Fidelity Says These 2 Factors Still Point to a Strong Market Amid Tariffs: What To Know
Written by
Adam Palasciano
Edited by
Jenna Klaverweiden
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It seems like tariffs are all anyone can talk about these days. Since President Trump’s sweeping tariff plan was announced, the stock market has violently swung up and down, with financial headlines and policies changing seemingly on a daily basis.
Despite this, financial services company Fidelity explained in a recent article that some factors are still pointing to a strong market. Keep reading for more details on how the tariffs have affected the economy and the two factors Fidelity is looking at.
Also see five ways investors are changing strategies amid a turbulent stock market.
Tariffs Have Created Economic Uncertainty
On April 2, dubbed “Liberation Day,” President Trump announced a huge tariff plan that imposes a 10% universal tariff on all countries worldwide, with some countries set to face much higher reciprocal tariffs.
However, Trump temporarily suspended some of the previously announced higher tariffs for 90 days, while increasing them on imports from China (though he has since mentioned lowering them). In the meantime, the U.S. will impose a blanket 10% tariff on most countries worldwide while higher tariffs remain paused for now.
It ultimately remains unclear how this tariff policy will ultimately affect the economy. As NPR reported, Goldman Sachs has raised the probability of a recession to 45%. However, Fidelity explained that two factors still point to a strong market.
Economic Growth and Corporate Profits Are Holding Up
Fidelity explained that, historically speaking, economic growth and corporate profits have been more important for ongoing financial market performance compared with shifts in government policy.
At least for now, these two indicators have remained positive, and fundamentals appear strong despite negative financial headlines and stock market swings.
Stocks and Bonds Still Have Potential
At the same time, Fidelity also believes that stocks and bonds will yield positive long-term results.
“Our outlook for U.S. stocks remains positive and we believe intermediate-term bonds can offer yield as well as diversification,” said Mike Scarsciotti of Fidelity’s Capital Markets Strategy Group.
As a general rule of thumb, it’s typically best to make long-term investments to weather periods of economic volatility. If you buy and hold stocks for the long term, you’ll have a better chance of realizing a significant profit.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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