Market Pulse with Dan Sheehan

Good Morning Investors,

Markets are crumbling once again this morning as President Trump’s defiant stance on sweeping tariffs deepens the economic fallout. China’s retaliatory 34% tariffs on U.S. imports and the absence of any meaningful negotiations over the weekend have left global investors reeling. Trump called the levies “medicine” and reiterated that foreign governments will have to “pay a lot of money” to lift them—rhetoric that has only hardened market fears of a self-inflicted economic slowdown.

Futures were in sharp decline premarket, with the Dow off over 700 points, S&P 500 down 2.1%, and the Nasdaq 100 shedding 2.3%. This extends last week’s brutal two-day stretch, in which over $5 trillion in equity value was erased. The S&P 500 is now down 17.4% from its February peak and approaching bear market territory. The VIX briefly spiked to 60—levels not seen since the early pandemic panic of March 2020.

MARKET FRAMEWORK

This morning’s move adds to one of the worst three-day stretches for markets since 1950—alongside Black Monday (1987), the Global Financial Crisis (2008), and the Covid crash (2020). Historically, those moments have led to strong 12-month returns—but the current environment remains fluid and politically volatile.

The S&P 500 has fallen 10% in just two sessions. Nasdaq is in a confirmed bear market, while Japan’s Nikkei and Hong Kong’s Hang Seng have also crossed the threshold. Treasury yields continue to collapse, with the two-year yield hitting multi-year lows as investors flee to safety. Jamie Dimon warned on Sunday that the tariffs risk slowing U.S. growth and spurring inflation—a rare break from the business-as-usual tone out of the banks.

Margin calls are already hitting hedge funds. Risk assets are being sold aggressively, with hedge funds reportedly offloading large equity positions to meet liquidity needs. The VIX crossing 60 this morning tells us that stress is reaching a crescendo.

OPPORTUNITY ANALYSIS

Despite the panic, some parts of the market are quietly becoming more attractive on valuation grounds. Nvidia now trades at nearly half its five-year average forward P/E. Apple, Google, and Amazon are all below their five-year PEG ratios. For long-term investors focused on durable growth at a reasonable price, I continue to see Nvidia, Google, and Amazon as the most compelling opportunities right now.

This isn’t just about cheapness—it’s about positioning. These businesses are deeply tied to the AI transformation, a trend I continue to believe will reshape enterprise software, infrastructure, and productivity for years to come. AI is not a passing fad—it’s a foundational shift in how the economy operates. Investors often overestimate what a new technology can do in the short run and underestimate it in the long run. But at these valuation levels, some of the best-in-class AI platforms are now trading at what I’d call reasonable entry points for long-term, disciplined portfolios.

I also like IGV, the iShares Expanded Tech-Software ETF. It holds names like Microsoft, Oracle, Adobe, Salesforce, and Palantir—core software infrastructure plays. Priced at $78 versus an all-time high of $110, this ETF offers broad exposure to the application layer of the AI story, which I think is still in the very early innings. These entry points rarely feel good in the moment—but looking back, they often mark the best opportunities.

PORTFOLIO POSITIONING

This is not the time for panic selling. The last few years have been unusually easy for investors—low rates, high returns, and a lot of smooth sailing. That’s not the norm. Pullbacks, corrections, even bear markets—these are a natural part of the cycle. And more often than not, moments like this end up being the opportunities we wish we’d leaned into ten years later.

If you’ve got cash on the sidelines, this is a moment to deploy selectively. A move from money markets or bonds into high-quality equities could help rebalance risk/reward in a portfolio. If you’re already fully invested, a 401(k) rebalance might help tilt toward equity at a time when prices are dislocated.

But most importantly, this is a time to have your financial plan in place. Know your goals. Know your time horizon. And allow yourself the clarity to make smart, unemotional decisions. If you don’t yet have that game plan, or want help pressure-testing it—I’d be glad to work with you on building one that you can actually use when things get difficult.

CORPORATE FRAMEWORK

From Apple’s encryption battle in the UK to Tesla’s diplomatic reassurances from Beijing, companies are juggling multiple fronts. Meta unveiled new AI models and previewed its most powerful LLM yet, Llama 4 Behemoth. Meanwhile, Maxeon Solar and Howmet Aerospace are the latest to activate contingency plans amid supply chain disruptions tied to tariffs. Microsoft’s joint venture Wicresoft is exiting China, laying off 2,000 workers.

Chevron, Shell, and Toyota are also feeling the impact. Chevron was hit with a $740 million ruling over Louisiana land damage, while Shell downgraded LNG output due to cyclone disruptions. Toyota will cut 2026 EV output by 50% as it adjusts production plans across geographies in light of foreign exchange and tariff risk.

GLOBAL CONTEXT

Global equity indices were hit hard overnight. The Hang Seng dropped 13%, its largest single-day fall since 1997. Japan’s Nikkei fell nearly 8%, entering bear market territory. In Europe, the Stoxx 600 dropped to its lowest level since January 2024, retreating 4.3% and at one point down as much as 6.5%.

Oil prices dipped below $60 a barrel for the first time since 2021. Treasury yields dropped sharply again, and gold stabilized after last week’s surge.

STRATEGIC OUTLOOK

This is a political storm, not a credit crisis. Markets are processing the shock of a tariff regime that came fast and hard, with more coming Wednesday. Investors are grappling with uncertainty, not insolvency. But volatility will remain elevated, and I do believe the selloff is over.

Still, this aligns with the roadmap I laid out in March: the administration’s aim appears to be driving down the 10-year yield to refinance the debt, followed by a potential tariff rollback in Q3/Q4 to stimulate markets. The Trump Put remains intact, escalate first, negotiate later. The Fed Put is awakening too, as Powell now faces pressure to act. For now, I continue to see this as a growth scare, not a recession, though risks are rising by the day.

ANALYST RECOMMENDATIONS

CLOSING THOUGHT

Market history is clear: when the dust settles, these moments often reveal the best opportunities. Right now, fear is driving price. But fundamentals have not yet collapsed. With cash on the sidelines and policy tools still available, this could soon mark the inflection point investors look back on as a time when they added risk thoughtfully, not reactively.

Please feel free to reach out to me on LinkedIn or by email if you would like help navigating this market environment or have any planning-related questions.

Dan Sheehan [email protected]

This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.