S&P 500 hits new record high following months of Trump tariff doom and gloom

Just weeks into President Donald Trump's second term, the S&P 500 — which had risen over 20% in the previous two years — rocketed to record highs, driven up in part by a substantive increase in corporate earnings as well as the "Trump bump."

After marking its all-time high of 6,144.15 on Feb. 19, the index soon began to slide, prompting anxiety among some investors and doom-saying from various analysts, especially over the potential impact of the president's tariff proposals.

For instance, Andrew Brenner, head of international fixed income at National Alliance Securities, told the New York Times a month ahead of Trump's "Liberation Day" tariff announcements, "The tariff rhetoric has become daily and extreme, sentiment is awful and trading is on edge."

In the days immediately following Trump's April 2 announcements, the S&P 500 had its worst day since COVID-19 crashed the economy in 2020, then shed many trillions in market value, prompting more of the concerns and shirt-rending that would become customary over subsequent weeks.

After months of doom and gloom, the S&P 500 hit a new record on Friday, marking a stunning comeback from April. At market open, the S&P 500 went north of 6,154.79.

CNBC suggested that the comeback — what Bloomberg indicated is "shooting toward the second-biggest percentage-point recovery in history" — was driven in part by strong corporate earnings, a stable labor market, and new energy in the AI trade. It certainly doesn't hurt that trepidation over tariffs has largely given way to optimism over Trump's trade deals.

The possibility that Trump might not ultimately implement his Liberation Day tariffs may also have been factored into investors' optimism. After all, the rise came on the heels of White House press secretary Karoline Leavitt noting that Trump's July tariff deal deadline "is not critical" and "could be extended."

There's also the matter of Commerce Secretary Howard Lutnick's recent revelations to Bloomberg News that the U.S. and China finalized its trade deal this week and that the Trump administration has imminent plans to reach trade deals with 10 other major trading partners.

"We're going to do top 10 deals, put them in the right category, and then these other countries will fit behind," said Lutnick.

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Photo by Kent Nishimura/Bloomberg via Getty Images

"The markets are looking forward, seeing lower interest rates, less regulation in the banking sector, a shift from austerity to stimulus in Europe, and a less biting inflation and tariff environment," Jamie Cox, managing partner at Harris Financial Group, told CNBC. "This sure isn’t the stagflation story we've been told to brace for."

Paul Stanley, chief investment officer at Granite Bay Wealth Management, said to CNN regarding the S&P 500's $9.8 trillion roundtrip, "The market is betting on continued progress on trade and a de-escalation of tensions in the Middle East is giving investors confidence."

Entrepreneur and business expert Carol Roth told Blaze News that "it's important to remember that the market is not the economy, and that other factors, including the Federal Reserve and government policy, have impacted the market, particularly over the last couple of decades."

"The president's heavy-handed approach to tariffs was not expected by the market, but as there had been more certainty gained regarding tariff policy and a belief that further de-escalation is more likely than escalation, the market has moved past that hurdle," explained Roth. "In recent days, commentary from Fed members that suggests a Fed rate cut may be on the table for July has supported risk assets."

Roth noted, however, that "any long-tail effects from tariffs that show up later in the year, or challenges that arise from financing/refinancing our massive debt and deficit could shift the outlook and impact market returns."

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