on investor sentiment and consumer and business confidence," said Bret Kenwell, a US investment and options analyst at eToro. "This approach has pushed management teams into a cautious, wait-and-see stance, while making economic forecasting extremely challenging given how much can change on a day-to-day basis. Unsurprisingly, this has made the investing environment vastly more difficult." With so much tariff uncertainty, Gary Brode, managing partner with Deep Knowledge Investing, has been hedging equity exposure with large positions in uncorrelated assets such as bitcoin and gold. Brode also has sold some equity index put options on days when indexes are down and volatility is spiking and added to hedges as the market shows signs of rallying. "Having a hedged portfolio makes sense to us in a market environment where one social media post can send stocks up or down by huge amounts," Brode said. Sonu Varghese, a global macro strategist with Carson Wealth, said the firm has been shifting to more diversified portfolios over the past three to four months and is now neutral on US and international equities and going underweight on more volatile mid- and small-cap stocks. For now, the bull case for equities is a rolling back of tariffs without a major shift in the global trade system, likely pushing stocks back to highs seen in February, Varghese said. The bear case, however, would be the start of a recession with more extreme tariffs kept in place. "I don't think it's a certainty that we land in a recession right now, but we could see stocks ping back and forth between optimism and pessimism as policy direction, and impact, remains clouded," Varghese said. According to Varghese, investors will become accustomed to the uncertainty and move beyond it, as companies determine how to navigate US tariffs as the new normal in trade. "The current volatility will continue while trade agreements are made, but I don't expect this to continue for a full four years," said Brode with Deep Knowledge Investing. "At some point, we'll reach a new equilibrium."

Webinar Q2'25 Outlook for Commercial Banks: Assessing Bank Performance In An Uncertain Economic Environment Live Webinar Event starts in Days Hours Minutes Register Now Register Now Summary The fundamental environment had improved significantly for US banks heading into 2025. Peak competition for deposits and the worst-case fears for credit deterioration were in the rear-view mirror and banks and their investors were hopeful that the new Trump administration would offer a friendlier regulatory and pro-growth environment. However, the view toward the banking sector has changed in the aftermath of new tariffs announced by the Trump administration, which exceeded most economists’ expectations both in scope and size. It is difficult to assess how tariffs will impact U.S. banks, particularly given how quickly the situation is evolving, but the presence of such a high level of tariffs increases the risk of a recession and threatens a resurgence in capital markets activity. During this discussion, we’ll examine the latest outlook for the U.S. economy, as well as share our proprietary projections for commercial bank performance to show how the current operating environment will impact U.S Commercial Banks. Register Now Moderator S&P Global Market Intelligence Maureen McKenna US Commercial Banks Market Development Lead View Profile Speakers US Bank Beth Ann Bovino Chief Economist View Profile S&P Global Market Intelligence Nathan Stovall Director of FIG Research View Profile Questions? Please contact us if you need more information or have trouble accessing the webinar. globalevents@spgobal.com