The U.S. stock market has been roaring in recent weeks, with the S&P 500 index up more than 17 percent since mid-June. That uplift has been attributed to former President Donald Trump’s tariff rollback and a new US-China trade pact. That surprise has blunted Wall Street firms’ predictions of a coming recession, contributing to a resurgence of bullishness among investors. The S&P 500 has climbed more than 5% over the past month, marking a total increase of 20% since an April low following Trump’s “Liberation Day” tariff announcement.
Recent inflation data shows both a modest upward acceleration in the pace of price increases. Still, inflation as of now remains near its overall lowest point since 2021. As in May, the pace of hiring slowed but remained remarkably resilient, showcasing a labor market that refuses to go down quietly. These three drivers have crushed expectations, resulting in a cautious but generally optimistic tone on Wall St.
The recent trade agreement between the U.S. and China has notably reduced tit-for-tat tariffs, which has positively affected market sentiment. Some analysts are saying that this development has taken the edge off fears of a sharp spike in inflation. They give thanks for this relief to the lower burdens placed on businesses.
Yung-Yu Ma, chief investment strategist at PNC Financial Services, was optimistic about the market’s ability to continue growing. As he explained, there’s a good chance the market might go up much more than 5% from today’s levels. S&P 500 Ivan Feinseth, a market analyst with Tigress Financial, was expecting a stronger advance in the S&P 500. He anticipates for it to grow from its current level of 6,090 to 6,500, which would be a 6% increase.
“The stock market doesn’t care about geopolitical events,” – Ivan Feinseth
While optimism abounds, other industry analysts are warning that the market still has some significant risks. If hostilities in the Middle East were to increase significantly, oil prices could shoot up. That threat to global economic growth increases with the escalation of recent tit-for-tat strikes between Iran and Israel. The North’s outbreak of violence shocked markets, sending stocks tumbling and rapidly increasing the price of oil.
The Federal Reserve has adopted a wait-and-see approach concerning interest rates, maintaining them at current levels as they monitor economic indicators. This measured approach is indicative of the central bank’s focus on sustaining growth while continuing to keep inflation in check.
Despite the market’s impressive resilience, Yung-Yu Ma cautioned that endurance is not an excuse for investors to engage in recklessness. He warned against getting too carried away with optimism in light of the tenuous state of today’s markets.
“Despite the market getting close to its highs, getting too enthusiastic is probably not what’s called for at this point,” – Yung-Yu Ma
His remarks underscored the freight market’s continued efforts to address ongoing near-term challenges and disruptions. As uncertainty looms, investors need to be prepared for increased market volatility.
