Personal Finance
Why uncertainty makes the stock market go haywire
Traders on the floor of the New York Stock Exchange on March 14, 2025, at the opening bell.
Timothy A. Clary | Afp | Getty Images
Uncertainty isn’t in short supply these days — and investors have taken notice.
See-sawing policy from the White House has given investors whiplash on many fronts — with tariffs being among the biggest question marks, market experts say.
Coupled with uncertainty around federal job cuts, negotiations to end the war in Ukraine and other issues, the combination has been “disorienting to market sentiment,” Paul Christopher, head of global investment strategy at the Wells Fargo Investment Institute, wrote Wednesday.
Stocks have wobbled amid the vertigo.
The S&P 500 entered a correction last week, meaning the U.S. stock index fell 10% from its recent high mark in February. The index has recovered a bit but teetered on the edge of a correction Tuesday afternoon.
The benchmark is down about 5% in 2025.
Uncertainty makes investors jittery — and stock markets volatile — because they don’t know how policy and other events will impact companies’ ability to make money, said Barry Glassman, a certified financial planner and founder of Glassman Wealth Services.
Worried consumers might pull back on spending, crimping profits, for example. Tariffs raise costs for certain companies to import or produce goods — and it’s unclear how other nations might retaliate. While economists generally don’t think federal trade policy and job cuts will push the U.S. into recession, Trump hasn’t ruled out that possibility.
“All of this comes down to corporate profits,” said Glassman, a member of CNBC’s Advisor Council. “People will put more dollars where they have greater confidence in the investments,” he added.
Many ‘unanswered’ questions
There’s always uncertainty in the stock market, but it may feel more acute right now than at other times, experts said.
A recent (and perhaps counterintuitive) example of that uncertainty came on March 6, when President Donald Trump reversed course and delayed 25% tariffs on many imports from Canada and Mexico by a month. That delay came two days after the tariffs had taken effect.
Despite that “reprieve,” the S&P 500 sold off sharply during the day’s trading session, BeiChen Lin, senior investment strategist at Russell Investments, said recently.
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“There are still a lot of questions that remain unanswered,” Lin said.
For example, Lin said, what would happen after the 30-day delay? How might Mexico and Canada respond? Will the U.S. impose tariffs on other countries or products?
National Economic Council director Kevin Hassett warned Monday of “some uncertainty” over Trump’s tariff policy in coming weeks. Treasury Secretary Scott Bessent said last week that the Trump administration is more focused on long-term health of the U.S. economy instead of short-term volatility.
‘It’s all based on emotion’
Brad Klontz, a certified financial planner and behavioral finance expert, said he thinks the stock market turmoil ties into something more primitive than corporate profits: Human psychology.
“Quite frankly, it’s all based on emotion,” said Klontz, managing principal of YMW Advisors in Boulder, Colorado, and a member of CNBC’s Advisor Council.
“We like to feel like we can predict the future. When we feel the future is unpredictable, when we don’t have faith in our leaders, that’s when we start to panic,” Klontz said.
“There’s a ton of fear” right now, he added.
Amid fear, it’s important for investors to put the recent market moves into perspective, advisors said.
A 10% pullback isn’t shocking after two consecutive years of annual stock returns exceeding 20%, Glassman said.
“This is normal,” Glassman said of the market’s temper tantrums.
However, investors often make bad financial choices by engaging in catastrophic thinking (believing the markets may never recover, for example), Klontz said. They buy high and sell low, he said.
Historically, the market has always bounced back higher.
“If you lost $40,000, you have to ask yourself, did you really lose it?” Klontz said. “If you didn’t sell, I’m not sure you lost it. If you sold, you guaranteed lost that $40,000.”
Focus on what you can control
During times of uncertainty, investors should focus on what they can control, Klontz said.
It’s a good time for investors to look at their asset allocation, and ensure their overall stock-bond holdings haven’t gotten too risky or conservative over time, for example, Klontz said.
The recent volatility has also shown the value of diversification among different asset classes in an investment portfolio, Glassman said.
For example, international stocks in both developed and emerging markets are up this year, even though U.S. stocks are down, Glassman said. Bond returns have also been positive, he said.
Ultimately, investor behavior is the biggest threat to stock returns, not the federal government, Klontz said.
President Donald Trump departs the White House on May 22, 2025. Trump is traveling to his Trump National Golf Club in Virginia where he is holding a dinner for the top investors in his $TRUMP cryptocurrency.
Kevin Dietsch | Getty Images News | Getty Images
The Trump administration on Wednesday relaxed barriers in 401(k) plans to buying cryptocurrency and related digital assets like NFTs and meme coins.
The Labor Department rescinded guidance put in place by the Biden-era Labor Department in 2022 that aimed to safeguard 401(k) investors from such digital assets.
At the time, the Biden labor officials cautioned employers to exercise “extreme care” before making crypto and related investments available to their workers. They cited “serious concerns” about the prudence of exposing investors’ retirement savings to crypto given “significant risks of fraud, theft, and loss.”
The Trump Labor Department has withdrawn that guidance in full.
‘Neither endorsing, nor disapproving of’ crypto
The agency said the standard of “extreme care” cited by the Biden administration is not found in the Employee Retirement Income Security Act.
“Prior to the 2022 release, the Department had usually articulated a neutral approach to particular investment types and strategies,” the Trump Labor Department said in a compliance assistance bulletin issued Wednesday.
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The department said that it is “neither endorsing, nor disapproving of” employers who decide that adding crypto to a 401(k) investment list is appropriate.
The Labor Department’s reasoning extends to cryptocurrencies and “a wide range” of digital assets like “tokens, coins, crypto assets, and any derivatives thereof,” it said.
The move comes at a time when President Trump has launched a $TRUMP meme coin that’s added billions of dollars in paper wealth to his net worth and led Democratic senators to call for an ethics probe.
President Trump has pledged to make the U.S. the “crypto capital of the world.”
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Jamie Beaton has built a career helping students from around the world gain admission to Harvard University and other top-tier institutions.
Now, days after the Trump administration banned Harvard from enrolling international students and stopped scheduling appointments for student visas, Beaton, co-founder and CEO of Crimson Education, a college consulting firm, is advising his clients to “ignore the chaos.”
Getting into an Ivy League school like Harvard is a years-long process, Beaton said. For recently admitted applicants, current students and this year’s graduating class, he says, “remain steadfast in that goal.”
And for Harvard hopefuls, particularly from abroad, there could even be a benefit to applying in the upcoming cycle even amid the ongoing political strife. “You may have an advantage in the eye of the storm,” Beaton said, as some applicants turn their attention to other schools.
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Over time, Harvard has become the gold standard of the Ivy League. As of last year, Harvard’s acceptance rate was just under 4%, down from more than 10% two decades ago. Roughly 18% of the Class of 2028 came from abroad.
“I think Harvard’s brand on the world stage is so strong and so viral, it would take a long time to lose some of that trust and excitement,” Beaton said. “The brand can take a lot of big hits.”
Of course, students are justifiably nervous as the federal government continues to fire blows at one of the nation’s oldest and most venerable institutions of higher education.
“It’s been a rollercoaster ride since last Thursday,” said Fangzhou Jiang, a student at Harvard’s Kennedy School and co-founder of Crimson Education.
A glimpse into the Harvard University campus on May 24, 2025 in Cambridge, Massachusetts.
Vcg | Visual China Group | Getty Images
Harvard, Trump battle over international enrollment
On Tuesday, the Trump administration moved to stop scheduling new interviews for international students seeking visas to come to the U.S. and said it plans to expand social media vetting of foreign students, effectively disrupting international enrollment. Politico first reported the stop to new student visa interviews.
In the escalating standoff between the federal government and Harvard, the White House also attempted to terminate Harvard’s student and exchange visitor program certification and cancel all remaining federal government contracts with Harvard, which are worth a reported $100 million.
This latest moves come after Harvard refused to meet a set of demands issued by the Trump administration’s Task Force to Combat Anti-Semitism.
“The whole instability or uncertainty is quite damaging,” said Jiang, who has a student visa and would consider transferring across the country to Stanford University, where he is pursuing a dual degree.
“It is a privilege, not a right, for universities to enroll foreign students and benefit from their higher tuition payments to help pad their multibillion-dollar endowments,” Homeland Security Secretary Kristi Noem said in a statement Thursday.
A federal judge in Massachusetts on Friday temporarily halted the Trump administration’s ban on international students, following a petition from Harvard. A hearing is set for Thursday, May 29, to determine whether the temporary order should be extended.
“This is a critical step to protect the rights and opportunities of our international students and scholars, who are vital to the University’s mission and community,” Harvard’s president Alan Garber said in a statement. On its website, the Harvard International Office says “Harvard is committed to maintaining our ability to host our international students and scholars.”
Beaton predicts that by the time college applications are due this fall, the university and the federal government “will come to a compromise.”
Why international enrollment is so important
“International students make up such a vital part of the undergraduate student population,” said Robert Franek, The Princeton Review’s editor-in-chief.
Further, foreign students typically pay full tuition, which makes international enrollment an important source of revenue for Harvard and many colleges and universities in the U.S., according to Franek.
Altogether, international student enrollment contributed $43.8 billion to the U.S. economy in 2023-24, according to a report by NAFSA: Association of International Educators.
During that academic year, the U.S. hosted a record number of students from abroad, marking a 7% increase from 2022-23, according to the latest Open Doors data, released by the U.S. Department of State and the Institute of International Education.
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