Wall Street Rattled by Trump’s Tariff Chaos as Global Stocks Gain Favor

Market volatility surges amid uncertainty over trade policies and economic direction

Wall Street has endured another turbulent week as investors react to U.S. President Donald Trump’s tariff-driven agenda. The S&P 500 slumped by 2% this week, despite a sharp Friday rebound, reflecting heightened volatility unseen since the Federal Reserve’s aggressive inflation-fighting policies.

At the center of the chaos is a growing fear of a protracted trade war, which has sent shockwaves across global markets. While hedge funds and retail investors struggle with steep losses, contrarian investors like Ben Inker of Grantham Mayo Van Otterloo are profiting from the turmoil, thanks to strategic bets on undervalued global equities.

Wall Street’s Volatility Reaches Fed-Era Highs

Stock market fluctuations have intensified, with the average daily swing in U.S. equities and bonds rising to levels not seen since the Federal Reserve’s tightening cycle.

• The S&P 500 briefly entered correction territory, plunging 10% in just 16 sessions before rebounding.
• The U.S. dollar recorded its biggest post-inauguration loss since 1973, slipping 2.5% in March alone.
• Credit markets are flashing warning signs, with junk bond spreads widening, reflecting investor anxiety over economic growth prospects.
• Citigroup’s global risk gauge, which measures volatility across 22 asset classes, hit its highest level since 2022.

For market veterans like Inker, these wild swings signal long-overdue market corrections. “This does feel pretty violent, mostly because the market had been pretty tame for a couple of years,” said Inker, co-head of asset allocation at Grantham Mayo Van Otterloo. “I’m very sympathetic to what the market is doing.”

Trump’s Policies Drive Unprecedented Market Moves

Market observers are attributing the latest financial turmoil to one primary variable: Donald Trump. The president’s early days in office have already set records for market turbulence, surpassing previous administrations’ rocky transitions.

• The S&P 500 posted its worst start for a new administration since the 2008 financial crisis.
• Uncertainty surrounding tariffs and potential government shake-ups has triggered a wave of sell-offs.
• The market concentration of the “Magnificent 7” tech stocks has started to unwind as investors rotate into international markets.

A shift in sentiment is apparent, with investors reassessing the risks of overvalued U.S. equities. As Jeff Muhlenkamp, portfolio manager at Muhlenkamp Fund, put it: “The market was very expensive anyway, and all this uncertainty is going to make people nervous.”

Muhlenkamp’s fund has defied broader losses, gaining ground by targeting undervalued sectors such as semiconductor and chemical stocks.

From Boom to Bust: Wall Street’s Rapid Reversal

Just weeks ago, Wall Street was on a euphoric rally:

• Bitcoin surged past $100,000.
• Junk bond spreads were at their tightest since 2007.
• Roughly one-third of the S&P 500’s value was concentrated in just seven tech stocks.

Now, those excesses are unwinding. Investors seeking safety have piled into gold and U.S. Treasuries, mirroring historical patterns seen during previous economic downturns.

• Gold has rallied 10% since Trump’s inauguration—the best performance at the start of a presidential term since Jimmy Carter in 1977.
• U.S. Treasuries have gained 2.5%, a move not seen since Bill Clinton’s presidency in 1993.

Winners Emerge from the Market Turmoil

While many investors are licking their wounds, some see the current landscape as an opportunity.

• International equities have gained traction as money rotates out of overvalued U.S. stocks.
• Value investors—long sidelined by the dominance of high-growth tech stocks—are finding opportunities in beaten-down sectors.
• Defensive assets, such as gold and government bonds, are seeing strong inflows.

At Morgan Stanley Investment Management, Jitania Kandhari, deputy CIO of the solutions and multi-asset group, is capitalizing on the shift away from U.S. tech stocks. “U.S. concentration was up, valuations were extended,” she noted. “It did feel like you could have a correction.”

Investors Await a “Trump Put” to Calm Markets

The persistent volatility has led some analysts to speculate about a potential “Trump put”—an intervention by the president to stabilize markets. However, with sentiment still fragile and faith in America’s tech sector being tested, investors remain cautious.

As Wall Street adjusts to the new reality of heightened volatility and shifting economic policies, a new group of winners is emerging. The once-dominant U.S. tech stocks are losing steam, while international equities, value stocks, and safe-haven assets gain favor. Whether this trend continues depends on how Trump’s economic agenda unfolds in the coming months.