The Federal Reserve brought relief to the markets on Wednesday by maintaining its projection for two interest rate cuts in 2025. However, the one-day surge in stocks did not last, with market strategists feeling that the underlying issues affecting the stock market remained unchanged.22V Research president Dennis Debusschere explained to Yahoo Finance that attention would now return to President Trump’s tariffs and potential reciprocal duties, and how these policies might impact corporate profits amidst the recent 10% decline in the S&P 500. On Friday, concerns about tariffs were highlighted further as both Nike (NKE) and FedEx (FDX) stocks fell following warnings about potential economic challenges like tariffs affecting profits this year. The complexities of the tariff situation include questions about which companies will be affected, potential counter-tariffs, and the ripple effects on pricing across different industries, raising fears about consumer spending and overall economic activity.
This uncertainty has led to volatile market movements as investors grapple with pricing in shifting dynamics. President Trump’s tariff plans have mostly been postponed until April 2, a date he referred to as “liberation day in America.” Market participants are now waiting for clarity on what will transpire after that date. Piper Sandler’s chief investment strategist Michael Kantrowitz noted that policy uncertainty has been a key driver of recent market turmoil, clouding the outlook for the Federal Reserve and corporate earnings. While typically markets would stabilize once the initial catalyst for a sell-off is resolved, in this case, the uncertainty remains high. The recent correction in the S&P 500, partly due to concerns about earnings impacts from tariffs, also reflects a broader reassessment of popular trades such as the “Magnificent Seven” tech stocks. The decline in these stocks, which have outperformed for the past two years, has raised worries about potential downside risk for the overall market, especially if large-cap tech stocks continue to struggle. Morningstar’s David Sekera described the recent market action as signaling a “bear market in artificial intelligence stocks,” further fueling concerns about a broader market downturn.
“Capital Economics chief markets economist John Higgins wrote that the index may peak earlier than expected, possibly indicating an earlier burst in the AI bubble. Follow Yahoo Finance reporter Josh Schafer on Twitter @_joshschafer for the latest stock market updates and comprehensive analysis on market-moving events. Stay informed with the latest financial and business news from Yahoo Finance by clicking here.”
