Stock Market Insights: Stocks swing back hard, but is it sustainable?

Joe Shearrer, CPFA® is Vice President and Wealth Advisor at Fervent Wealth Management.

My son had a baseball tournament this past weekend. On Saturday, he went 0-for-4 at the plate—tough day. As they often do, frustration, doubt and a little discouragement crept in. But baseball has a funny way of reminding us how quickly things can turn around. On Sunday, he bounced back, going 6-for-8 and helping his team surge through the bracket.

The stock market, it seems, has had a similar streak — from cold to hot in record time. After a sharp and unsettling drop in early April, markets have staged a remarkable comeback — the kind that turns heads and lifts spirits. But just like my son's hitting streak, the real question isn't how impressive the bounce-back looks on paper; it's whether it will last.

What drove the drop and the surge?

April's decline wasn't driven by collapsing economic fundamentals, but by something else: policy shock. Specifically, a surprise tariff announcement on April 2 sent a wave of uncertainty through global markets. The scope and suddenness of the policy caught many off guard, sparking widespread selling. At the time, the true economic impact of the tariffs was impossible to judge — and in many ways, it still is.

Fast forward to May, and investor confidence has returned — at least for now. However, we should be cautious about interpreting the recent rally as a clear signal that all risks have passed. Much of the current optimism may be premature.

The economic picture: Still forming

It's important to remember that economic data takes time to reflect the effects of major policy changes. The full impact of the April tariffs likely won't be visible until June or July. Until then, markets may be flying blind. If economic growth does show signs of slowing, especially if backed by hard data, not just early indicators, we could see another wave of volatility later this summer.

Complicating matters, the policy landscape remains unsettled. Many broader tariffs are paused until July, and China is exempt from increases until August 12. If trade tensions flare up again or negotiations break down, it could trigger renewed market instability, especially during the late summer and fall, a season that historically brings challenges for stocks.

The role of the Fed and the White House

In the weeks and months ahead, two players will have an outsized influence on what happens next: the Federal Reserve and the administration. If the Fed acts swiftly to support the economy, such as by adjusting interest rates, it could help extend the market's current gains. Similarly, if President Trump pivots away from tariffs and toward more business-friendly policies, it may restore confidence among investors. But if policy moves are delayed, unclear, or ineffective, markets could easily return to the choppiness we saw earlier this year.

Where do we go from here?

Like my son shaking off a rough day at the plate, the market has rebounded with impressive force. But one hot streak doesn't mean you're in the clear — in baseball or investing. Momentum can shift quickly, and confidence can be fragile when the fundamentals are still developing.

As we look ahead to summer, the economic scorecard is still being written. The market may be back on offense, but key policy decisions, data releases and global headlines could throw the next curveball. For now, the best approach is caution with perspective: remain alert, stay informed, and don't mistake a strong rebound for an all-clear signal. Markets may be rising, but risks haven't disappeared — they've just taken a different shape.

Have a blessed week!

www.FerventWM.com

Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

Opinions voiced above are for general information only and not intended as specific advice or recommendations for any person. All performance cited is historical and is no guarantee of future results. All indices are unmanaged and may not be invested directly.

The economic forecast outlined in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.