Wall Street traders can be an irreverent bunch. They often coin nicknames for politicians. Many of the wags on the trading desks in lower Manhattan refer to Donald Trump as “President Chaos.” (What they call Hillary Clinton is unprintable here.)

Whether you agree or disagree with Trump’s trade policies, one fact is undeniable: his proposed tariffs on steel and aluminum have spawned considerable turmoil in financial markets.

Stocks face a towering wall of worry. On Monday, they climbed that wall higher. The three main indices closed in positive territory, as investors put aside anxieties over trade to savor the continuing economic recovery. The Dow Jones Industrial Average today snapped a four-session losing streak.

The Institute for Supply Management (ISM) reported Monday that its survey of service companies for February was robust. The ISM non-manufacturing index slipped to 59.5 last month from 59.9. in January. Nonetheless, a reading above 50 indicates that the manufacturing economy is expanding. The index sits at a 12-year high.

Equity markets initially opened sharply lower on Monday but bounced back. All 11 S&P 500 sectors closed higher. Trading was volatile, as uncertainty lingered in the wake of Trump’s recently announced tariffs.

Trump has proposed tariffs of 25% on steel and 10% on aluminum. Wall Street’s attitude toward the tariffs can be summed up by borrowing the lyrics of a famous 1960s protest song: Trade war, what is it good for? Absolutely nothing.

A trade war would most impact companies that manufacture machinery used to create capital goods in the information technology, aerospace, and engineering sectors. The fear is that Trump’s tariffs could result in an escalating trade war reminiscent of the 1930s.

Trump’s “America First” policy is rattling investors. Last week, the major indices posted their worst week of losses since the market swoon of early February. The Dow fell 3.1% and closed the week below 25,000. The CBOE Volatility Index (VIX) last week rose 18.8%.

Ministers from the U.S., Canada and Mexico met today in Mexico City for the latest round of North American Free Trade Agreement (NAFTA) talks. The steel and aluminum tariffs cast a shadow over deliberations.

Investors received solace on Monday from House Speaker Paul Ryan (R-WI), who told Trump to drop his tariff proposals. Wall Street also was cheered by hints from the Trump administration that the tariffs were merely bargaining chips for NAFTA talks.

But the president has largely stood his ground, despite fierce criticism from his Republican allies in Congress and the business community. He is expected to finalize the tariffs later this week, which complicates the job of U.S. trade envoys at the NAFTA talks.

The Mexican and Canadian ministers today pressured the U.S. to exempt their countries from the tariffs. The matter remains unresolved. The North American supply chain could be thrown into, well, chaos.

Europe torn asunder?

It’s not just a looming trade war. Investors also are spooked by the rise of far-right parties in Europe.

Political risk — both at home and abroad — has taken center stage. Europe suddenly seems a lot less stable.

In national elections on Sunday, Italian voters registered their disgust with the European political establishment. They handed a majority of votes to anti-immigrant, “populist” parties.

Exacerbating concerns about the euro zone’s stability are rocky Brexit negotiations. Britain’s Tory leadership is weak.

Even Germany, the growth engine of Europe, is looking shaky. Chancellor Angela Merkel secured a ruling coalition on Sunday, but it’s a tenuous accord that leaves her power diminished.

China’s leadership is stirring the cauldron as well. Chinese President Xi Jinping announced last week the abolition of the two-term limit for the presidency, which could set up Xi as China’s ruler for life. The move dashed hopes that maybe, just maybe, China was evolving toward Western democratic values.

President Trump joked that a life-time tenure for presidents was worth trying in the United States. (Investors weren’t amused.)

China also grapples with huge debt. Financial transparency is lacking in the Middle Kingdom. On February 22, the government seized Anbang, a private insurer that’s accused of fraud.

Meanwhile, President Trump’s White House resembles a revolving door. Personnel defections are rife as Special Counsel Robert Mueller’s Russia investigation zeroes in.

The long period of calm that fueled the bull market is over. Uncertainty is the byword. The good news is that extreme change can breed future investment opportunities.

Stay invested. Stocks today rose across the board, showing that there’s still money to be made in the market. But until this chaos subsides, you should also stay defensive.

Monday Market Wrap

• DJIA: +1.37% or +336.70 points to close at 24,874.76
  
• S&P 500: +1.10% or +29.69 points to close at 2,720.94
  
• Nasdaq: +1.00% or +72.84 points to close at 7,330.70
  

Monday’s Big Gainers

• XL Group (NYSE: XL) +29.15%

Insurer in merger talks.

• Intrepid Potash (NYSE: IPI) +11.80%

Fertilizer prices continue to rise.

• Global Net Lease (NYSE: GNL) +9.42%

REIT added to small-cap index.

Monday’s Big Decliners

• Sparton (NYSE: SPA) -27.15%

Engineering firm’s merger falls through.

• BRF (NYSE: BRFS) -19.48%

Inspection fraud hits Brazilian food producer.

• PAR Technology (NYSE: PAR) -8.51%

Analysts bearish on maker of point-of-sale equipment.

Letters to the Editor

“Europe looks politically risky. Should I ignore European stocks altogether?” — Bill J.

In a word, no. The European Union certainly has its share of headline-grabbing problems. But turn your back on Europe and you’re leaving serious money on the table. Several signs point to a European revival in the making. Undervalued German-based blue chips look particularly appealing.

The EU economy generates a nominal gross domestic product of about €15 trillion, which makes it the largest economy in the world if treated as the economy of a single country.

The EU is the world’s biggest exporter of manufactured goods and services. As super investor Warren Buffett once said with characteristic understatement: “Europe is going to be around.”

Questions about rising geopolitical risk? I’m here to put it into context: mailbag@investingdaily.com

John Persinos is managing editor of Personal Finance and chief investment strategist of Breakthrough Tech Profits.