S&P500: Analysts Warn of Continued Volatility for US Indices Despite Tariff Pause

Wild Roller Coaster Ride for Stocks

Wall Street experienced dramatic swings after President Trump announced a 90-day reduction of his “reciprocal” tariffs to 10% for most countries. Despite Wednesday’s historic rally—the S&P 500’s third-largest single-day gain since World War II—markets retreated sharply on Thursday with the Dow dropping 820 points (2.1%), the S&P 500 falling 2.5%, and the Nasdaq sliding 2.9%. The major indexes remain lower by at least 1% since Trump’s initial April 2 announcement despite Wednesday’s impressive bounce.

Record-Breaking Trading Frenzy

Wednesday’s session saw an extraordinary 30 billion shares changing hands—the highest volume in 18 years of market history. This massive surge in buying came after Trump’s announcement of a temporary tariff reduction, while maintaining the 125% rate on Chinese goods. The European Union quickly responded with their own 90-day pause on U.S. goods, showing how these policy shifts create immediate global ripple effects.

Expert Warning Signs Flash Yellow

Despite the temporary relief, market experts urge caution for everyday investors. Michael Gapen from Morgan Stanley explained in simple terms: “Delays help, but do not reduce uncertainty.” LPL Financial’s Jeffrey Roach warned that “market volatility could remain elevated” and pointed to early-year economic data showing slowdown signs regardless of trade policy changes—important information for anyone with retirement accounts or personal investments.

Signs of Trouble Beneath the Surface

Preston Caldwell at Morningstar cautioned that investors might be “reacting too optimistically” without guarantees of further tariff reductions. With high tariff rates still in place and especially harsh measures against China, experts predict increased inflation and slower economic growth ahead. The March Consumer Price Index offered a small bright spot, showing inflation easing to 2.4% year-over-year, below what economists expected.

What This Means for Your Portfolio

Looking beyond the day-to-day market swings, Deutsche Bank analysts highlighted that despite Wednesday’s impressive 9% rally, the S&P 500 remains nearly 4% below where it stood before the tariff announcements.

While some experts like Jim Caron of Morgan Stanley Investment Management believe markets will eventually stabilize, most expect continued ups and downs as confidence slowly rebuilds. For the average investor, this suggests staying invested but prepared for a bumpy road ahead as trade negotiations continue in this unpredictable environment.

More Information in our Economic Calendar.