Stock Rally Hits a Tariff Wall

​After weeks of bullish vibes and a nine-day winning streak, the U.S. stock market just ran headfirst into reality. The recent rally, powered in part by hopes that Trump’s harsh new tariffs might get walked back, is now looking wobbly. Why? Because that walk-back might already be priced in—and there’s not much good news left to fuel more gains.

What’s Behind the Stumble
President Trump’s April 2 “liberation day” tariff bombshell made markets nervous. But since then, the White House has eased up—delaying implementation and exempting major imports like computer chips and cars. Investors, sensing a pullback in tariff aggression, bought into the rally.

But according to Tom Essaye of Sevens Report Research, that optimism might have been premature. “The Trump administration has seriously backtracked,” he noted—but those changes were already baked into stock prices. So now, the market is running out of fresh reasons to climb.

In short: if you were betting on tariffs getting less bad, you may have already won. Now what?

“Sell the News” Risk
Here’s the real kicker: when official trade deals are eventually announced, the market might not cheer—it could drop. “We could even see a ‘sell-the-news’ move,” Essaye warned. That’s trader-speak for when markets fall precisely because something positive was expected and is now confirmed, leaving no upside surprise.

Meanwhile, the S&P 500, despite clawing back post-tariff losses, is still down nearly 4% for the year. And volatility, as measured by the VIX, is spiking again.

Reality Check: Tariffs Still Hurt
Even with some softening in stance, tariffs are still way higher than they were at the start of the year. And while the economy hasn’t buckled—yet—Essaye warns the real drag on growth hasn’t even kicked in. Investors haven’t fully felt the pain from higher costs or slower global trade.

In his view, the market has been riding a wave of relief more than true strength. And that wave might be cresting.

What to Watch
Essaye is shifting toward defense: utilities, consumer staples, and healthcare. He also likes ETFs that focus on minimizing volatility and favoring high-quality companies, suggesting the market may be entering rougher waters.

Bottom Line
The stock market’s recent rally has been built on hope—hope that tariffs would ease, that the worst was behind us. But with that hope already factored in, and the real economic hit still looming, the rally might be running on fumes. Buckle up.







​