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Wall Street Volatility: Stocks Dive and Rise Amid Tariff Uncertainty
Although Wall Street has established itself as a leading wealth creator over time, it is not immune to significant volatility. Following President Donald Trump’s announcement of “Liberation Day” tariffs on April 2, the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) have experienced some of the most dramatic fluctuations in their histories.
On April 3 and 4, the S&P 500 recorded its fifth-largest two-day drop ever. In contrast, on April 9, all three indices—the Dow Jones, S&P 500, and Nasdaq—achieved their largest single-session point gains to date and experienced some of their best percentage increases. These market swings have pushed the Dow and S&P 500 into correction territory, while the Nasdaq has entered a bear market.
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Factors Behind Wall Street’s Current Volatility
The volatility in Wall Street is influenced by several factors, such as the historical high valuation of stocks and, predominantly, the ongoing tariff discussions initiated by the president.
President Donald Trump signing an executive order. Image source: Official White House Photo.
Trump’s Tariffs Spark Historical Financial Turbulence
President Trump initially announced a sweeping 10% global tariff alongside various increased tariffs on countries with negative trade balances with the U.S.
The intended purpose of these tariffs is to enhance U.S. economic revenue, safeguard American jobs, and encourage domestic production. However, the practical impact of these policies may differ from their theoretical intent.
Trump’s “Liberation Day” tariffs do not clearly distinguish between output and input tariffs. Output tariffs apply to finished goods imported into the U.S., whereas input tariffs are levied on components necessary for domestic production. This distinction could lead to inflationary pressures and compromise the competitiveness of U.S. products against foreign imports.
Additionally, Trump’s tariffs could potentially set off a larger trade conflict with China and other U.S. allies. This is particularly concerning as the Atlanta Federal Reserve’s GDPNow model anticipates the steepest contraction in the U.S. economy for the first quarter since the Great Recession, excluding the COVID-19 pandemic periods.
Instability is further aggravated by Trump’s tendency to modify his stance on tariffs. The 90-day suspension of reciprocal tariffs announced on April 9 resulted in the major single-day gains seen in the Dow, S&P 500, and Nasdaq, yet a clear and consistent tariff strategy remains elusive.
Among this volatility, there is a silver lining: market tremors can present long-term investors with prime opportunities to acquire high-quality stocks at reduced prices. Currently, three outstanding companies are available at discounted rates that investors might consider.
Investment Opportunity: Pfizer
One notable company positioned attractively during this turbulent period is Pfizer (NYSE: PFE). While it is conceivable that pharmaceutical stocks could face future tariffs, this concern is not expected to deter Pfizer or its investors significantly.
Pfizer’s performance showcases a peculiar trend; the stock has been penalized for its own successes. It recorded $41.9 billion in revenue in 2020 without any income from COVID-19 treatments. By 2024, it is projected to achieve $63.6 billion in net sales, including around $11 billion from its COVID-19 vaccine (Comirnaty) and therapy (Paxlovid). Even after a drop in COVID-19 sales from over $56 billion in 2022 to $11 billion last year, Pfizer remains in a robust position.
Moreover, healthcare stocks are often considered defensive investments. Regardless of market fluctuations, people continuously need healthcare services and prescriptions, ensuring a steady demand for Pfizer’s innovative therapies.
This year promises to be particularly exciting for Pfizer, as it has moved beyond acquisition-related expenses that previously suppressed profits. The $43 billion acquisition of cancer drug maker Seagen in late 2023 is set to enhance Pfizer’s oncology pipeline, improve its financial performance, and yield substantial cost savings in the coming years.
Additionally, Pfizer shares are historically undervalued, offering a remarkable annual dividend yield nearing 8%, which is among the highest in the company’s history.
Image source: Getty Images.
Investment Opportunity: Enterprise Products Partners
Another exemplary stock to consider amidst the tariff-related market downturn is Enterprise Products Partners (NYSE: EPD).
As oil prices recently dropped to a four-year low, it is understandable that investors may be cautious about investing in oil and gas shares. The profitability of upstream drilling firms is directly affected by declines in crude prices.
However, Enterprise Products Partners operates as a midstream company, insulating itself from the volatility that typically affects energy commodity prices. The firm manages over 50,000 miles of pipelines, 26 fractionation sites, and boasts storage capacity for more than 300 million barrels of oil and refined liquids.
The company’s strength lies in its long-term contracts with upstream drilling firms, which primarily feature fixed fees. Such agreements provide stability and predictability, even during turbulent market conditions.
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Analyzing Predictable Cash Flow: Enterprise Products and AutoZone’s Strategies
Managing inflation and spot-price volatility can significantly enhance a company’s operating cash flow predictability over a one-year horizon or longer.
Enterprise Products Partners’ Growth Strategy
For midstream companies like Enterprise Products Partners, predictable operations are crucial. The company has invested approximately $7.6 billion in major capital projects, scheduled to launch by the end of 2026. These initiatives primarily aim to enhance its exposure to natural gas liquids and are forecasted to boost profitability.
Enterprise Products Partners has a strong track record, having raised its distribution for 26 consecutive years, currently yielding over 7%. With a valuation of less than 10 times projected earnings for 2026, the company is positioned for a notable increase in distributable cash as its capital expenditures taper off after this year.
AutoZone’s Expansion and Market Position
AutoZone, a prominent auto parts retailer, also stands to gain from current market dynamics. The company, trading under the ticker AZO (NYSE: AZO), benefits from a trend where tariffs on foreign-made vehicles encourage consumers to maintain their existing cars longer.
According to a May 2024 report from S&P Global Mobility, the average vehicle age on U.S. roads has reached a record high of 12.6 years, an increase of 1.5 years since 2012. As vehicles age, AutoZone is likely to see increased demand for its products.
The company is capitalizing on these macro trends by investing in its distribution network. AutoZone is constructing 200 mega-hubs, designed to streamline inventory, enabling customers easy access to parts they need. Each hub is projected to stock up to 110,000 items.
One of AutoZone’s most notable achievements is its robust share repurchase program. Since fiscal 1998, the company has repurchased $37.8 billion worth of shares, reducing its outstanding share count by 90.3%. Such a reduction usually leads to climbing earnings per share, especially when combined with steady or growing net income.
Moreover, AutoZone remains attractively valued. Its forward price-to-earnings ratio of 21 seems low, especially given its aggressive buyback strategy, favorable tariff positioning, and the increasing age of vehicles on the road.
Considering Investments in Pfizer
Thinking about investing $1,000 in Pfizer? Before making that choice, reflect on this:
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The average return from the Stock Advisor portfolio is 818%—well above the S&P 500’s 156% return.
*Stock Advisor returns as of April 14, 2025
Sean Williams holds stock in Pfizer. The Motley Fool also recommends Pfizer and S&P Global, while it endorses Enterprise Products Partners. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
