Have the Markets Stabilized?                      

Jordan Hucht, CFP®, ChFC®, AIF®

The past two months have brought a level of volatility that we haven’t seen in years, with multi-percentage-point daily moves becoming the norm as financial markets digest and react to a very fluid policy path being laid in Washington. Market volatility hit a fever pitch earlier this month, when we saw the S&P 500 swing by huge amounts – including a nearly 10% move on April 9 – in a single day. The past two weeks have been a bit calmer, but does that mean the worst is now behind us?

Obviously, the proverbial crystal ball can’t answer that question definitively, so here’s another 5-point list of things to keep in mind on this Friday afternoon:

1. Earnings in focus. Coming into the year, the market was priced for 12-15% earnings growth for S&P 500 companies. Tariff uncertainty and the resulting hit to confidence has now made that target look overly optimistic, but there’s a big difference between something like 7-10% earnings growth vs little to no growth. As companies have begun reporting Q1 results, which have been decent, the forward guidance tends to be justifiably vague. Though earnings growth for this year is likely to underperform prior expectations, there will be a point in the not-too-distant future where 2026 earnings become the focus.
2. The Fed’s in a tough spot. Since the post-Covid inflation spike, the Federal Reserve has crafted monetary policy to curb inflation without derailing the economy, a goal it’s largely achieved. But now it’s faced with the tough decision of whether to deliver the June rate cut that the market’s expecting (not to mention the pressure from the White House) at a time when we could see tariff-driven price increases.
3. Headline hypersensitivity. We’ve been in a headline-driven environment, leading to several dramatic intra-day market pivots – in both directions – over the past two months. I don’t expect that to change in the near-term, so it’s important to stay disciplined and not let sentiment swings bait you into abandoning sound long-term strategy.
   
4. Volatility works in both ways. The term “volatility” often has negative connotation, as sharp downside moves tend to elicit a more emotional response than similar upside moves. But the upside moves are equally as important. Stock market returns are lumpy – average returns can be consistent over the long term, but rarely do we have an “average” year. Also keep in mind that disruption creates opportunity. Sometimes the best long-term results are born in the worst markets.
5. Diversification matters. How do you protect yourself from stock market sell-offs? Not having to sell. Proper exposure to other asset classes (international stocks, bonds, cash, and alternatives) based on careful financial planning can act as a shock absorber for bumpy rides like the one we’re on now.

We’re four months into the year. The past two months have been markedly different than the year’s first two months, and I’m sure the next two months will, too, have their own story to tell. It’s a reminder that financial planning and investment management needs to have a multi-year, even multi-decade lens.

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Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results.