The U.S. stock market reached new heights on Friday, as the S&P 500 and Nasdaq closed at all-time highs. The S&P 500 gained 0.5%, closing at a record 6,173.07, its first new high since February 19. This comes after the index flirted with bear market territory in early April.
US stocks close at an all-time high just months after plunging on tariff fearshttps://t.co/gBYgS4O3WS pic.twitter.com/ysQAmTwUsg
— Michelle L. Price (@michellelprice) June 27, 2025
The Nasdaq Composite also reached a record high, gaining 0.5%, fueled by the recent boom in artificial intelligence. The Dow Jones Industrial Average rose by 432 points, or 1%, falling short of its own record high.
The S&P 500 is really close to its all time high pic.twitter.com/TOX30e2PCH
— Joe Weisenthal (@TheStalwart) June 26, 2025
The stock market’s remarkable rebound began after a significant drop from its previous record on February 19 to its low point on April 8.
Over the past two and a half months, the markets managed to recover all those losses. This resurgence was accompanied by improvements in U.S. trade relations. Recent trade frameworks with the United Kingdom and China have alleviated investor concerns.
550% dividend announced; multibagger IT stock – Record date in Julyhttps://t.co/UD287rnlBU
— ET NOW (@ETNOWlive) June 29, 2025
Investor Alert! 5 drivers of stock market THIS week; here’s what analysts trackedhttps://t.co/rdZhA1Rm37
— ET NOW (@ETNOWlive) June 29, 2025
The AI boom, led by companies like Nvidia, and a deregulatory push from Republican lawmakers have also driven the stock market’s rise. Expectations of a potential rate cut from the Federal Reserve, alongside strong economic indicators and low inflation, have buoyed investor confidence. However, challenges lie ahead.
Consumer spending in the first quarter of 2025 was at its weakest rate in over four years. The expiration of the reciprocal tariff pause could lead to increased tariffs if new trade deals are not reached. Political uncertainties could also impact market stability.
Markets surge after trade talks end
Valuations have surged well above earnings expectations, with the S&P 500’s price-to-earnings ratio exceeding 23, indicating high stock prices relative to profit expectations. The S&P 500’s recent record follows a rally of more than 23% from its April 8 bottom.
Wall Street strategists are increasingly bullish, revising their year-end targets for the index. BMO Capital Markets chief investment strategist Brian Belski noted, “The signposts we called out in April are largely in place – markets are transitioning from ‘scare me’ to ‘show me.’ Performance is broadening, reactions to daily rhetoric are calming, and corporate guidance is expected to improve following the second-quarter earnings reporting period.”
The gains on Friday were broad, with nearly every sector within the S&P 500 rising. Nike soared 15.2 percent for the biggest gain on the market, despite warning of a steep hit from tariffs.
Investors are also monitoring potential progress on trade conflicts between the US and the world, specifically with China. The US and China have signed a trade deal that will make it easier for American firms to obtain magnets and rare earth minerals from China that are critical to manufacturing and microchip production. An update on inflation Friday showed prices ticked higher in May, though the rate mostly matched economists’ projections.
The Federal Reserve is monitoring the tariff situation with a big focus on inflation. The rate of inflation has been stubbornly sitting just above the central bank’s target of 2 percent. The Fed cut interest rates twice in late 2024 following a historic series of rate hikes to cool inflation.
The Fed hasn’t cut interest rates so far in 2025 over worries that tariffs could reignite inflation and hamper the economy. Economists still expect at least two rate cuts before the end of the year. Overall, the S&P 500 rose 32.05 points to 6,173.07.
The Dow gained 432.43 points to 43,819.27, and the Nasdaq added 105.55 points to 20,273.46. Stocks in Europe were mostly higher, while stocks in Asia finished mixed.
