The stock market has been a bad spring after a year of banners in 2024 and a rise in stock prices after the U.S. presidential election. Since reaching a peak of 6,411.15 on February 19, 2025, the S&P 500 (the benchmark for U.S. stocks) has dropped more than 15% in the past six weeks.
The Trump administration's constant changes in tariff policies have not helped. Yesterday, the White House announced a series of new tariffs for countries around the world. Today, U.S. stock prices have fallen so rapidly that the S&P 500 lost $2 trillion in just two and a half hours. The market may be red for a while.
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“Businesses plan in the chaotic tariff environment created by the Trump administration is very difficult,” said Robert Johnson, partner in the Economic Index and CEO of Finance Professor of Creton University’s Hyde Business School. Markets often react negatively to tariffs, which are taxes on imported goods that usually drive consumer prices and stifle global trade prices.
While escalating tariff threats are eroding consumer and corporate confidence, cutting federal labor is causing households to curb spending and sparking concerns about a recession. “This could lead to a slowdown,” Johnson said.
Many other factors have also contributed to stock market volatility, such as inflation, interest rate forecasts and concerns about increased military conflict. Wall Street briefly rallyed after the Fed kept its benchmark interest rate stable on March 19, but forecasts for higher inflation and lower economic growth in 2025 subsequently lowered stocks again.
“The stock market is affected by reality and perception,” said Rick Miller, financial and investment advisor at Miller Investment Management. “What people think is happening is often as impacted as the actual market conditions.”
Although the pressure to drop 10% in the stock market may be huge, it is also normal. Stock markets have been recovering from steep drops, including the recent Great Depression and the Covid-19 collapse. If you are upset about your investment, such as the 401(k), financial experts won't panic.
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What should I do if my investment is losing money?
While watching your investment shrink may be painful, changing your strategy is not always a safer option, especially if you’re a few years away from retirement. If your 30s to the early 50s, then time is right around you to ride out and play long races.
But if you are retirement or are planning to retire early, Miller says you might want to cash in on a qualified plan to keep things built over the years.
Despite the historical record of stock market bounces after a downturn, retirees (or people close to retirement) may not be able to afford the time needed to recover. For example, after the bursting of the Internet bubble in 2000, the market began to surge, but the subsequent financial crisis in 2007-09 took a hit. The stock market did not fully recover until 2013.
The key is to protect your financial security. For example, as long as you do not withdraw funds from your retirement account, sell assets Within Qualified workplace plans, such as 401(k) or IRA, will not result in tax bills no matter how old you are.
“By making your qualified program contribute aggressively until the market stabilizes, the effect is a little effective,” Miller said. This is a way to benefit from the upward momentum in the market while preventing nest eggs from any further Didi.
Since stocks are cheaper, should I invest more now?
Stocks may rebound in light of broader issues in the economy. Most financial advisers advise against changing your strategy based on the latest stock market rises.
“The best advice for long-term investors is to develop an investment plan and stick to it,” he said.
It is usually wise to avoid panic for sale. By doing so, you may violate the general guidance of your investment, which is to buy high prices at a low price.
Financial planners often recommend using what is called a dollar cost average strategy, where you invest a fixed amount each month regardless of market conditions. This approach removes some sentiment from investment, and even if you pay more when the market surges, it can allow you to lock in low prices during a decline in the stock market.
However, if you do choose to take advantage of the lower price, remember that the timing of recovery is unpredictable. “Even the average investor should consider 'buy low prices' when high-quality companies experience price drops for years,” Miller said.
