Deciding whether to enter the stock market now or wait for more clarity on economic data and tariff talks involves weighing current market conditions, economic indicators, and the risks tied to ongoing uncertainties. Here’s a breakdown to help you make an informed decision:

Current Market Context

Volatility from Tariff Talks: Recent reports highlight significant market swings driven by U.S. tariff policies, particularly under the Trump administration. For instance, the S&P 500 experienced a 9.5% single-day gain after a 90-day tariff pause was announced on April 9, 2025, but subsequent sell-offs erased some gains, with the S&P 500 dropping 3.46% the next day. Tariffs on China, now at 145%, and retaliatory measures (China’s tariffs at 125%) continue to fuel uncertainty, impacting global supply chains and inflation expectations.

Economic Data: The U.S. economy contracted by 0.3% annualized in Q1 2025, the first decline in three years, signaling potential slowdown. Consumer spending, while resilient, wasn’t enough to offset the pullback. Inflation eased to 2.4% in March 2025, below the expected 2.6%, but consumer inflation expectations have spiked to 6.7%, the highest since 1981.

Market Performance: The S&P 500 is down 11.2% from its February 2025 high, reflecting ongoing concerns about tariffs and economic growth. Small-cap stocks, more sensitive to domestic economic shifts, have faced sharper declines, suggesting higher risk in that segment.

Reasons to Consider Entering Now

Potential for Bargains: The recent market sell-offs have lowered valuations, with the S&P 500’s forward price-to-earnings multiple potentially reduced by 3% due to tariff-related uncertainty. Some sectors, like technology or small-caps, may offer opportunities if you believe the worst is priced in.

Tariff Pause Optimism: The 90-day pause on most country-specific tariffs (excluding China) has spurred market rallies, suggesting investor relief. If trade negotiations progress with countries like South Korea or Japan, as hinted by the White House, further stabilization could occur.

Long-Term Perspective: Historical data supports staying invested over trying to time the market. Edward Jones notes that despite tariff-driven volatility, the S&P 500’s recovery post-pause underscores the value of a long-term focus.

Federal Reserve Support: The Fed may cut rates more than the two times projected for 2025 if economic growth deteriorates, potentially supporting equities by lowering borrowing costs.

Reasons to Wait for More Information

Ongoing Tariff Uncertainty: The tariff situation remains fluid. Trump’s administration has signaled openness to deals but also readiness to reinstate higher tariffs if negotiations fail. The U.S.-China trade war, with no clear resolution, continues to roil markets.

Economic Risks: Economists warn of stagflation risks (high inflation, slow growth), with Goldman Sachs estimating a 45% recession probability even after the tariff pause. A sustained trade war could further disrupt supply chains and corporate earnings, with Goldman Sachs projecting a 2-3% hit to S&P 500 earnings per share per 5% tariff rate increase.

Market Volatility: The S&P 500’s wild swings—entering bear market territory briefly in early April 2025—suggest investors are still grappling with tariff impacts. False reports, like a rumored tariff pause on April 7, triggered sharp movements, highlighting the risk of reacting to incomplete information.

Sector-Specific Risks: Industries reliant on global supply chains (e.g., automotive, aerospace) face heightened risks. For example, Stellantis paused production in Canada and Mexico due to auto tariffs, and Boeing’s stock dropped 10% amid supply chain concerns.

Key Economic Data and Tariff Developments to Watch

Upcoming Economic Releases: Monitor April 2025 retail sales (due mid-May) and Q2 GDP estimates for signs of consumer spending and economic recovery. Strong consumer data could signal resilience despite tariffs.

Inflation and Fed Policy: The Fed’s next meeting in May 2025 will clarify rate cut plans. If inflation remains contained (closer to 2%) and growth weakens, rate cuts could bolster markets.

Tariff Negotiation Outcomes: Progress in talks with South Korea, Japan, or the EU could reduce uncertainty. Conversely, escalation with China or reimposition of paused tariffs post-July 2025 could trigger sell-offs.

Corporate Earnings: Q1 2025 earnings reports, ongoing through May, will reveal how companies are navigating tariff costs. Watch for guidance from multinationals like Walmart, which reported sales volatility due to tariffs.

Strategic Considerations

Diversification: If entering now, focus on diversified portfolios to mitigate sector-specific risks. Sectors less exposed to tariffs, like utilities or healthcare, may offer stability. Gold, hitting record highs above $3,300/oz, is a safe-haven option amid uncertainty.

Dollar-Cost Averaging: Instead of a lump-sum investment, consider gradual entry to spread risk over volatile periods. This aligns with Edward Jones’ advice to avoid emotional, market-timing decisions.

Risk Tolerance: Assess your investment horizon and risk appetite. Short-term traders may capitalize on volatility, but long-term investors should prioritize fundamentals and avoid chasing momentum driven by tariff headlines.

Cash Reserves: Veteran investors like Mark Mobius are holding cash to wait out volatility, suggesting flexibility to act when clarity emerges