Navigating market turbulence: What investors should think about

Recent tariff announcements have rattled markets, raising the average U.S. tariff rate to 25%, the highest in over a century. This has led to significant volatility, with the S&P 500 dropping 10.5% in two days, its worst performance over such a span since the Covid-19 selloff, and erasing over $5 trillion in market value. Nearly all sectors were affected, with 97% of the index declining. The index is now near bear market territory, alongside the Nasdaq 100.

Despite the turmoil, abandoning long-term strategies is not advisable. History shows market timing is risky. In the last 20 years, seven of the 10 best market days occurred within 15 days of the 10 worst days. This highlights the risk of exiting the market during volatility, as it may cause investors to miss the rebound and derail them from their long-term financial goals. Instead, investors should reassess financial goals and consider rebalancing portfolios. While the current environment is challenging, it also presents potential opportunities for vigilant investors.

In light of these developments, we suggest ensuring portfolios are diversified and resilient, with a consideration for gold and bonds which historically offered a buffer against equity volatility. This approach may help navigate the current volatility and position investors for future growth.

All market and economic data as of 04/07/25 are sourced from Bloomberg Finance L.P. and FactSet unless otherwise stated.

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