Financial markets are always unpredictable, and that’s been especially true so far in 2025. After early April volatility related to early tariff announcements that included the biggest single-day drop in the S&P 500® since 2020, the US stock market rebounded and ended the first half of the year at an all-time high. Then, just a week later on July 7, US stocks ended the day down (along with both European and international stocks) as investors continued to digest changing expectations around tariffs. While there’s no way to predict what the future holds, it’s certainly possible that markets will continue to be somewhat volatile in the coming weeks as more trade announcements are made ahead of August 1 (when reciprocal tariffs are now expected to go into effect). But despite a new bout of tariff-driven market uncertainty, Wealthfront clients appear to be taking all of this change in stride. Here’s how they’re responding:
-Clients are taking the long view: There’s been a lot of media commentary leading up to the initial tariff deadline on July 9. Still, deposits into Automated Investing Accounts have remained positive over the past couple of weeks, despite the market being down on July 7 due to tariff news, suggesting that investors are maintaining a long-term perspective and avoiding the temptation to stop investing and wait for markets to stabilize.
-Optimism about the US stock market rose in late June and early July: In a survey we fielded from June 25 to July 6, 63% of respondents indicated they felt either somewhat (50%) or very (13%) optimistic about the US stock market over the next six months. This is up from 55% in late May when 46% were somewhat optimistic and 9% were very optimistic. And for the first time since we began running these surveys, the number of clients who said they believe the US stock market will rise in the next six months was greater than the number of clients who said the market will decline. It’s worth noting that the survey concluded before July 7, when stocks started to fall, but it’s still the most optimism we’ve measured on this point since we began fielding these surveys earlier this year.
-What renewed market uncertainty means: Last week, the market was up. Early this week, it was down, influenced by new tariff announcements with Japan and South Korea. In the weeks ahead, it’s possible that other potential trade deals will have similar short-term effects. Additionally, the next Federal Open Market Committee meeting will be held later this month (July 29-30). The federal funds rate is not expected to change, but Fed Chair Jerome Powell’s remarks following renewed tariff announcements will be closely watched and may impact market behavior.
But if you’ve got a long-term time horizon for your investments, you may be glad to hear that we don’t think you need to follow the day-to-day (or week-to-week!) movement of the market all that closely. No one knows for sure what will happen next, but history tells us that the US stock market has generally trended up over the long run. We think it’s smart to keep focusing on what you can control: minimizing fees, taking steps to lower your taxes (including using tax-loss harvesting in periods of volatility), and managing risk through diversification.
-Further reading on tariffs & market volatility: If you’re interested in reading more about best practices for investing through periods of volatility and navigating tariff-fueled uncertainty, we recommend revisiting two pieces of content from the Wealthfront blog:
Disclosure
The information contained in this blog is provided for general informational purposes only, and should not be construed as investment or tax advice. Nothing in this communication should be construed as a solicitation or offer, or recommendation, to buy or sell any security. Any links provided to other server sites are offered as a matter of convenience and are not intended to imply that Wealthfront Advisers or its affiliates endorses, sponsors, promotes and/or is affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated otherwise.
The data shown in the survey represents the opinion of those surveyed and may change based on the market and other conditions. Results may not represent all client experiences.
The effectiveness of the tax-loss harvesting strategy to reduce the tax liability of the client will depend on the client’s entire tax and investment profile, including purchases and dispositions in a client’s (or client’s spouse’s) accounts outside of Wealthfront Advisers and type of investments (e.g., taxable or nontaxable) or holding period (e.g., short-term or long-term).
Diversification, asset allocation, and automated investing do not guarantee profit or ensure against loss. Investor experiences can vary widely based on strategies and time horizons. Index funds and ETFs generally offer broad diversification, but may still expose investors to specific market, sector, or asset class risks. Wealthfront provides investment management services but may not achieve returns comparable to those of the general market or specific benchmarks.
Investment management and advisory services are provided by Wealthfront Advisers LLC (“Wealthfront Advisers”), an SEC-registered investment adviser, and brokerage related products, including the Cash Account, are provided by Wealthfront Brokerage LLC (“Wealthfront Brokerage”), a Member of FINRA/SIPC. Wealthfront Advisers and Wealthfront Brokerage are wholly-owned subsidiaries of Wealthfront Corporation.
All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. Please see our Full Disclosure for further information.
Copyright 2025 Wealthfront Corporation. All rights reserved.
About the author(s)
Alex Michalka, Ph.D, has led Wealthfront’s investment research team since 2019. Prior to Wealthfront, Alex held quantitative research positions at AQR Capital Management and The Climate Corporation. Alex holds a B.A. in Applied Mathematics from the University of California, Berkeley, and a Ph.D. in Operations Research from Columbia University. View all posts by Alex Michalka, Ph.D
