Investors bet clarity on tariffs will bring stability to markets

Stocks' calm this week shows investors continue to bet that clarity on trade will bring stability to markets.

- Sam Goldfarb

Major indexes have retreated since President Trump began hiking duties on the country's largest trading partners, but not nearly as much as would be expected if investors thought that the economy was barreling toward a recession. As of Tuesday afternoon, the S&P 500 was down around 8% from its all-time high reached in February. But it has ticked up over the past two days, extending a rebound off its lows from a few weeks ago.

Trump is due to unveil sweeping tariffs at an event at the White House Rose Garden on Wednesday, but what exactly he will announce is unclear. He said late Monday he had settled on a plan, but didn't say what it was.

Investors and analysts have offered several explanations for the stock market's resilience. Those include: "I know we're going to have tariffs," said Jim Caron, chief investment officer of the portfolio solutions group at Morgan Stanley Investment Management. "Now the game is something that we on Wall Street are very, very well equipped to understand. You know: what's the cash flows under these tariff scenarios? What's the range of outcomes?"