Key Takeaways

President Trump's unpredictable trade policies have pushed stock volatility up to its highest level in years, creating substantial uncertainty and, some say, opportunity on Wall Street.

Stock volatility jumped last week when President Trump announced sweeping tariffs that would raise the effective U.S. tariff rate to its highest level in more than a century. The Cboe Volatility Index ( VIX ), sometimes referred to as the fear index, nearly tripled between Trump’s tariff announcement last Wednesday and Monday morning when stocks opened at their lowest level in more than a year. The VIX has remained elevated despite a historic stock rally on Wednesday when Trump delayed nearly all of the tariffs. The index traded above 40, a level it hit only once in all of 2023 and 2024, for a sixth consecutive day on Friday.

The stock market’s volatility matches the unpredictability of the White House’s trade policy. Trump has announced, delayed, escalated, and watered down his tariff threats repeatedly during the first months of his presidency, putting businesses and consumers on tenterhooks. Mentions of “chaos” on earnings calls and at corporate conferences have skyrocketed in recent weeks , according to analysis from data provider AlphaSense.

Uncertainty Will Continue to Hang Over Market

The 90-day pause eliminates some of the risk hanging over markets, according to Kristian Kerr, Head of Macro Strategy at LPL Financial, who noted countries and companies could negotiate lower rates over the next three months. “So in essence uncertainty has been reduced a bit,” he said, “but the erratic nature of US policy will remain an overhang and keep uncertainty elevated versus norms until we get more definitive clarity on trade policy.”

Wall Street expects more twists and turns in the coming months. The 90-day pause “may provide companies with a clearer backdrop for their guidance, offering some relief to a market hungry for direction,” wrote Gina Bolvin, President of Bolvin Wealth Management in a note on Wednesday. “However, uncertainty looms over what happens after the 90-day period, leaving investors to grapple with potential volatility ahead.”