For President Trump Customs Bargain The US is set to unleash its largest trading partner on April 2, which is equivalent to “liberation date,” as he explained the trade measures on social media on Thursday. As Chairman Jerome Powell relayed on Wednesday, tariffs on the Federal Reserve are A broad range of economic growth.
Where does it leave investors? Judging from today’s deal, I scratched my head. The stock wobbled quickly, rebounding, and lost momentum in the afternoon. The S&P 500 fell 12 points (0.2%) at 5,663, with the Dow Jones industrial average being nearly flat, while the Nasdaq composite fell 0.3%.
Dip followed a modest bounce in the stock market yesterday after the Fed announced Pat based on interest rateas Wall Street had expected. In fact, investors may not have learned much from central banks and Powell’s remarks, given that as the US moves to roll out tariffs on Canada, China, Europe, Mexico and other countries, economists are already beginning to forecast weaker growth and higher inflation.
Powell’s Principles of Uncertainty
Another thing investors didn’t learn from the Fed: the world is a much more uncertain place than before Trump was re-elected in November. This year, financial markets fell this year as the White House plans for tariffs, with the S&P 500 temporarily falling into the realm of corrections, or 10% below its previous peak. The index has fallen 8.4% since it hit an all-time high on February 19th.
Still, if there were lingering doubts about the country’s economic outlook being vague, Powell seems determined to crush them flat. The Fed chair cited uncertainty five times in his prepared remarks, and cited dozens more at the next press conference.
That uncertainty refers to questions about how the Trump administration’s economic agenda on trade, immigration, fiscal policy and government regulation will affect the economy.
Of course, for those considering taking out a loan, what’s certain is that for now the Fed prefers to assess the impact of these policies before cutting benchmark interest rates.
That attention can be understood in light of questions hanging in the economy, but it can in itself pose a risk. So the central bank’s pricing panel, the federal open market committee, may be too long before it returns to the stick.
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There is a good precedent for the Fed’s misdirecting policy changes, as was done during the pandemic, that previous moves to tighten rates may have helped them get off the rise in inflation.
Certainly, despite the haze surrounding the economy, Powell remains clear about one thing that proves to be safe for investors. The risk of a recession in the US remains low. Fed policymakers also expect inflation to rise to 2.7% this year, but they believe it will recede to 2.2% in 2026 and 2% in 2027.
Stifel’s chief equity strategist Barry Bannister believes stocks will be able to rise soon as they focus on the Fed saying investors could cut prices twice this year. In the long run, the question of hovering in the market is how the economy responds to the shock therapy Trump administered, and whether the Fed has the drug to deal with it.
I contributed to this report.
