Significant Uncertainties Put U.S. Stock Market At Risk

Now is a challenging time for consumers, economists, businesses and investors (including professionals). Multiple, diverse concerns are heightening uncertainties dramatically, putting the U.S. stock market at risk. There are three risk areas to examine: Normal, Federal Reserve, U.S. Government.

First, the increasing “normal” risks

Here are my two previous articles that address these growing “normal” risks.

Dec. 28 – “Eight Issues Could Undermine The 2025 U.S. Stock Market”

“As the 2025 New Year’s excitement ends, look for the U.S. stock market to falter. It is carrying a lopsided enthusiasm from 2024, so 2025 could be a period of adjustment. There are eight issues that have begun to undermine the stock market’s shaky support.”

Feb. 14 – “Wall Street’s Four Bullish Views Will Likely Reverse”

“The stock market’s behavior is the gauge by which we can measure Wall Street’s attitude and outlook. Clearly, today’s reading continues to be one of bullish optimism.

“However, there is a problem with following Wall Street’s current enthusiasm. The four bullish views cited as reasons to own stocks carry the risk of having reality chip away at the optimistic rationale.”

Second, the Federal Reserve’s missteps

The Fed’s reputation continues to be as a provider of growth and bullishness by lowering interest rates. This 15-year experiment of the Fed overriding capital market rates has unproven benefits, but its drawbacks are clear:

• Inadequate returns on the $trillions of short-term investments
• Maintaining an inflationary environment
• Spurring non-growth and excessive borrowing (e.g., by the U.S. Government, private equity funds, and leveraged financial actions)
• False “education” by the Federal Reserve’s comments and explanations built upon the presumption that the capital markets, alone, are incapable of setting the key interest rate foundation

However, it appears that the capital markets (AKA Wall Street) have finally begun to act independently. I explained how this shift could occur in my Dec. 31 article: “2025’s Outlook: Capital Markets Will Correct Federal Reserve Irregularities”

“Time’s up. The fallacy-driven beliefs and actions have had their turn. Once again, the visible irregularities are stretched. Therefore, the misshaped environment is ready to produce profits from reality-driven investing.”

Third, the U.S. government’s abnormal actions

The “abnormal” adjective is serious. It means rarely or never before used government actions and behavior. Additionally, the actions are significant, sizable and rushed. Moreover, there is no congressional input, only President Trump’s minimal explanations of his executive orders.

Therefore, there are now many serious uncertainties regarding the U.S. Government actions’ effects on the economy, businesses, labor, consumers and investors.

So, when will the results be known? Probably not until the latter half of 2025, when the completed actions are evaluated alongside the then-visible results. Since Wall Street typically looks six months ahead, it is currently faced with a widespread list of possible outcomes, many of them with unknown negatives.

The bottom line – Growing uncertainties produce falling markets

Wall Street and investors necessarily focus on the future. Normally, that means judging the likelihoods of issues like economic growth, consumer behavior and business developments. However, those items now are blanketed by overriding uncertainties. Thus, likelihoods are harder to determine, and the risk of negative outcomes is high. Naturally, that means a shrinking interest in buying and owning risk-based investments – hence, markets fall.