Stock Market: The Wild Ride of Recovery

The stock market in the U. S. had a rollercoaster ride after a sudden announcement about tariffs. It took just a few weeks for the market to bounce back to where it was before the shock. This happened after a president announced much higher tariffs than expected on almost all U. S. trading partners. These tariffs were so harsh that they sparked fears of a possible recession. Within four days, the S&P 500 dropped about 12%, and the Dow Jones Industrial Average lost nearly 4, 600 points, or about 11%. The market's recovery was just as surprising as its fall. The S&P 500 rallied 1. 5% for a ninth straight gain and returned to its level from before the tariff announcement. However, the index is still more than 7% below its all-time high set earlier in the year. The future remains uncertain, as no one knows how the tariffs will ultimately affect the economy. The president announced a "90-day pause" for most of the tariffs, except those against China. This news caused the S&P 500 to soar 9. 5% in one of its best days ever. However, this good news came with some controversy. Hours before the announcement, the president suggested that it was a great time to buy stocks. The weeks that followed were a mix of ups and downs. The president talked about negotiating tariffs while also using them to force companies to move manufacturing to the U. S. Investors found some relief in the de-escalation between the U. S. and China. They also welcomed the president's moves to ease tariffs on autos and electronics. The severity of the stock market's fall surprised some experts. They had assumed the president would backtrack on policies that hurt the Dow Jones Industrial Average. However, it was fear in other financial markets that may have forced the president's hand. Tumbling prices for U. S. government bonds raised worries about the U. S. Treasury market's status. The value of the U. S. dollar also sank, signaling diminishing faith in the United States as a safe haven for investors. Economists and investors had to make sense of conflicting signals about the economy. Surveys of consumers showed declining confidence due to the uncertainty created by the trade policy. However, "hard data, " such as employment numbers, indicated that the economy was still doing okay. As of Friday, when the government said employers had added 177, 000 jobs in April, the hard numbers seemed to have the upper hand over weak sentiment. The Federal Reserve cut rates three times at the end of 2024, but then paused to assess the impact of the trade policy. The strong jobs report seemed to give the Fed clearance to keep rates steady for now. However, the market is still looking for three cuts before the end of the year. Through all the market's turmoil, U. S. companies have continued to deliver profit reports that have topped analysts' expectations. Stock prices tend to follow profits over the long term, and that's given the market a notable boost. Three out of every four companies in the S&P 500 have beaten analysts' expectations for profits in recent weeks. They're on track to deliver growth of nearly 13% from a year earlier. Even as companies have delivered fatter profits than expected, many have also warned that they're unsure whether it can last. CEOs have been either lowering or withdrawing their financial forecasts for the year given all the uncertainty around how the tariffs will end up. United Airlines even made the unusual move of offering two separate forecasts for the year: one if there's a recession, and one if not. The president's off-again-on-again approach to tariffs has made this the most volatile period for the market since the onset of the pandemic. The pause is in its fourth week, and the administration has yet to announce an agreement with any of the U. S. 's trading partners. Based on recent comments, the president is still all-in on tariffs, so the pause could prove to be just that. Financial experts have warned that if the administration moves forward with their initial tariff plan, the market will react similarly to the first week of April.