Volatility in stocks won’t let up anytime soon, according to UBS. The Dow Jones Industrial Average on Thursday suffered its worst day since Jan. 10, dropping more than 400 points after a sell-off in Walmart shares. The stock dropped more than 6% after the country’s largest retailer issued weaker-than-expected fiscal-year guidance. Walmart also warned it would not be fully immune from U.S. tariffs on Mexican and Canadian goods. The S & P 500 and Nasdaq Composite were lower on the day as well. Earlier this week, President Donald Trump suggested the U.S. put additional tariffs on imported autos, pharmaceuticals and semiconductors. The Trump administration is also moving quickly with spending cuts at the federal government, raising political uncertainty. UBS thinks the continued barrage of policy moves could make it harder for stocks to move meaningfully higher from current levels. “Volatility is potentially one asset class that is mispriced, in our view, especially given the potential political, geopolitical and technological shifts that are likely to unfold in the months ahead,” wrote Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS’ chief investment office. “More tariff plans are expected to be unveiled, with some going into effect,” she said. “We don’t think all tariff plans will be followed through given the potential damage they may cause to U.S. growth and inflation, but we have said investors should prepare for aggressive U.S. trade policies. Markets may need to adjust their pricing of the tariff impact as more detailed plans or new proposals are revealed in the coming weeks and months,” Hoffmann-Burchardi said. Hoffmann-Burchardi also warned that a U.S. government shutdown could add to the stock market’s jitters. “Congress is struggling to strike a deal to keep the government funded before the March 14 deadline to prevent a shutdown, as top appropriators have yet to agree on a figure for the 12 annual funding bills,” she said. “In addition, the budget reconciliation process in April is likely to trigger market volatility as Republicans, with their slim majority, look to pass various pieces of legislation that were promised on the campaign trail.” Elsewhere on Wall Street on Friday morning, JPMorgan upgraded Singapore-based ride-sharing app Grab Holdings to overweight. “GRAB’s guidance could prove conservative,” analyst Ranjan Sharma wrote in a note to clients Friday. “With investor expectations anchored to the guidance, we believe earnings delivery over the year will likely drive positive revisions in earnings expectations.”
