Tariffs Catch Traders Off Guard: Why Stock Markets Are Still Misjudging Trump and 5 Other Things to Know Today

The stock market has been on a rollercoaster ride since President Donald Trump's latest tariff announcements, leaving investors bewildered and uncertain about the future. The S&P 500, which had reached a record high on February 19, has since fallen almost every day, and the index is now lower than it was when Mr. Trump took office on January 20. Other indexes, including those more closely tied to the ebb and flow of the economy, have also fallen. This market weakness is a departure from the bullish trends seen during Mr. Trump's first term, when the S&P 500 had risen more than 20 percent for two consecutive years (2023 and 2024).



In the Big Tech sector, some of the marquee stocks have already lost their luster. Nvidia, which makes chips for A.I. companies, has fallen almost 10 percent since Mr. Trump's inauguration. Of the S&P 500's 11 sectors, tech is one of only two sectors that have declined so far this year. This decline in Big Tech stocks is a significant shift, as these companies had previously been a major driver of the market's growth.



In the insurance sector, companies like AIG and Chubb have also been affected by the tariff announcements. The uncertainty surrounding the potential impact of tariffs on their businesses has led to a decrease in their stock prices. For example, AIG's stock price has fallen by approximately 10 percent since the beginning of the year.



As a long-term investor, these changes in the market and specific sectors should be taken into consideration. However, it is essential to maintain a clear logic and avoid baseless conclusions. The recent market weakness and the decline in Big Tech and insurance stocks can be attributed to the uncertainty and potential negative impacts of the tariff announcements. However, it is crucial to remember that the market is cyclical, and long-term investment strategies should be based on a diversified portfolio and a well-researched understanding of the companies and sectors in which you invest.



In conclusion, the recent tariff announcements by President Trump have had a significant impact on the stock market's performance, particularly in sectors like Big Tech and insurance. Investors should stay informed about the broader economic context and maintain a long-term perspective to avoid making decisions based on short-term market noise or political events. By focusing on fundamentals, diversifying portfolios, and considering the broader economic context, investors can navigate the volatile market and make informed decisions about their investments.