An ‘Untradable’ Market: Trump Sows Profound Uncertainty for Stocks

The administration’s whipsawing moves are leaving investors guessing. The risk is that this uncertainty comes at a real cost to the economy.

Investors are adept at finding ways to navigate just about any government policy, good or bad. Tariffs, once set, can be modeled for how they will affect corporate profits, prices and, in turn, the broader economy. The mass firings of federal workers can be analyzed for how they might increase unemployment.

The thing that investors really struggle to put a price on is uncertainty. And right now, there is a profound sense of uncertainty in the stock market.

It has been brought on by the whipsawing policies and pronouncements of the Trump administration. To name just three: the on-again, off-again threats of tariffs; President Trump’s refusal to rule out the possibility of a recession, followed by reassurances that a severe downturn is unlikely; and the chaotic cuts to the federal government.

For many of Mr. Trump’s supporters in Washington and across America, the president is doing exactly what he should be doing as a savvy negotiator: keeping trading partners like China and Mexico off balance in order to gain the upper hand.

But for investors, such dizzying shifts have made the stock market in the early months of the Trump administration “untradable,” said George Goncalves, head of U.S. macro strategy at MUFG Securities. Perhaps the administration will raise tariffs further and stocks will fall again. Perhaps the administration will abandon tariffs altogether, likely soothing the market.

“The volatility does not make this easy,” Mr. Goncalves said. “It’s a challenging environment to have any conviction to hold a view.”