The Epic Comeback of Wall Street and the Unsolved Puzzles
The epic comeback of Wall Street indeed raises some puzzles, particularly in the context of the ongoing risks in Donald Trump’s trade policy and its effects on global markets. Here are some key aspects that explain Wall Street’s comeback and the challenges associated with it:
Background: 2025 Stock Market Crash
On April 2, 2025, the global stock markets began to decline sharply following the announcement of new trade policies by President Donald Trump. These measures led to increased volatility and a massive loss of confidence among investors. The markets experienced the largest decline since the crash in 2020, which was triggered by the COVID-19 pandemic.
Trump’s Trade Policy and Its Impact
Trump’s trade policy, announced on April 2, 2025, as “Liberation Day,” included extensive tariffs that affected nearly all sectors of the US economy. These measures exacerbated the trade war with China and led to new conflicts with Canada and Mexico. The increasing uncertainty and volatility in the markets were direct consequences of this policy.
The Comeback of Wall Street
Despite the initial turbulence, Wall Street experienced a remarkable comeback. On May 1, 2025, the day began with negative news: the US economy had shrunk by 0.3% in the first quarter, marking the first decline in three years. However, the release of quarterly figures from tech giants like Microsoft and Meta Platforms led to a late surge. Microsoft’s revenue rose by 13% to $70.07 billion, and Meta also reported a 13% increase in revenue. These positive results saw the stocks of both companies rise significantly in after-hours trading.
Risks and Challenges
Despite the comeback, risks remain. Trump’s trade policy has led to ongoing uncertainty that continues to affect the markets. Recent developments show that markets react to positive news, but the underlying risks from the trade policy have not been fully resolved. Solita Marcelli, Chief Investment Officer at UBS Global Wealth Management, emphasizes that market volatility could persist until there is greater clarity regarding tariffs.
Global Impact
The impact of US trade policy is not limited to domestic markets. It has also affected global markets, as trading partners and investors respond to uncertainty. The recent pause in tariff increases on April 9, 2025, led to a short-term market bounce, but also shows that the global economy is reacting to US policy.
In summary, while Wall Street’s comeback is encouraging, the ongoing risks from trade policy and global uncertainty should not be overlooked. Investors must remain cautious and pay attention to developments in trade policy in order to adjust their investment strategies accordingly.