After the 2025 market slump, is it finally save to buy stocks again?

Markets have steadied after a turbulent spring when President Trump’s sweeping tariffs on Canada, Mexico and China rattled global investors. The S&P 500 and TSX have since clawed back roughly half their losses as inflation continues to cool and central banks — including the Bank of Canada, which has cut its policy rate to 2.5% — shift toward supporting growth.

Still, with trade tensions simmering and earnings forecasts softening, many investors are asking: is now the time to buy back in — or wait for the next dip?

S&P 500 enters bear market amid escalating tariff tensions

In early April, the S&P 500 entered bear market territory, defined by a 20% decline from its recent peak. The index fell to 4,870, down 21% from its high of 6,144 on February 19, 2025. This marks the second-fastest transition to a bear market in history (1), surpassed only by the rapid decline during the COVID-19 pandemic in March 2020.

While volatility persists, analysts now describe that sell-off as a short-term correction rather than a prolonged downturn.

Since then, the market recovery has ben fueled by easing inflation, optimism over interest-rate cuts, and renewed consumer spending. Still, geopolitical risks — including continued tariff negotiations — remain a key drag on investor confidence.

The key drag on confidence is the ongoing threat of President Donald Trump's tariff policies. On April 2, 2025, the President announced sweeping tariffs, including a 25% duty on imports from Canada and Mexico, and an increase in tariffs on Chinese goods from 10% to 20%. These measures have heightened fears of a global trade war, leading to significant market volatility.

While Trump has gone to the negotiating table a number of times in 2025, his reliance on tariffs remains a wildcard for investors. Still, most economists expect a partial rollback of U.S./Canada trade measures by early 2026 as new negotiations begin. The initial 25% duty on cross-border goods spiked input costs in Q2, but many firms have since adjusted supply chains and pricing.

Possibly the brightest spot is that the worst-case recession scenarios that were predicted in the spring have not materialized. Instead, GDP growth in both the U.S. and Canada has stabilized near 1.5% to 2%, suggesting markets may have already priced in much of the tariff risk (2).

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Is now the right time to invest in stocks?

Given the current market volatility, investors, or would be investors, are questioning whether this is an opportune moment to buy stocks. Historically, market downturns have presented buying opportunities for long-term investors. According to Bespoke Investment Group (3), the average bear market since 1929 lasted 286 days, while the average bull market persisted for 1,011 days. This suggests that, despite short-term declines, markets have a tendency to recover and grow over longer periods. In short, history shows that investors who stay the course — or buy quality stocks during downturns — often come out ahead. While volatility remains elevated, lower valuations and rate cuts have created opportunities in select sectors, particularly technology, financials and industrials.

Long-term investors should focus on fundamentally strong businesses with durable earnings, not short-term market noise.

To identify those opportunities, consider turning to The Motley Fool’s expert stock analysis. Their analysts track undervalued blue-chip and growth companies — the same types of stocks that tend to outperform once markets stabilize.

See The Motley Fool’s latest stock recommendations.

Safer investment bets in a down market

Even as the market rebounds, diversification remains key. According to Morningstar analysts (4), healthcare stocks tend to remain stable because demand for medical services and products persists regardless of broader economic conditions. Companies like Johnson & Johnson and Pfizer have historically weathered economic downturns with less volatility. Other defensive sectors like utilities and consumer staples can also provide stability, while dividend-paying stocks offer consistent income in uncertain times. "Dividend payers may lag during market environments led by hot growth stocks, but in down periods like 2022 and 2018, they show resilience," Dan Lefkovitz, a strategist for Morningstar Indexes told ThinkAdvisor (5).

Bond ETFs have regained attention too, as lower interest rates push prices up — a reminder that mixing equities with fixed income can smooth returns over time.

For investors looking to build or rebalance portfolios, CIBC Investor’s Edge offers a comprehensive, low-cost platform for DIY investors. You can research individual stocks, ETFs and bonds, access analyst reports, and use educational tools to understand risk and performance — all in one place.

Explore CIBC Investor’s Edge.

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Historical context and future outlook

Economists have dialed back their recession warnings as rate cuts and resilient consumer spending buoy the economy. Goldman Sachs now places the odds of a 2026 recession below 15%, while Canadian growth remains steady.

Analysts suggest markets could see modest single-digit returns through the remainder of 2025, with opportunities in energy transition, infrastructure and dividend-growth stocks.

How to position your portfolio for the recovery

With interest rates falling and inflation easing, investors have a rare opportunity to buy quality companies before the next bull cycle gains steam. Consider a “barbell” approach — holding both defensive dividend stocks and select growth opportunities.

• Do your research: Use tools like The Motley Fool for expert analysis on undervalued and dividend-growth stocks.
• Stay diversified: Manage your own ETF and stock mix with CIBC Investor’s Edge, which provides educational resources and a full suite of research data.
• Automate your investing: If you’re just getting started, set up a Simplii Financial No-Fee Chequing Account to automatically funnel a portion of your pay into a TFSA or RRSP high-interest savings account, ensuring you invest consistently through every market cycle. Open an account before October 31, 2025 and get $300 cash back plus a $50 Skip The Dishes gift card. Terms and conditions apply.

Article sources

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Business Insider: The S&P 500 has tumbled into dreaded bear market territory (1); Yahoo Finance: Tariff storm ravages Magnificent Seven as Apple nears one-year low (2); The Motley Fool: How Likely Is It That the Stock Market Crashes Under President Donald Trump in 2025? Here's What History Tells Us (3); Business Insider: Here's what bright minds on Wall Street are saying about Trump's tariff-fueled market meltdown (4); ThinkAdvisor: 10 Dividend-Growth Stocks to Buy Now: Morningstar (5)