Two the Point — Market Shifts & Short-Term Shakes: Navigating Uncertainty with Perspective

Investor sentiment has turned cautious as markets digest rising tariffs, potential job cuts, and shifting economic expectations. While volatility may persist, historical patterns suggest that patience and a focus on quality over speculation tend to reward disciplined investors.

Key Insights:

• Trade tensions escalate, with an additional 10% tariff on China and 25% tariffs on Canada and Mexico now in effect, alongside upcoming levies on steel, aluminum, and pharmaceuticals.
• Labor market concerns intensify, with DOGE-related federal layoffs projected at 300,000, potentially impacting up to 7 million jobs through indirect effects.
• Economic data weakens, as the Atlanta Fed’s GDPNow forecast turns negative, and the Economic Surprise Index declines to -16.5, reflecting a slowdown in growth momentum.
• Market rotation accelerates, with investors shifting away from high-momentum stocks and into companies with sustainable earnings and lower valuations.
• The Magnificent Seven struggle, as five of the seven rank among the worst-performing S&P 500 stocks YTD, with Tesla (-30%), NVIDIA (-15%), and Alphabet (-12%) leading the declines, as of March 3, 2025.
• Long-term perspective remains key, as market psychology often amplifies short-term concerns, but history shows that staying invested through volatility tends to generate superior outcomes.