Tariffs causing stock market turmoil, but historical data suggests market corrections are normal

From Nasdaq: 2025-03-06 13:27:00

Trump’s tariffs on countries like Japan, China, and Germany are causing turmoil in the US stock market. The S&P 500 Index ETF (SPY) has dropped 5% in the past month, with increased volatility. However, historical data suggests that market corrections are normal, and election seasonality patterns indicate a likely Q1 weakness.

Investors are closely watching the market’s movement above the 200-day moving average. Volatility above this average can actually be bullish, with historical data showing positive performance after such events. The odds of a rate cut are also on the rise, as the Trump Administration pushes for lower interest rates.

While Trump initially indicated he wanted to keep tariffs permanently, signs of potential resolutions are emerging, with softer rhetoric between nations. The recent market pullback has led to lower valuations for tech stocks like Tesla and Microsoft, making them more attractive to investors. Overall, market correction due to tariffs may be short-lived.



Read more at Nasdaq: Are Tariff Concerns Overblown? | Nasdaq