Expect ongoing market volatility amid fast-paced changes
U.S. stock markets finished last week sharply lower. Finally equity investors have returned their verdict on the chaotic policy headlines: It is decidedly negative.
Chief Investment Officer Thierry Hasse
Some notable corporate examples: At Nvidia, the dominant provider of the computer chips needed to develop AI models, the downfall is even sharper. The stock is lower by almost 30% since the high achieved in January 2025, a decrease of over $1 trillion in market capitalization. For Tesla, the nation’s largest producer of electric vehicles, shareholders would prefer that their CEO focused on running the company as opposed to reforming the U.S. government. The shares were close to 47% lower than their December 2024 high and have declined for seven straight weeks (Source: CNBC).
Tariffs Cause Confusion and Worry
Who could blame corporate CEOs for being confused when tariffs are announced daily, then implemented partially, then removed for a short period of time, then scratched altogether, then re-implemented? The cost of tariff uncertainty is not only reflected in the U.S. stock market action but also and more importantly in corporate boardrooms where CEOs are increasingly being cautious about the 2025 U.S. economic outlook. When businesses have a clear idea of the administration’s policies they can plan and invest accordingly. But high uncertainty and volatility is leading to delayed investments or worse – canceled project developments. The fear of tariffs is starting to be worse than the tariffs themselves.
A Fast Changing World
Geopolitical initiatives by the U.S. government are bringing generational changes across the world. With the increasing unwillingness of the United States to insure the military security of its European NATO partners, the German government reacted by lifting its self-imposed budgetary restraints. Germany will create a 500 billion euro infrastructure fund as part of a massive increase in defense spending. Who would have thought that the initial benefit of a pro business, pro growth U.S. administration would be a massive boost to … German and French defense companies?
Important Week Ahead for U.S. Markets
Clearly the recent price action of the U.S. stock markets have corrected the expectations of exuberant investors and brought down high valuations. U.S. equity markets are now at a crossroad: On the one hand will this corrective action lead to resumption of growth supported by solid earnings expectations? On the other hand, could we be witnessing the start of a more meaningful drawback in stock prices with the U.S. economy slowing rapidly into recession? Either way volatile trading is guaranteed in the next few weeks.
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