Tariff Concerns Impact S&P 500; Strategist Advises Patience and No Panic

TL/DR –

The S&P 500 has experienced a 5% drop year-to-date due to tariff-related concerns. However, Jeff Buchbinder, chief equity strategist at LPL Financial, notes that 5-10% pullbacks in the index are common, occurring three times on average annually and in 94% of years since 1928. Despite these corrections, stocks have averaged a 13% annual return since 1980 and Buchbinder advises investors to remain patient and stay invested.

Tariff Concerns Instigate S&P 500 Pullbacks

Over the last month, concerns linked to tariffs have driven stocks down, resulting in a roughly 5% decline in the S&P 500 ^GSPC as of Thursday morning. It’s crucial for investors to keep in mind that policy changes can cause market instability, however, pullbacks ranging from 5% to 10% in the key index are not unusual.

Perspective on Market Corrections

Jeff Buchbinder, LPL Financial’s chief equity strategist, informed clients that the index typically undergoes three drawdowns of between 5% and 10% each year. Buchbinder highlighted that there has been at least one 5% setback in the S&P 500 in 94% of years since 1928, including its precursor S&P 90 Index.

Patience and Investment Strategy

Buchbinder reinforced his simple yet effective advice: “Be patient, stay invested, and most importantly, don’t panic.” He noted that even in favorable years, stocks usually experience a correction exceeding 10% once annually. In 2024, there were no corrections, so a pullback was anticipated. Despite these fluctuations, stocks have yielded an average 13% annual return since 1980.

Year-End Predictions for S&P 500

Buchbinder’s end-of-year price projection for the S&P 500 lies between 6,275 and 6,375, mirroring other Wall Street expectations.

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