Although a Q1 market update video is currently being edited and will be in your inbox soon, we wanted to provide a more immediate perspective on the recent market volatility and the policy developments that contributed to it. We know periods like this can be unsettling, and we want to acknowledge how challenging these environments can be.

The magnitude of recent market swings is not just dramatic, it is historically rare. Since 1950, there had only been five prior instances where the S&P 500 fell 10% or more over two consecutive trading days. Last Thursday and Friday became the sixth.

Today remains volatile, and throughout the day markets have swung between substantial losses and gains. Overnight, futures were down nearly 4% at one point. If Monday follows through with another 4% decline, it will mark just the fourth time in history that the market experienced three consecutive daily drops of that magnitude. All three prior instances occurred during the Great Depression. Those numbers help put the current volatility into historical context and remind us just how sharp and rare these kinds of moves really are.

Markets had been expecting the tariff announcement, but what emerged on Wednesday afternoon from the Rose Garden strayed dramatically from those expectations. The administration had previously signaled a targeted and strategic approach, but what was delivered instead was a broad, sweeping change with dramatic rates and an almost-immediate implementation. Investors were rattled, and data points like uninhabited islands appearing on the list of tariffed entities only heightened concern about the depth of analysis behind the policy. As more details emerged, the methodology appeared to be based on a simple application of trade deficit figures, which further contributed to the market’s sense of uncertainty. The result was confusion, loss of confidence, and a rapid shift toward risk aversion.

This situation is reminiscent of how the Federal Reserve once operated. In the past, the Fed maintained strict secrecy around its intentions. Alan Greenspan was famously vague and stoic, using carefully crafted “Fedspeak” to avoid revealing too much. Over time, the Fed learned that surprising the market was counterproductive and contributed to volatility. Today, the Fed aims for transparency and predictability – a recognition that markets do not respond well to uncertainty, and a lesson this administration has not embraced.

Markets can move incredibly fast in uncertain environments, and today is no exception. The Fed Funds futures market is now pricing in an additional rate cut by year-end compared to just a week ago, with some market chatter speculating it could come in the form of an emergency move. Adding to the evolving backdrop, reports indicate that more than 50 countries have reached out to begin trade negotiations with the administration.

This kind of rapid shift highlights why we stay grounded in long-term thinking. Volatile periods like this are highly dynamic where facts can change quickly. This reinforces the importance of avoiding emotional or reactionary investment decisions.

Fear is a powerful emotion, and we understand the intensity of that feeling. However, history has shown that fear has not been a reliable guide for making sound portfolio decisions. We do not know whether policy shifts will come today, tomorrow, next month, or next year – or whether they will send the market to new highs or new lows. What we do know is that markets have consistently overcome past challenges. This long-term historical chart from J.P. Morgan (see below) illustrates how resilient markets have been – even through wars, recessions, policy shocks, and periods of extreme uncertainty.

That is why we remain committed to the long term, where your portfolio has been intentionally constructed to reflect your unique time horizon, income needs, risk tolerance, and goals for the future. Your Investment Policy Statement serves as a foundational guide, especially during times of heightened uncertainty.

Your Summit team remains ready and available.

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