Markets have experienced renewed volatility to end the week, driven largely by escalating trade tensions and investor uncertainty surrounding global economic policies.
As President Trump announced a fresh wave of tariffs, the move has triggered retaliation from major trade partners, raising fears of a prolonged trade war that could disrupt supply chains and increase costs. Market participants are now grappling with how these geopolitical developments may affect corporate earnings and broader economic growth.
While it’s understandably unnerving to read all the news headlines swirling around, and seeing markets pullback further, it’s important to keep the recent volatility in perspective. So we thought we would share some charts and data to help do just that (apologies in advance for the nerdiness of this post).
The recent downturn has felt particularly bad, largely due to how politically charged it has been. However, the intra-year drawdown still remains within the normal range of all years going back to 1990. As of yesterday’s close, the S&P 500 was down around 12% from its recent highs, compared to an average of 14% over the past 35 years.
While geopolitical events can cause near-term uncertainty and instability, in many instances these scenarios have not had a lasting negative impact on long-term stock market performance. Historically, even after significant global conflicts or political crises, the stock market has often rebounded over the ensuing year.
Despite the recent market volatility, a more diversified portfolio has held up relatively well all things considered. As gains were focused in large AI-focused tech companies with the rally over the past couple years, the recent pullback has been more concentrated in this area of the market as well. Looking at various sectors of the S&P 500, some areas of the market are holding up quite a bit better than others, so it’s not all bad across the board.
Looking at different asset classes outside of just US stocks, we can see a similar picture. While US stocks have certainly struggled, other asset classes like commodities, bonds, and REITs have helped a more diversified portfolio so far this year.
On the economic front, we just received an updated labor market report this morning and the US economy added more jobs than expected. It was well above the three-month average, rebounding sharply from January and February.
In uncertain times like these, maintaining a diversified portfolio and a long-term perspective is more important than ever. While volatility can be unsettling, it often presents opportunities for disciplined investors focused on their broader financial goals. Staying informed and resisting emotional decision-making is key.
In the words of behavioral finance expert Morgan Housel, “Every past market decline looks like an opportunity, every future decline looks like a risk.”
The information presented is not investment advice – it is for educational purposes only and is not an offer or solicitation for the sale or purchase of any securities or investment advisory services. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser when making investment decisions.
– The Aspire Wealth Team
April 2025 Newsletter
