In the first 100 days of Trump, the S&P 500 went on the roller coaster. What can investors expect in the next 100 days?

After President Donald Trump took office, he promised to shake everything, boy, he did it. Trump imposes tariffs on goods in most countries, trying to change decades of globalization, which he believes makes global trade unfair to the United States

In the initial announcement on April 2, the level of tariffs caused stocks to fall, both S&P 500 and Nasdaq Composite Materials The index entered bear market territory that month. Once Trump announced a 90-day suspension of tariffs on most countries, stocks quickly rebounded, so the government could negotiate a trade deal.

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Even with rebounds and a nine-day streak as of May 2, the S&P 500 still performed the worst in the first 100 days of the president's tenure since 1974, down about 8%. It was a roller coaster for investors in the first few months of Trump's second semester, but what would they expect in the next 100 days?

As of this writing, the Trump administration has suspended 24 days of tariff suspensions for 90 days. While the government suggests trade talks with major trading partners like India and Japan, nothing is official. In addition, tensions with China escalate. Trump has raised tariffs on many commodities from the world's second largest economy to accumulate 145%. Meanwhile, China hit, slapped U.S. imports with a cumulative tariff of 125%, while the country's leadership showed no signs of retreat.

However, media recently reported that a spokesman for the Chinese Commerce Secretary said in a statement that Chinese officials are evaluating the possibility of starting trade talks with the United States after senior U.S. officials “through inquiries from relevant parties.” However, the statement also said that if the United States does not want to "further compromise on mutual trust", all unilateral tariffs must be removed.

A deal with major trading partners, including China, is crucial to maintaining a stable position in the stock market. Many companies warn of what could happen if Trump eventually resumes its high tariff rates. The consequences could mean higher prices and layoffs, while many market strategists are predicting an imminent recession. All eyes will be on these trade talks, which could keep investors on their toes over the next 100 days as the market continues to sway wildly based on news headlines.

President Donald Trump is in front of the microphone.
Official White House Photos by Joyce N. Boghosian.

Even with a 90-day pause, the chances of a recession this year have increased with the back and forth of economic data. The U.S. gross domestic product (GDP) fell by 0.3% in the first quarter, although many economists believe that the data may be biased by companies that are eager to raise tariffs, which has led to a surge in imports. April’s work report refuted concerns about the recession, surprised by the upside, with the unemployment rate still at 4.2%, suggesting that the labor market may be better than some think.

Nevertheless, if the U.S. GDP shrinks again, the economy will be in a technological recession. Economic data also begins to show some cracks on consumer aspects. Tariffs add another layer of uncertainty to the macro outlook. The Fed is content to wait and see what happens because it fears tariffs will lead to higher consumer prices.

The Fed does not want to see consumer prices rise, while economic growth slows down and unemployment rises. Such conditions will make it difficult for the Fed to achieve its dual tasks of full employment and price stability. This situation could lead to pitfalls and even worse results, as the Fed cannot simply lower interest rates to stimulate growth without risking inflation and damaging the labor market.

All these different factors set the stage for greater fluctuations. Despite the recent streak in stocks, the U.S. economy still has a shot, and no one can be sure how Trump’s tariff legend will end, if anything.

With this in mind, investors need to maintain their long-term outlook. Trying to achieve short-term victory in this environment is particularly dangerous. Historical data shows that the longer you can keep your investment, the better the chances of positive returns. A way to stay calm in the chaos and know that you should still win patience in the end.

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Bram Berkowitz has no position in any of the stocks mentioned. Motley fool has no position in any stock mentioned. Motley Fool has a disclosure policy.

In the first 100 days of Trump, the S&P 500 went on the roller coaster. What can investors expect in the next 100 days? Originally published by Motley Fool