After a turbulent spring triggered by President Trump’s sweeping tariffs on Canada, Mexico, and China, markets have stabilized. The S&P 500 and TSX have recovered approximately half of their losses as inflation decreases and central banks, including the Bank of Canada, reduce policy rates to 2.5% to support growth.
However, persistent trade tensions and softened earnings forecasts have many investors pondering whether it’s a good time to reinvest or wait for a more favorable dip.
In early April, the S&P 500 entered bear market territory after falling 21% from its peak of 6,144 on February 19, 2025, marking a rapid transition to a bear market, second only to the COVID-19 pandemic decline in March 2020.
Despite ongoing volatility, analysts now characterize this sell-off as a short-term correction rather than a prolonged decline. Recent market recovery has been driven by easing inflation, positive expectations for interest rate cuts, and renewed consumer spending, although geopolitical risks, notably related to tariffs, continue to weigh on investor sentiment.
Trump’s tariff policies affect confidence, particularly following his announcement of increased tariffs on imports from Canada, Mexico, and a rise from 10% to 20% on Chinese goods. These tariffs have raised fears of a global trade war, contributing to market volatility.
Fortunately, severe recession predictions from spring have not become reality. GDP growth in the U.S. and Canada has stabilized around 1.5% to 2%, indicating that much of the tariff risk may already be factored into market prices.
With interest rates dropping and inflation easing, investors now have a unique opportunity to purchase quality stocks before the next bull cycle gains momentum. A balanced approach, mixing defensive dividend stocks with select growth opportunities, is essential for long-term investment success.
