Why rates ‘are not the problem’ on the stock market: lace -up trader

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Markets are rattled by the escalating commercial interviews while President Trump sets out the tariff policy from his first term.

Stocks fell on Monday, with the S&P 500 (^GSPC) who registered its worst day of 2025, after Trump repeated that 25% rates on goods from Mexico and Canada would continue on March 4. Trump also promised that the US would levy an extra 10% rate on Chinese import.

The changing mood in the market repeated comparable movements this year after tariff heads. According to Wall Street veteran Kenny Polcari: “Rates are not the problem. Investerspanic is.”

“Every time rates in the headlines come, the market throws a fit, diving shares, the media screaming trade war and investors pretend that 2008 is again,” Polcari argued on the Talk podcast of Yahoo Finance (see video above or listen below). “But let’s just take a step back. Are rates really the disaster they have made?”

The most important indexes have fallen in the past month, because Trump drove various new tariff ideas, including mutual rates and new tasks on steel and aluminum, among other things. But although tariff problems have been in the front and in the middle, investors have seen the shares return through a sharp decline.

Read more: What are rates and how do they influence you?

“The knee’s reaction was ridiculous,” Polcari said about the sale at the beginning of February when Trump announced rates about Mexico and Canada. “Stocks refueled, volatility spiked and algorithms panicked.”

“But what happens when the dust covers?” He went on. “Executives adapt. Trade agreements are being negotiated again and investors realize that the world is not ending. Those who remain calm and position themselves will usually win.”

President Trump has indicated that rates promote domestic jobs, goods and services and that the increase in government revenues would enable the US to pay the country’s national debt – which is currently $ 36.5 trillion.

However, predictors note that the costs of rates often fall for consumers, who pay higher prices for daily goods imported from abroad.

Nevertheless, Polcari argued that the tendency of investors to adjust their investments in anticipation of potential effects of rates can hurt as much as or more than the rates themselves.

“If you dump shares because of rates, you do it all wrong,” Polcari said.

Great Hill Capital chairman and management member Thomas Hayes agreed and said that despite the panic these rates have caused in the short term, the effect will probably be neutral in the long term.

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“It’s a fear of the unknown,” said Hayes. “At a certain point you have to take a step back when these shares sell because they have exposure to China, or they have exposure to Mexico, or they have exposure to Canada. You say: ‘Wait a minute. When I look back on their free cash flow and income in two years, it will be a small blip on the radar. It becomes even. ” ‘

So what should investors do in this time of economic uncertainty? Polcari suggested that investors “pay attention to where the money is moving.”

“Look at companies with strong balance sheets, prices, power and diversified supply chains,” he said. “Note how the industry is shifting. This is where real opportunities are found – not selling in a panic, but in smart positioning.”

“The bottom line,” he added, is that “rates are not the end of the world, but emotional trade – that’s what your return really kills.”

Every week on Trader Talk, Wall Street -Veteran Kenny Polcari brings you expert advice and important market insights of the New York Stock Exchange. You can find more episodes about our video bub Or look at you Preferred streaming service.