{"id":13708,"date":"2025-04-04T18:01:24","date_gmt":"2025-04-04T18:01:24","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13708"},"modified":"2025-05-12T14:37:45","modified_gmt":"2025-05-12T14:37:45","slug":"market-shock-from-tariffs-how-to-navigate-volatility","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/market-shock-from-tariffs-how-to-navigate-volatility\/","title":{"rendered":"Market Shock from Tariffs: How to Navigate Volatility"},"content":{"rendered":"\n

Responding to the Steep Market Sell-Off<\/strong><\/p>\n\n\n\n

On April 2nd, global stocks made it clear that the tariff announcement was worse-than-expected. We were looking for a roughly 10% effective tariff rate once all the details were parsed, but the actual figure appears to be closer to 20%. That\u2019s also about double what the general market was expecting, and as I\u2019ve written time and again, markets<\/em> do not like negative surprises<\/em>.<\/p>\n\n\n\n

Panicked investors everywhere are trying to decipher what to do next, which makes the current environment ripe for major missteps.<\/p>\n\n\n\n

These are the moments historically when investors start trying to predict what is going to happen next, and the assessments tend to skew sharply negative. In the current environment, it may mean predicting a prolonged trade war, a recession (or worse), and\/or more equity market downside. It does not matter if you have been an investor for one year or for 30+ year like me\u2014the chances of being precisely correct are very, very low.<\/p>\n\n\n\n

Investors tried to make the same predictions the day after Black Monday in 1987, when the S&P 500 fell -22.61% in a single day. Ditto in 2008, when a plummeting market was accompanied by images of bankers leaving Lehman Brothers with boxes. The Covid-19 pandemic is arguably in a league of its own in this respect, too.<\/p>\n\n\n\n

There are very reasonable arguments that the current shift in trade policy should fall into a different category, given the medium- to long-term implications it could have on growth, prices, and global economic order. I could write many columns fleshing out economic theories for and against tariffs, while analyzing every line item of the April 2nd announcement and making projections for economic impact. This is the type of work we do at Zacks Investment Management — determining which stocks and bonds to own in portfolios, as we make earnings and interest rate forecasts.<\/p>\n\n\n\n

But it\u2019s not the type of analysis I think investors should be doing when determining whether or not to stay invested.<\/p>\n\n\n\n

Tariffs, Trade Wars & Market Swings\u2014What Should Investors Do?<\/a><\/u><\/strong><\/p>\n\n\n\n

Markets don\u2019t like surprises, and the recent tariff announcement sent stocks tumbling. When volatility spikes, investors often feel the urge to act\u2014but history shows that short-term decisions can have long-term consequences.<\/p>\n\n\n\n

Our guide, Do\u2019s and Don\u2019ts of Market Volatility<\/em>, provides expert insights to help you make informed choices. Inside, we cover:<\/p>\n\n\n\n