The path ahead for stocks remains higher — despite the recent uptick in market volatility. On Friday, the major averages sold off on renewed inflation fears among consumers and worries over additional U.S. tariffs on imported goods. The Dow Jones Industrial Average lost more than 400 points on the day, while the S & P 500 and Nasdaq Composite dropped 1% and 1.4%, respectively. That wasn’t the only bout of volatility investors have faced of late. In January, the emergence of artificial intelligence model DeepSeek sparked a global market sell-off as it raised concern over the amount companies need to spend on AI. Earlier this month, stocks briefly sold off after the U.S. issued tariffs on Mexican and Canadian imports — which were later halted for a month. Global trade is back at the top of investors’ minds Monday, after President Donald Trump said he would impose a 25% tariff on steel and aluminum imports . However, stock futures appeared to take this in stride, with contracts tied to the Dow rising more than 200 points. S & P 500 and Nasdaq-100 futures climbed 0.6% and 0.8%, respectively. Evercore ISI strategist Julian Emanuel noted that, because the S & P 500 remains so close to its all-time high (just 1.7% below as of Friday’s close), Trump has leverage in trade negotiations. This is ultimately a positive for stocks, he said. “A strong stock market offers a ‘high ground’ position, tactically advantageous in military doctrine, from which to apply pressure and maximize outcomes – both as a type of ‘currency’ and any benign reaction to threats or announcements as offering room to escalate further,” Emanuel wrote. Emanuel has a 6,800 year-end target for the S & P 500. That implies upside of 12.8% from Friday’s close. Others agree that stocks should continue going higher despite the persistent volatility: Solita Marcelli, chief investment officer of the Americas at UBS’ global wealth management division: “Signs suggest some of Trump’s planned tariffs are likely part of a negotiating strategy. Given the political costs of elevated inflation, we continue to believe that the Trump’s administration will not want to jeopardize US economic growth or risk higher inflation through broad and sustained universal tariffs. … So, we see the S & P 500 rising to 6,600 by the end of the year, although the journey up is likely to be accompanied by heightened volatility.” Craig Johnson, chief market technician at Piper Sandler: “Despite the increased headline volatility surrounding earnings, inflation, and tariff concerns, we believe now is not the time for investors to retreat—instead, it is time to rotate. The Russell Value 3000 index (RAV) is leading the way with a YTD gain of 4.1%, outperforming its peer indices. In comparison, the Russell Growth 3000 index (RAG) is up just 1.7% YTD. This shows that investors have been steering away from the mega-cap leaders and focusing more “down-cap” on small and mid-cap value stocks. We expect this trend to continue and look for opportunities to participate in the market’s broadening participation.” Elsewhere Monday morning on Wall Street, UBS upgraded Johnson Controls to buy from neutral. The bank also raised its price target on shares to $103 from $90, signaling 17% upside. “The bottom line is we see meaningful incremental margin potential, and we view the company’s ability to execute as better following strategic actions and new management appointments,” analyst Amit Mehrotra wrote.
