In early April, President Trump’s ‘Liberation Day’ tariffs contributed to a significant market sell-off. Following the initial tariff announcement, the S&P 500 index fell by over 12% in less than a week. Since that time, the recovery has been more rapid and complete than many investors expected.
In the 100 days from the market’s April trough, the S&P 500 gained over 25%, a historically strong recovery. This recovery has also been characterized by impressive breadth. Categories that have lagged in recent years, such as small caps and international stocks, have gained along with the S&P 500.
In the past, similar recoveries have been followed by continued positive performance. Since 1950, there have been 11 cases of stocks rallying over 25% in 100 days.[1] In 10 of these instances, stocks have been higher one year after the rally, a favorable precedent for today’s market.
All this is not to say that the outlook is entirely clear. While the market’s strength is encouraging, significant uncertainty remains below the surface. In this article, we’ll take a look at some of the key challenges shaping the rest of the year and explore how Sound View is positioning portfolios to navigate this environment.
The Current Landscape: Many Mixed Messages
Following the April sell-off, tariffs seem to have faded from focus for many investors. Markets are no longer reacting as dramatically to ongoing tariff announcements. But despite this calm, notable tariff uncertainty still remains, with the Supreme Court soon set to decide on the legality of many of Trump’s new levies.[2]
The labor market has not offered investors any greater clarity. Although initial jobless claims have slowed in recent weeks, the most recent estimates of the unemployment rate have ticked up.[3],[4] Amid extended economic and policy uncertainty, businesses appear to be holding off on hiring.
While the Federal Reserve has reacted to these hints of weakness with a quarter-point rate cut, it’s not clear whether investors should view this as the start of a new dovish cycle. Speaking to the press, Fed Chair Jerome Powell described the decision as a “risk-management cut.”[5] Inflation concerns mean that the Fed will likely have to make rate decisions on a meeting-by-meeting basis.
This cloudy macro picture has not seemed to dent the market’s bullishness, particularly when it comes to AI. Continued R&D spending from Big Tech shows that investor enthusiasm for the technology remains robust – but has also stoked fears of a bubble. Valuation metrics in the tech sector have risen above their long-term averages.[6]
Considering all the above, there can be little doubt that the current investment landscape remains a highly uncertain environment. From tariffs to technology, individuals have little control over how these key trends will unfold. In such an environment, it’s increasingly important that investors focus on the factors they can control, including a continued commitment to long-term thinking and intelligent planning.
Our Philosophy: Discipline, Not Speculation
Investors will likely face an unpredictable and noisy environment through the rest of the year. A robust financial plan, supported by a disciplined investment process, can serve as a source of stability through such uncertainty.
Between market hype and economic fears, the temptation to react to every headline has never been greater. Some investors are content to try to get lucky by speculating on market movements. But at Sound View, we recognize that this is no way to consistently and reliably achieve long-term financial goals.
When the outlook becomes more complicated, downside protection becomes more important. The math is simple – a 20% loss takes a subsequent 25% gain just to break even, meaning that investors should first focus on not losing money. When paired with a portfolio strategy that prioritizes consistent returns, this approach can be a powerful way for investors to continue building toward their long-term goals, even in an inconsistent environment.
Asset Allocation: Searching for Consistency
As always, our portfolio approach rests on a fundamentally oriented focus on value. Even within a sector like AI, where valuations remain elevated, disciplined research and analysis can still uncover opportunities for capital deployment. As the Dot-Com era demonstrated, investors shouldn’t dismiss a technology’s transformative power just because of market hype.
With the potential for more Fed rate cuts over the rest of the year, the current moment also offers strong opportunities to lock in elevated yields on outstanding bonds. Market uncertainty has driven yields higher on long-maturity bonds, which could see capital appreciation if the Fed’s cutting cycle extends. These assets can be a strong fit for our portfolio framework – consistent returns today, potential growth tomorrow.
We’re also exploring opportunities for risk mitigation with the use of innovative structures such as buffered ETFs. While not suitable for every investor, buffered ETFs can offer downside protection in exchange for capping potential gains. Typically benchmarked to a major index like the S&P 500, these funds can help make equity returns more consistent and less volatile.
Finally, we continue to emphasize the importance of diversification within client portfolios. Crucially, diversification shouldn’t be understood simply as a risk management tool in the current environment. Given the breadth of the market’s recent recovery, a suitably diversified portfolio can also help investors capture upside potential across asset classes.
Conclusion: Complex Questions, Simple Answers
Although the current environment may be complex, the investment response does not need to be. A continued focus on certainty, stability, and reliability will pay dividends for long-term investors.
Through the rest of the year, we will continue to monitor the impact of ongoing trade negotiations and the evolving labor market. While elevated inflation figures do pose a risk, we are optimistic that Fed rate cuts can provide meaningful economic support as both businesses and consumers adjust to tariffs. Moreover, robust corporate earnings growth should provide reassurance that businesses are continuing to effectively navigate the current climate.[7] For existing clients with questions on how the current environment may impact their portfolio allocation, we invite you to contact your relationship manager with any questions. And for prospective clients who’d like to learn how Sound View’s approach can provide a steady hand through uncertainty, reach out to start a conversation today.
[1] Opening Bell Daily Stocks just secured one of the best 100-day rallies in history Link
[2] Wall Street Journal Supreme Court Agrees to Fast-Track Trump’s Tariff Appeal Link
[3] Reuters US weekly jobless claims reverse prior surge, labor market still softening Link
[4] Reuters Chicago Fed releases interim unemployment estimate, with September at 4.3% Link
[5] Bloomberg Powell Reiterates No Risk-Free Path for Fed Amid Dual Threats Link
[6] Centre for Economic Policy Research Unpacking US tech valuations: An agnostic assessment Link
[7] FactSet Earnings Insight September 19, 2025 Link
Disclosure:
The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this commentary is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. All investments carry a certain positive risk, and there is no assurance that an investment will provide performance over any period of time. An investor may experience loss of principal. Investment decisions should always be made based on the investor’s specific financial needs and objectives, goals, time horizon, and risk tolerance. The asset classes and/or investment strategies described may not be suitable for all investors and investors should consult with an investment advisor to determine the appropriate investment strategy. Information obtained from third party sources are believed to be reliable but not guaranteed. Sound View Wealth Advisors Group, LLC makes no representation regarding the accuracy or completeness of information provided herein. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice.