Stock Market Turmoil Over Tariffs and Oil Prices: 60 Years of History Show What Happens Next
Several headwinds threaten the U.S. stock market in the near term, but history says the S&P 500 is headed much higher in the long term.
It's been a tumultuous year for the United States stock market. The S&P 500 (SNPINDEX: ^GSPC) dropped 10.5% in the two days after President Trump unveiled his "Liberation Day" tariffs in early April, the fifth-largest two-day decline in history. That led to the third-largest weekly spike in the CBOE Volatility Index, commonly called Wall Street's "fear gauge."
Surprisingly, the S&P 500 rebounded shortly thereafter as encouraging inflation, jobs, and consumer spending data showed the resilience of the U.S. economy. Additionally, Trump paused the most severe tariffs for 90 days to allow time for trade negotiations, which caused several economists to lower their recession probability forecasts.
However, the stock market recently hit another spot of turbulence when Israel attacked Iran, and tensions escalated further when the U.S. entered the conflict. Iran is one of the largest oil producers in the world, so investors are worried the conflict will lead to higher oil prices, which in turn could bring about a resurgence in inflation.
