US President Donald Trump’s unpredictable policy shifts are leaving investors on edge, making the stock market “untradable.” The uncertainty has led to a 9% drop in the S&P 500 index since its peak last month, with large daily swings. Investors are taking defensive measures, such as hedging against further big stock moves and positioning themselves defensively.
The uncertainty is not just affecting investors but also consumers and businesses. Recent surveys show that people and companies are becoming more cautious, pulling back on spending plans and reducing hiring. This can lead to a slowdown in the economy, which has yet to show up consistently in official data.
Industry experts warn that the volatility is making it challenging for investors to hold convictions in their views. George Goncalves, head of US macro strategy at MUFG Securities, says, “The volatility does not make this easy… It’s a challenging environment to have any conviction to hold a view.”
As investors wait and see, they are also bracing themselves for potential market downturns. Some are even placing bets that would pay off if the S&P 500 falls sharply over the coming months. The uncertainty is expected to linger, with some fearing it could go too far.
The latest data from the National Federation of Independent Businesses shows that uncertainty levels have reached an all-time high among small businesses. The Business Roundtable survey also found that CEOs are reducing hiring plans and lowering sales expectations due to the uncertainty in Washington.
This uncertainty has significant implications for the economy, with potential consequences on consumer spending, business profits, and corporate earnings. As investors continue to navigate this challenging environment, it remains to be seen how long the current trend of caution will last.
Source: https://www.nytimes.com/2025/03/13/business/trump-stock-market.html