Rising trade tensions, weakening jobs data, and shifting Federal Reserve expectations rattled markets on Friday, but Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company, says the answer for investors remains unchanged: stay diversified.<\/p>\n
\u201cUncertainty remains high\u2014and the way to manage it has not changed,\u201d Schutte wrote in a recent note. \u201cWe do not believe the unpredictability in the economy and the markets calls for dramatic changes to your investment plan.\u201d<\/p>\n
U.S. stocks fell last week, and bond yields declined as disappointing employment numbers and higher-than-expected tariffs on U.S. trading partners, including Canada, revived concerns about a slowdown.\u00a0<\/p>\n
The July jobs report showed just 73,000 jobs added, well below expectations, with prior months revised sharply downward.<\/p>\n
\u201cThe evidence of tariffs hitting hard economic measures, coupled with the Trump administration\u2019s unveiling of new and higher-than-expected duties on goods from countries that failed to reach a deal with the U.S. before the administration’s August 1 deadline, forced many investors to reconsider their views,\u201d Schutte said.\u00a0<\/p>\n
He noted that tariffs had previously shown up only in consumer and business sentiment surveys.<\/p>\n
Looking ahead, all eyes are on the Federal Reserve. Market expectations for a rate cut at the September FOMC meeting jumped from below 40% to 87% after the jobs data, according to the note.\u00a0<\/p>\n
However, Schutte cautioned that predictions around Fed timing are \u201cnotoriously fickle.\u201d<\/p>\n
Despite the economic crosscurrents, Northwestern Mutual sees opportunity in the long term.\u00a0<\/p>\n
\u201cThe current environment serves as a valuable reminder that an unpredictable future will lead to unpredictable opportunities,\u201d Schutte said. \u201cDiversification is the best way to capitalize on these unforeseen opportunities.\u201d<\/p>\n
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