BlackRock and Fidelity suggest gradual investments in U.S. stocks to navigate Trump's uncertain tariff policies.
In the spring of 2025, the US stock market showed resilience as corporate earnings exceeded expectations, but the new tariff policies of the Trump administration increased uncertainty in the global economy. BlackRock and Fidelity recommended a diversified market allocation and restructuring of supply chains to address risks. Profits for S&P 500 companies were strong, and tech stocks rebounded. The tariff policies led to supply chain restructuring and adjustments in capital expenditures, leading to increased inflation and demand for hedging. Investors should adopt asset allocation strategies that focus on defense, income, and growth while focusing on undervalued markets and industries with low policy risk.
Key Updates
05/22 23:18
BlackRock and Fidelity suggest gradual investments in U.S. stocks to navigate Trump's uncertain tariff policies.
In the spring of 2025, the US stock market showed resilience as corporate earnings exceeded expectations, but the new tariff policies of the Trump administration increased uncertainty in the global economy. BlackRock and Fidelity recommended a diversified market allocation and restructuring of supply chains to address risks. Profits for S&P 500 companies were strong, and tech stocks rebounded. The tariff policies led to supply chain restructuring and adjustments in capital expenditures, leading to increased inflation and demand for hedging. Investors should adopt asset allocation strategies that focus on defense, income, and growth while focusing on undervalued markets and industries with low policy risk.
Impressive Earnings Reports Bolster U.S. Stock Fundamentals, Institutional Investors Advise Phased Investment
According to the first-quarter earnings reports of S&P 500 companies, about 78% of companies exceeded market expectations, indicating that corporate fundamentals remain resilient. KGI Cloud Trend Fund Manager Feng Shaorong pointed out that corporate earnings are the key driving force behind the recent rebound in tech stocks. The Philadelphia Semiconductor Index and the NASDAQ have risen by 27.61% and 17.54% respectively over the past month, reflecting market confidence in the long-term growth potential of AI and cloud applications.
Allianz AI Income Growth Multi-Asset Fund Manager Zhuang Kailun believes that rapid progress in innovative investments in the AI industry chain will help support the mid-term recovery of U.S. stocks. She noted that if trade and tax policies become clearer, corporate earnings are expected to return to a growth trajectory. NVIDIA and Apple plan to invest $500 billion and $50 billion respectively in the AI field, which will help build a more resilient technology and supply chain structure.
In terms of investment strategy, institutional investors generally recommend a phased investment approach. Both HSBC and Taishin Investment Trust pointed out that although the market is affected by policy uncertainties and valuation adjustments, the pressure for a pullback has gradually been released. They suggest that investors can use multi-asset allocation to balance growth and defense, reducing volatility risk.
Trump's Tariff Policy Triggers Supply Chain Restructuring and Capital Expenditure Adjustments
The Trump administration announced in early 2025 a 10% basic tariff on most countries, with additional tariffs on countries with larger trade deficits, causing global market turmoil. According to BlackRock's research, this wave of tariff policies has had a substantial impact on corporate operations, particularly in terms of supply chain and capital expenditure.
Firstly, according to Alphasense data, companies generally mentioned plans to shift production to the U.S. or countries with better relations with the U.S. during first-quarter earnings calls, indicating that supply chain restructuring has become a key strategic focus for companies. Secondly, companies have shown increased acceptance of high costs, with some external estimates suggesting that tariff impacts could lead to a 10% to 20% decline in corporate net profits. Thirdly, according to data from Bank of America and FactSet, about 60% of companies' capital expenditures were below market consensus, indicating a conservative approach in an uncertain environment.
Despite this, some industries still show momentum in capital expenditure. Large tech companies continue to strengthen AI and cloud infrastructure, with the four major American cloud service providers reporting strong earnings, indicating that corporate investment in digital transformation has not slowed down.
BlackRock and Fidelity: Diversified Market Positioning is Key to Addressing Uncertainty
In response to the economic uncertainty brought by Trump's policies, both BlackRock and Fidelity International emphasize the importance of diversified market positioning. BlackRock points out that although analysts have lowered earnings growth expectations for S&P 500 companies, the overall fundamentals of U.S. companies remain strong, especially with compelling investment opportunities driven by structural trends such as AI and high-performance computing.
Fidelity International believes that global funds have gradually shifted from a U.S.-centric phase to diversified market positioning. The institution is more optimistic about U.S. service industries not directly affected by tariffs, leading European companies with strong pricing power, and global high-yield stocks with stable dividends and strong cash flow. Fidelity particularly notes that non-U.S. multinational companies headquartered outside the United States but with diverse revenue sources can maintain stable operations amid policy disruptions.
In the manufacturing sector, Fidelity is optimistic about companies with domestic manufacturing capabilities, pricing power, and lasting competitive advantages, as these traits help maintain profitability during supply chain restructuring.
Tariff Policy Drives Inflation and Hedging Demand, Investors Should Strengthen Risk Management
Trump's tariff policy not only affects corporate operations but also puts pressure on the overall economic environment. Federal Reserve Vice Chairman Jefferson pointed out that tariffs and related policy uncertainties may suppress growth and increase inflation. BlackRock also noted that supply chain disruptions and rising costs will become sources of inflationary pressure.
Against this backdrop, investor hedging sentiment is rising. EPFR data shows that after the announcement of the tariff policy in early April, there was a net sell-off of investment-grade corporate bonds and high-yield bonds, but funds gradually returned, indicating that the market remains cautious about policy developments.
Fidelity and other institutional investors suggest that investors adopt a defensive, income, and growth triple-structure asset allocation strategy and reduce single-market or policy risks through regional and industry diversification. For example, focus on the undervalued Latin American market, Australia with low trade war exposure, or cyclical industries benefiting from a shift in European fiscal policy.
