Volume #5: Stock Market Fiasco - A Turbulent Week for Investors

Wall Street woes, stock market blows, and America’s foes.

The world economy is taking a massive hit right now with new developments in the stock market. And news flash: It’s only the beginning.

With Dow heading towards its worst week in 2 years, there is a lot of uncertainty with where the economy is headed right now. Consumers are spending less, and demand is just not as high as it should be.

As for investors, it is very ambiguous where the money is headed to next. Businesses are holding back their spending and struggling to make decisions. Ultimately, these next few weeks could be summed up in one word: uncertainty.

No one knows if tariffs will go up. The solution right now seems to be to “just wait and see”, as stated by CBS News earlier this week. How will tariffs affect prices? This is the question on the minds of everyone right now.

📉Trends this Week: Dow and S&P 500 Sink

Stocks sharply lowered on Thursday, with the major sell-off of stocks sinking the major indexes between 1.3% to 2%, including the Dow Jones Industrial Average.

The S&P 500 pulled off the exact definition of a market correction with a 10% decline from its peak on February 19th. Investors are highly concerned and apprehensive of how the government administration handles this, since any little mistake could lead to a disaster.

An even worse statistic is the fact that about $5 trillion has been lost in the stock market in just the last 3 weeks. That is shocking.

Specifically, the manufacturing and telecommunications industries were heavily impacted by this drop, while the gold mining industry saw surprising benefits.

A leading culprit of all this? Artificial Intelligence.

AI companies like Nvidia rapidly inflated the value of its stocks, which are now down a whopping 17%. This overspeculation could be partially attributed to optimistic growth expectations by investors. Clearly, they’re dreams where not realized.

If there’s anything to know about the stock market, it’s that it doesn’t care about your money or your feelings. It cannot be bullied, elected, predicted, ignored. It just simply is. But if you start tampering with prices of imports, as you will see, things can go downhill pretty quickly.

🗡️Trump’s Trade War: Business or Burden?

Early market expectations cited a pro-market policy agenda during Trump’s reign as president. While many investors hope his plans will come to fruition, it will take some time.

His plans include deregulation to foster economic growth, to encourage businesses to invest more money into the market.

He is also proposing corporate tax cuts, to incite fiscal (government) spending that would have a positive and intended effect on investors.

However, high tariffs on Canadian steel and aluminum appear to be hurting this so-called ‘growth’.

Since the president’s inaguration, J.P. Morgan’s Michael Cembalest warned of Trump’s pro-growth measures and assessed the risks of a potential stock market correction before his policies begin seeing their intended effects.

The administration could have a particularly hard time fixing the market, considering its continued tariffs against Canada and Mexico’s auto industries.

The 25% tariffs on Canada as well as Mexico, the administration’s 10% tariff on energy, and, for some reason, the 50% tariff on EU whiskey, is causing a huge panic for businesses, large and small alike.

When imports slow for, say aluminum, the price temporarily goes up until domestic industries can catch up. While this is a positive direction, it is very unsustainable and will take some time.

Because of this, small businesses have reduced their capital expenses. Employment as well as production are both also on the decline in the automobile industry. Big businesses are seeing an overall decline in their value.

Demand for domestic suppliers are increasing heavily, and many companies are stockpiling their warehouses due to scarcity.

Right now, as Treasury Secretary Scott Bessent has said, a “detox” needs to happen in the US economy before any further action.

💵Time to Invest? When and What to Expect

The stock market right now is very wobbly. The various corrections in Nasdaq and S&P 500 have made it hard to predict whether a bear market might be on the horizon. A bear market suggests a prolonged drop in investment prices.

Many investors are being incentivized to sell their shares, since it is unknown if correction levels could reach up to a 15%, or possibly even 20%, downturn.

Low confidence and fidelity in the direction of the stock market is a key component to the impending uncertainty facing the global economy right now.

Honestly, the safest option is to just wait and see what developments occur abroad in Canada and China and their tariff updates. And if there already is some money in certain funds, don’t be discouraged by the volatility of the market.

But if I had to choose, gold is a very safe, low risk option right now, pushing at around $3000 an ounce.

⭐Glimpse of Hope: Hidden Hopes

Friday gave us a sliver lining.

The S&P 500 bounced back 2.1% to finish off the day strong, just over 5,500 points. The Nasdaq and Dow Jones Indexes are also on the rise.

But right now, based on Trump’s policies, national debt seems to be equally as concerning as the domestic market performance right now. We have seen this through his various cuts in spending and government size, as well as his search for revenue through his high tariffs.

“We are focused on the real economy,” said Bessent during an appearance on CNBC. The end goal is long term stability for the American people, not short-term pleasure.

Understanding recession needs an understanding of the stock market. The stock market will play itself out of trouble eventually, but it is essentially controlled by the risk assessment of investors.

Maybe we are seeing a change in direction? Or maybe it’s just a small hill of false hope, and the economy is just building up the energy to roll right back down to where it was just a few days ago.

💡Final Thoughts

Please, be smart with your money. Don’t go running around putting a little bit of money into this and a little bit of money into that. Do your research, find reliable sources.

Now we loom over sort of a stalemate, where there is a small window of a break from the market disruptions we saw throughout this week.

While certain indexes are on the rise, it’s important to keep yourself informed at all times, even if it’s just for the minor updates.

And lastly, make sure to subscribe to my newsletter for weekly economic roundups!

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