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From tariff panic to a $10 trillion rally in 80 days. Can it last?
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🐂 Running strong
Trump's tariff-triggered stock market sell-off? Fuhgeddaboudit.
In just 80 days, investors went from panic to FOMO — the fear of missing out — pushing the US market to
The remarkable rebound has
been driven by good news on tariffs, inflation, and geopolitics — most recently the cease-fire between Iran and Israel after Iran's nuclear facilities were severely damaged by Israeli and American bombings.
It's notable that stocks moved into uncharted territory even as the Federal Reserve kept interest rates at a level that holds back the economy despite inflation hovering near the central bank's 2 percent target.
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But does the rally have legs?
Yes, according to
'Assuming nothing bad happens . . . we can see the market closing the year at a new high,' Pantekidis said in an interview.
Stocks opened higher on Monday.
Rewind:
Stocks peaked in February — then cratered after Trump blindsided markets on April 2 with steep new 'Liberation Day' tariffs. In just four trading days, the S&P 500 plunged 12 percent, leaving the benchmark on the brink of a 20 percent drop known as a bear market.
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The bond market shuddered. Investors feared Trump risked stoking inflation and choking growth by putting ideology ahead of sound economics.
Then came the walk-back. Trump
The upshot:
Wall Street decided Liberation Day was a bargaining ploy.
Tariffs might rise, investors reasoned, but not nearly as much as Trump had threatened.
'So long as we're not seeing 30, 40, 50 percent tariff rates — or even 100 percent in the case of China — the markets aren't being spooked,' Pantekidis said.
China's recent pledge to
Fired up:
The bounce back from April's cruelest days has been led by tech stocks rising a wave of optimism that artificial intelligence will power the economy to new heights.
Fundamentals improve:
Other market indicators are flashing bullish signals.
Sectors beyond tech are heating up, including industrials, consumer discretionary, and financials.
S&P 500 stocks are trading at a fairly reasonable 19 times estimated earnings, excluding the richly valued Magnificent 7.
Oil prices are falling again after spiking when Israel attacked Iran.
The economy is slowing but remains in good shape despite all the uncertainty around tariffs, tax policies, and tensions with Iran and China.
Caveats:
There's a laundry list of reasons why investors might want to curb their enthusiasm, starting with Trump's unpredictable handling of tariffs.
Even as stocks hit a new high on Friday, he announced an unexpected suspension of trade talks with Canada over its plan to begin collecting, on Monday, a new tax on digital services sold by foreign tech companies. On Sunday night,
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Investor confidence could be shaken by renewed Mideast violence, a breakdown in negotiations with China, and a spike in inflation caused by whatever tariffs Trump leaves in place.
Meanwhile, corporate earnings are under pressure. Companies in the S&P 500 are expected to post 5 percent earnings growth in the second quarter, which ends on Monday,
And the US dollar has fallen nearly 9 percent this year — a short-term boost to overseas corporate earnings but one that makes imports pricier and could push interest rates higher.
The Fed factor:
Wall Street really, really wants the central bank to cut its benchmark lending rate, which influences the cost of borrowing money to buy a home, a car, or expand a business.
Fed chair Jerome Powell
The consensus among investors is that the Fed will start dropping rates in September. It's a win-win in market logic: Either inflation remains under control, or the economy softens and the Fed acts to limit the damage.
Final thought:
FOMO has replaced panic in the stock market.
Neither extreme is healthy.
'It has been a turbulent year so far and we may all want a calmer economy, with fewer policy and geopolitical shocks, in the second half of the year,' David Kelly, chief global strategist at JP Morgan Asset Management, said in a note on Monday. 'However, just because we want it, doesn't mean we will get it.'
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The fallout from Liberation Day proved short-lived, but plenty of risks loom.
Zohran Mamdani, the likely winner of New York City's Democratic mayoral primary.
SHURAN HUANG/NYT
🎙️ On the Record
'I don't think that we should have billionaires.' Zohran Mamdani, New York City mayoral candidate, on NBC's 'Meet the Press.'
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🔢 By the Numbers
$3.3 trillion
—
of how much the Senate version of Trump's sweeping tax and spending bill will add to the national debt over the next decade.
Rhode Island's T.F. Green International Airport.
Jessica Rinaldi/Globe Staff
✈️ The Closer
Score one for T.F. Green International Airport.
The airport, in Warwick, R.I., grabbed the No. 6 spot in
The ease of parking and navigating the airport is a big draw here — and a sharp contrast to New England's primary air hub, Boston Logan. Food options include Rhode Island stalwarts such as Saugy Franks hot dogs and the just-opened Narragansett Kitchen & Bar.
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The top-ranked airport was Portland International Airport. Logan didn't make the top 50.
👋 Thanks for reading. Trendlines will be back on Thursday.
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On this day in 1971, the Supreme Court ruled, 6-3, that the government could not prevent The New York Times or The Washington Post from publishing the Pentagon Papers.
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Larry Edelman can be reached at
