By Xavier Martinez

Tariffs. AI innovations. Pressure on the Federal Reserve. The Venezuela incursion.

A year into the second Trump administration, traders and investors say they are growing more accustomed to what is known in Wall Street parlance as "event risk" -- sudden, unexpected news triggering outsize market swings.

Market-moving shifts from Washington once involved months of negotiations with stakeholders, members of Congress and lobbyists. Today, they are just as likely to come via overnight headlines or social-media posts that can add or erase billions of dollars in market value before breakfast. Lately, they have ranged from the potential scaling back of steel tariffs to the appointment of a new Federal Reserve chairman.

New developments in artificial intelligence have also disrupted entire sectors of the market in sudden and unexpected ways, rolling through insurers, data providers, wealth managers and even trucking companies in recent sessions.

Stocks remain near records, but the all-hours cadence has spurred some investors to move money into foreign markets or other havens to escape the noise of the domestic headline cycle.

Stephen Kolano, chief investment officer at Integrated Partners, is increasingly looking toward regions where trade relationships are being formed independently of Washington, such as the European Union and India, increasing allocations to European defense companies and emerging-market equities.

"You almost get desensitized to it," he said. "You know to expect what's not expected."

Along with the unexpected, investors in the coming holiday-shortened week are preparing to parse data on economic growth and the Fed's preferred inflation gauge, along with earnings from Walmart, auto seller Carvana and equipment maker Deere.

The nerves are evident from spikes in the Cboe Volatility Index, or VIX, known as Wall Street's fear gauge because it measures the price of options that investors tend to buy when expecting stock swings. The median daily absolute move on the index has climbed to 4.2%, from 3.5% during the last year of Joe Biden's presidency, according to FactSet data.

The index closed at 20 or above on 66 days in the first year of President Trump's second term, compared with zero times in the first year of his first term, according to Asym 500 research.

Even this earnings season has been particularly volatile. The average S&P 500 stock moved 5.2% or more on reporting days, the highest since 2012, according to Citi analysts. Fifteen moved 15% or more.

Meanwhile, event-driven swings continue. An update from a small logistics company sparked a rout in trucking stocks this past week, with investors worried that shippers would be the next industry disrupted by new AI tools. C.H. Robinson fell 15%.

It isn't just stocks. Trade wars, deficit spending and a falling dollar helped gold prices surge 65% in 2025 and to records above $5,300 a troy ounce in January. Then the sudden nomination of Kevin Warsh to succeed Jerome Powell as chair of the Fed triggered a sharp dollar rally that sent gold sliding.

Brent Donnelly, president of Spectra Markets, pointed to an uptick in pension funds increasing protections against extreme moves in the U.S. dollar to mitigate the risk of the currency dropping on a sudden headline.

Case in point: Last month, Trump's comment that he wasn't concerned about a retreat in the U.S. currency sparked the dollar's biggest decline since his April tariff announcement.

"You can't possibly know when it's going to happen, and you won't know if it's credible when it does," Donnelly said.

In January alone, investors were surprised by the military operation in Venezuela, an unexpected proposal to cap credit-card interest rates at 10%, a directive to housing giants Fannie Mae and Freddie Mac to buy $200 billion of mortgage bonds, and Japanese policy shifts that sparked a bond-market selloff, Pimco's Marc Seidner and Pramol Dhawan wrote in a recent report.

They recommended that investors adopt "an agile mindset built for uncertainty," tracking valuations, staying flexible across regions and reacting quickly when volatility creates opportunities.

Some analysts said the relentless nature of the news has trained money managers to be wary of the initial response to administration pronouncements, geopolitical developments or surprise technological advances.

"You need to kind of look through that maximalist initial surprise offering, even if it seems like it's shooting from the hip, because it's going to be negotiated," said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute.

Instead of reacting to headlines, Christopher is focused on mutually reinforcing trends like deregulation and AI spending.

"The noise-to-signal ratio has gone up dramatically," said Michael Rosen, chief investment officer at Angeles Investments in Santa Monica, Calif. "We need to spend a lot more time sifting through the greater amount of noise that's in the world and try to discern what actually matters."

Angeles recently bought small-cap stocks for the first time in about 20 years and dropped a longstanding overweight position in U.S. assets to add exposure in Europe and emerging markets.

"Our portfolio is much more diversified than it really ever has been," Rosen said.

Write to Xavier Martinez at xavier.martinez@wsj.com

(END) Dow Jones Newswires

February 15, 2026 21:00 ET (02:00 GMT)

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