The S&P 500 and Nasdaq hit record highs on Friday. This comes as the major averages have staged a sharp recovery back to record levels this month. The S&P 500 is up 4.4% in June, while the tech-heavy Nasdaq has jumped nearly 6.1%.
The Dow has added about 3.7% month to date. At its low in April, the S&P 500 was down nearly 18% for the year when global trade and tariff tensions rocked the market. Ken Mahoney, CEO of Mahoney Asset Management, said, “The bearish narratives—Middle East conflict, tariffs, soft economic data—keep getting invalidated by the price action.
Every chance the market has had to break down has failed. Instead, it continues to do what bull markets do best: climb the wall of worry. We think this run can continue, not without volatility to the downside of course.”
Investors will be keeping an eye on whether the Senate will be able to pass a significant trade bill backed by President Donald Trump.
New market highs defy bearish trends
The package, which narrowly passed a key procedural vote in the Senate, faces an uncertain path in the House. Canada’s decision to rescind the digital services tax is part of an effort to restart trade negotiations with the U.S. Canadian Prime Minister Mark Carney stated, “Today’s announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month’s G7 Leaders’ Summit in Kananaskis.”
Atlanta Fed President Raphael Bostic said the U.S. Federal Reserve is unlikely to have enough clarity on the trajectory of the U.S. economy to justify an interest rate cut in July.
“We’re going to have a lot that’s unknown about how other policies are impacting the labor market,” Bostic said. The Fed will closely monitor how businesses and consumers respond to tariffs and other economic factors. Asia-Pacific markets traded mixed Monday as investors parsed details on trade negotiations and various economic data points.
China’s manufacturing activity showed signs of recovery in June, fueling hopes for more stimulus to cushion the impact of ongoing trade disruptions. More companies in the S&P 500 are issuing positive earnings guidance for the second quarter than average, according to FactSet. Over 110 companies have given quarterly EPS guidance, with 51 issuing positive guidance.
However, earnings growth could be slowing down, as the estimated year-over-year earnings growth rate for the S&P 500 in the second quarter of 5% could mark the lowest since the fourth quarter of 2023. The stock futures continue to look promising as investors remain optimistic about the market’s direction despite the prevailing uncertainties.
