Investors are fleeing U.S. stocks as tariff risks loom
In the current economic climate, investors are showing signs of retreat from U.S. stocks, with a notable shift in allocation away from domestic companies. Bank of America’s latest survey reveals a significant move out of U.S. equities, signaling growing pessimism about the country’s economic future amidst escalating trade tensions with key trading partners like Canada, Mexico, and China.
The survey points to a record rotation out of U.S. stocks, with investors turning to alternative assets such as cash, gold, and investments in other regions like the Eurozone. Market indexes have been fluctuating, with recent declines in the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite highlighting the uncertainty surrounding the markets.
A key factor contributing to this market volatility is the looming threat of new U.S. tariffs on various countries, scheduled to take effect on April 2. The rapid escalation of tariff announcements since January has raised concerns among economists and market analysts, with fears of a potential global economic slowdown.
The Organisation for Economic Co-operation and Development recently downgraded its growth forecasts for the U.S. and global economy, citing the risks associated with trade disputes. The U.S. GDP growth rate has slowed to 1.2% in the first quarter of 2025, compared to 2.3% in the previous quarter.
President Trump’s trade policies and aggressive rhetoric have further fueled market uncertainty, with investors bracing for potential disruptions in the near and medium-term. While some sectors have remained resilient, others have seen significant declines, reflecting the broader market sentiment.
Despite the challenges ahead, some analysts remain cautiously optimistic, with only a small percentage expecting a hard landing for the economy. Market volatility and investor sentiment are closely monitored, with potential opportunities for a rebound in U.S. stocks if trade tensions ease.
In conclusion, the current economic landscape is marked by uncertainty and market turbulence, driven by trade tensions and shifting investor sentiment. As the situation evolves, investors are advised to stay informed and adapt their strategies to navigate the challenges and opportunities in the market.
Written by Alain Sherter, a senior managing editor at CBS News, covering business, economics, money, and workplace issues for CBS MoneyWatch.
