By Joe Pinsker and Owen Tucker-Smith

For years, Yoram Ariely hadn't touched most of his investments, preferring to ride the stock market's ups and downs. Last Tuesday, he decided he had enough.

The 82-year-old unloaded almost half of his stock investments, fearful of the effects of President Trump's economic agenda, and tariffs in particular. He may get rid of more still.

"The decisions are changing daily," said Ariely, a retired business owner in Longboat Key, Fla.

The Trump administration's chaotic mix of tariffs and government budget cuts have jolted legions of everyday investors, leading them to question the assumption that they should buy and hold stocks on autopilot.

The S&P 500, which had been delivering hard-to-beat gains, fell into correction territory this past week, with Wall Street fretting that the economy is sliding toward recession.

In the first half of March, individual investors have been trading in their 401(k)s at more than four times the normal level, according to record-keeper Alight Solutions. The past month has had the most trading in almost five years.

Investors who have dumped U.S. stocks say they are searching for stability in money-market funds, short-term bonds, gold and international markets. European defense stocks have been a popular bet, premised on increased security spending in the region.

The share of investors who are bullish on the stock market is now at its lowest level since September 2022, according to survey data from the American Association of Individual Investors.

Of course, many people aren't touching their portfolios, following standard financial advice to avoid making rash decisions during market turmoil. Even with the heightened trading in 401(k)s in the past month, the activity amounted to just 0.43% of account balances, versus the average of 0.12% over the past several years, Alight said.

People's economic outlooks are also closely tied to their political leanings. Some Trump supporters say they are unfazed or even looking for a moment to buy.

Still, it is an abrupt shift, since it has been easy to assume in recent years that the stock market would keep chugging higher because of a strong economy. The S&P 500 rose 72% from October 2022, when it was at its lowest point of the last bear market, to its last record in February.

The S&P 500 has dropped 8.2% since then, including a 2.3% drop this past week. The benchmark index bounced back 2.1% on Friday, with investors relieved over an averted government shutdown, but worrying about a report that consumer sentiment is sinking.

Patton Price said he expected geopolitical chaos in Trump's second term, back when equities were still flying high. He sold all the stocks in his retirement accounts around the time of the presidential inauguration on Jan. 20.

"It's not like I have some fancy thesis and I think I know what's going to happen," said Price, a 46-year-old musician and former political consultant in Richmond, Calif. "I just don't think anybody knows what's going to happen."

Price, who voted for Kamala Harris, has kept most of the proceeds in money-market funds or short-term bonds. He doesn't know when he will get that money back into the market.

Financial-services firm TIAA said it has seen a roughly 10% uptick in the number of customers' calls to its advisers in the past two weeks, with more than usual coming from people who have historically tended to manage their portfolios on their own.

Individual investors added a net $30.4 billion to money-market funds in the seven-day period through March 5, the most in any week in over a year, according to the Investment Company Institute.

Meanwhile, U.S. physical gold ETFs saw net inflows north of $5 billion in February, according to Morningstar. Investors have piled in another $1 billion so far this month through Tuesday. The price of the precious metal topped $3,000 a troy ounce for the first time this past week.

Others have looked overseas. Investors poured $1.8 billion into European equity ETFs registered in the U.S. last month, according to data from the London Stock Exchange Group.

Jasmine Singh's breaking point was when Trump excoriated Ukrainian President Volodymyr Zelensky in a contentious White House meeting on Friday, Feb. 28. By Monday morning, Singh had swapped her U.S.-based portfolio allocation for one with mostly European stocks.

The first month of the second Trump administration convinced the 57-year-old former investment banker that the U.S. is relinquishing its centrality in the world economy and global balance of power.

"I don't know what world we're in at this point," said Singh, who lives in Millburn, N.J. "I'm not sure how much of what I've studied would still apply in this market."

International markets have outpaced the U.S. stock market in the first months of 2025. The Stoxx Europe 600 is up 7.7% year-to-date and the German DAX is up more than 15%, versus a 4.1% drop in the S&P 500.

Where some see signs of distress in the U.S. markets, others see no cause for worry.

Francisco Ayala, a financial adviser in Phoenix, said one client who can't stand Trump recently inquired about shifting investments out of the U.S. Another who adores him has regarded the drop as a healthy readjustment.

Earlier this month, Ben Pfeiffer started snapping up shares of Toast, Robinhood, Reddit and Broadcom.

"When this started unfolding, the market going down, it was a little more exciting because it offered opportunities to pick up names that I like," said Pfeiffer, a 43-year-old in New Braunfels, Texas, who runs an SEO marketing agency.

He voted for Trump and has noticed that liberal people he knows have a bleaker view right now.

"I feel like they're probably more vulnerable to much more irrational decisions," Pfeiffer said.

Write to Joe Pinsker at joe.pinsker@wsj.com and Owen Tucker-Smith at Owen.Tucker-Smith@wsj.com

(END) Dow Jones Newswires

March 16, 2025 05:30 ET (09:30 GMT)

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