In This Article:
(Bloomberg) -- In a few short weeks, President Donald Trump has started silencing the buy-the-dip stock traders who set the tone on Wall Street for the better part of two decades.
Most Read from Bloomberg
-
NYC Congestion Pricing Toll Gains Support Among City Residents
-
Open Philanthropy Launches $120 Million Fund To Support YIMBY Reforms
-
Prospect Medical’s Pennsylvania Hospitals at Risk of Closure
In their place are growing calls to lock in profits and sit on the sidelines while Trump’s trade-war chaos upends the economic outlook — and casts uncertainty over who, if anyone, will emerge as the new era’s stock-market winners.
“Buying the dip now is like buying discounted tickets to a show without knowing who’s performing,” said Dave Mazza, chief executive officer of Roundhill Investments. “Unlike the recent path when buying every dip was reliable, the heightened uncertainty of tariffs and trade policy means investors could end up with either a blockbuster or a flop.”
The sentiment is a sign of just how much Trump has rattled Wall Street’s once prevalent bull-market faith by moving to roll back the globalization that’s powered the world economy for decades and slash the government spending that’s provided a steady jolt of stimulus at home.
But as much as the policies themselves has been the return of Trump’s style — a scattershot approach that’s resulting in a dizzying cycle of tariffs that are called on, off and on again. And that volatility has shattered confidence that any bounceback — like the one that lifted stock prices Wednesday — won’t reverse as quickly as it appeared.
“Uncertainty is probably here to stay for a while,” said Burns McKinney, managing director and senior portfolio manager at NFJ Investment Group.
That uncertainty has pulled down what had been one of the strongest US bull runs since the Internet bubble of the 1990s, one that was stoked by swelling corporate profits and speculation that America’s tech giants would lead the coming artificial-intelligence revolution. That drove the Nasdaq 100 Index to gains of 54% in 2023 and 25% last year.
Even with rising doubts about whether valuations had run up too far, that rally had supported a buy-the-dip mentality. Last year, until late July, the S&P 500 went 356 days without logging a 2% decline, the longest such winning streak since the Global Financial Crisis, according to Bloomberg Intelligence data.
Since mid-February, the S&P has charted a steep pullback from its record high and is on the threshold of a technical correction, meaning a drop of 10% or more from its recent peak.