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Market Volatility, Tariffs, and the Road Ahead: What Financial Advisors Need to Know This Week

  • Writer: Joe Arena, CIO
    Joe Arena, CIO
  • May 8
  • 3 min read

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The markets surged last week—but it wasn’t all good news. Trade tensions, volatile guidance from Washington, and weakening GDP have created a murky macroeconomic outlook. Here’s what independent financial advisors should watch closely—and how we’re helping firms position portfolios to adapt.


Weekly Market Recap: Big Gains, Lingering Risks

Equities climbed sharply:

  • S&P 500: +2.94%

  • NASDAQ Composite: +3.43%

  • Russell 2000: +3.24%


Leading sectors:

Industrials (+4.3%), Communication Services (+4.2%), and Technology (+4.0%)


Lagging sectors:

Energy (-0.6%), Health Care (+0.3%), and Consumer Staples (+1.2%)


Interest rates ticked higher, with the 10-year Treasury yield rising from 4.26% to 4.32%. Meanwhile, high-yield spreads compressed slightly, pointing to continued risk appetite.


GDP contracted 0.3% in Q1, driven by a surge in imports ahead of tariff implementation. And while April’s jobs report showed 177,000 new jobs and steady unemployment (4.2%), the Fed may see it as a reason to hold back on rate cuts.


Trade Policy Uncertainty Is Driving Market Anxiety

The biggest wildcard? Tariffs.


U.S. Treasury Secretary Scott Bessent warned China could lose up to 10 million jobs if current tariffs remain in place—a risk that’s feeding market volatility and executive hesitation. The CBOE Volatility Index (VIX) remains elevated near 26, signaling continued trader unease.


We’re already seeing early signs of impact:

  • Q1 GDP was pulled down by front-loaded imports (+50.9%).

  • Corporate guidance is increasingly tariff-sensitive, though negative EPS outlooks remain below 5-year averages (FactSet).

  • Stock volatility spiked during recent policy announcements, particularly “Liberation Day.”


What Market Volatility Means for Financial Advisors Right Now

Will consumer spending hold up?

Personal consumption rose 1.8% in Q1—steady, but not robust. If higher prices from tariffs hit wallets, growth could slow further. This kind of economic uncertainty underscores why market volatility for financial advisors demands proactive communication and tactical portfolio adjustments.


Is inventory buildup masking future weakness?

We’ve seen this movie before: excess inventory was a key factor in the 2000–2002 market downturn. As advisors review client positioning, Q2 data will be critical in assessing whether current volatility signals a temporary blip—or something deeper.


Will guidance deteriorate further?

As more S&P 500 companies report, expect tariff language to feature heavily in earnings calls. Market volatility for financial advisors doesn’t just mean reacting to news—it’s about translating shifting fundamentals into clear client strategies.


Our Adaptive Risk Framework: Where Are We Now?

Quartz’s proprietary Adaptive Risk Premium (ARP) model helps advisors identify when to take risk—and when to hold back. Our ARP model integrates 33+ macro and market indicators. With a current score of -0.15, we’re tactically tilted toward a risk-off stance. Advisors who can pivot quickly in volatile conditions can create defensible value for clients in uncertain environments. Right now, our indicators suggest caution:


  • ARP Score: -0.15

  • Market Risk Outlook: Risk Off


The Shiller PE remains elevated at 34.35, signaling stretched valuations even amid earnings uncertainty.

Graph showing the Shiller PE remains elevated at 34.35, signaling stretched valuations even amid earnings uncertainty.

The ARP (Adaptive Risk Premium) model has turned negative, signaling elevated downside risk. Advisors relying on traditional 60/40 portfolios may want to reevaluate exposures as market volatility rises and clarity diminishes.


While consumer demand remains intact, core macro indicators signal a tougher road for pro-growth positioning. We’re watching this composite model for shifts that could justify a pivot to more cyclical or inflation-hedged exposures. Our economy + inflation model still sees consumer resilience, but tariff-related shocks and tight monetary policy are creating friction.

Bar chart showing the growth and decline of the economy and inflation over time, starting May 31, 2021 through April 30, 2025

Growth and inflation expectations have deteriorated sharply since late 2023. Our model shows sustained policy friction ahead—something every advisor must consider when managing near-term asset allocation.


Chart in Focus

Allianz Global Investors chart showing interest coverage ratio over time beginning in 2011 through 2024.

Source: Allianz Global Investors


US high yield issuers’ ability to cover interest payments has declined meaningfully. Advisors with clients in riskier credit exposures may want to reassess.


The Interest Coverage Ratio (ICR) has dipped notably since its 2022 peak. While still above crisis levels, a combination of higher rates and flatlining earnings could compress coverage further—especially if economic conditions worsen. This is a key data point we’re watching within our credit allocation process. Watch this trend: tighter monetary policy and slower earnings growth could pressure weaker issuers.


Key Economic Events This Week

  • Monday: U.S. ISM Services PMI

  • Tuesday: AMD earnings

  • Wednesday: FOMC policy meeting, Disney earnings

  • Thursday: Coinbase earnings

  • Friday: China CPI / PPI


Why It Matters for Independent Advisors

When markets shift this quickly, clients expect clarity. Advisors with scalable, data-driven investment models—and a plan to communicate confidently—will come out ahead.


At Quartz, we help advisors:

  • Navigate volatile markets with tactical, adaptive portfolios

  • Offload operational complexity and compliance burden

  • Grow with scalable solutions that put client outcomes first


Let’s Talk Strategy

Ready to see how Quartz can help you future-proof your investment approach?




Disclosures: This content is for informational purposes only and not investment advice. Past performance is not a guarantee of future results. Index performance is for illustrative purposes. See full disclosures at quartzpartners.com/disclosures.


 
 
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