S&P 500 record fueled by earnings strength, easing tariff fear

MaryBusiness2025-06-2913816

By Lewis Krauskopf and Saqib Iqbal Ahmed

NEW YORK (Reuters) -Investors have shifted from panicking about tariffs to relief buying, lifting the U.S. stock market back to record highs as corporate earnings and the U.S. economy held up better than many had expected through a period of dramatic policy change.

The S&P 500, seen as the benchmark for the U.S. stock market, closed at 6,173.07 on Friday, up 0.5% on the day -- its first close above 6,144.15, its previous all-time closing high from February 19.

In the intervening period, the S&P 500 fell as much as 18.9% on a closing basis from the February level to April 8, nearly enough to label the decline a bear market. Stocks plunged after President Donald Trump's "Liberation Day" tariff announcement on April 2 sparked broad concerns about an impending recession.

Worries eased as Trump moderated his harshest tariffs, and the market rebounded.

The Nasdaq Composite also closed at a record high on Friday, its first all-time peak since December 16, confirming the tech-heavy index is in a bull market.

Stocks got their latest boost this week from easing fears about conflict in the Middle East after Trump's announcement of a ceasefire between Israel and Iran and optimism about the Federal Reserve lowering borrowing costs in coming months.

The past four months in the market reflected deep concerns about Trump's trade and tax policy, said Rick Meckler, partner at Cherry Lane Investments in New Jersey.

"In the investment public's mind, it went from a sense of tremendous pessimism to what seems to be optimism that this will all fall into place," Meckler said. Policy risk, however, is "still there."

As worries eased, volatility measures have fallen dramatically. The Cboe Volatility Index, an options-based measure of investor anxiety, spiked in early April, hitting 60 and closing as high as 52.33 on April 8, its highest closing level in five years.

The VIX index has since receded and was last at 16.32, near its long-term median of 17.7.

The market appears to be pricing downside risk at levels similar to those seen before early April, when Trump unveiled his tariffs, said Garrett DeSimone, head quantitative analyst at OptionMetrics. But unlike the post-election rally late last year, sentiment does not appear excessively bullish or complacent, he said.

Investors said a stronger-than-expected first-quarter earnings season for U.S. companies helped drive the rebound in stocks. S&P 500 company profits overall rose 13.7% from a year earlier, compared to an 8% gain expected as of April 1, according to LSEG IBES.

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"This was one of the most furious comebacks ever from a near bear market, as trade worries were overblown, but so were all the recession calls," said Ryan Detrick, chief market strategist at Carson Group. "The economy is hanging in there and overall first-quarter earnings were quite solid, sparking the huge rally."

However, investors appear to be more concerned about the corporate outlook from here. Estimates for earnings growth for each of the next four quarters have fallen from expectations at the start of April.

Investors have grown more upbeat about the stock market. Bearish sentiment in early April had reached its highest levels since the financial crisis, according to the weekly American Association of Individual Investors (AAII) Sentiment Survey.

While sentiment has trended more positively, bullish sentiment is still below the historical average.

Also driving the rally has been renewed strength of the "Magnificent Seven" megacap tech and growth stocks. That group, which includes Microsoft, Nvidia and Amazon, had led equity indexes higher the prior two years but had gotten off to a rocky start in 2025.

Since April 8, the Roundhill Magnificent Seven ETF has jumped about 37% against a roughly 24% rise for the S&P 500.

Fueled by the Magnificent Seven, the S&P 500 posted back-to-back annual gains of over 20% in 2023 and 2024. Even with the latest record-high push, the index is up about 5% in 2025.

"I don't think anyone is really thinking this is an explosive year as the last two were," Meckler said. "I think it's more, 'Gee, we've come back a long way from the sell-off, and if we finish the year positive 5% to 10%, that would be a great year, given all that's happened.' "

(Reporting by Lewis Krauskopf and Saqib Iqbal Ahmed; Editing by Alden Bentley and David Gregorio)

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Cain

The record highs achieved by the S&P 50O index in recent weeks are significantly fueled not just by deeply rooted earnings strength across listed companies but also a calming of global tariff-related fear, underpinning market optimism and encouraging further bullish agenda.

2025-07-02 07:30:00 reply
Niko

The record-breaking performance of the S&P 50O index can be attributed largely to robust earnings and reducing uncertainty about tariff hikes, bolstering investors' confidence in market strength.

2025-07-02 07:30:15 reply
Dario

The recent positive momentum of the S&P 50O continues to be fueled by robust earnings growth, providing a buffer for companies against concerns related to easing tariff tensions.

2025-07-02 07:30:29 reply
Mercy

S&P 50O continuous record growth underscores the resilience of US corporations backed by robust earnings, offsetting concerns over easing tariff pressures.

2025-07-02 19:08:02 reply
Daria

The robust earnings of S&P 50O companies and easing concerns about trade tariffs have combined to propel the index towards new record highs.

2025-07-02 19:08:17 reply
Owen

The recent record highs of the S&P 50O index are fueled by strong earnings that have outweighed concerns caused by easing trade tariffs.)

2025-07-04 03:53:05 reply
Daisy

S&P 500 sets new highs fueled by the strength of earnings amid easing concerns over tariffs, signaling a continued resilient business environment.

2025-07-05 06:59:45 reply
Jessamine

The record-breaking performance of the S&P 500, fueled by robust earnings and reduced concerns over tariffs amidst an overall favorable economic environment.

2025-07-05 07:00:00 reply
Adam

The recent record-setting performance of the S&P 500 can be attributed largely to robust earnings strengths and a cooling in trade tariff fears, signaling an economic recovery that positively impacts equities.

2025-07-17 23:55:05 reply
Houston

The recent surge in the S&P 50O record reflects a resilient corporate sector fueled by strong earnings growth, allaying initial concerns of heightened tariffs.

2025-07-17 23:55:18 reply
Oakley

The recent rise in the S&P 500 record can be attributed to robust earnings and alleviated concerns over trade tariffs, demonstrating a positive economic momentum.

2025-07-18 02:19:34 reply
Jamari

The recent surge in the S&P 50O's record-breaking performance is fueled primarily by robust earnings growth, as investors breathe a sigh of relief over eased tariff concerns.

2025-07-18 02:19:49 reply
Wells

The recent gains in the S&P 50OI-display a reflection of robust earnings growth and supportive investors' sentiment, further bolstered by signs that tariff issues might be easing.

2025-07-18 02:20:04 reply
Yasmine

The recent surge in S&P 50commissions earnings strength and the easing of tariff-related fear, demonstrating a positive economic outlook for both US businesses.

2025-07-18 03:25:11 reply
Yvette

The record-setting performance of the S&P 50O in recent times can be attributed to solid earnings growth while easing concerns over tariffs relief provide a much needed boost for market sentiment.

2025-07-20 08:26:33 reply
Brisa

The recent record-breaking performance of the S&P 50O is fueled primarily by robust earnings strength, while easing tariff fears have provided additional confidence to investors.

2025-07-20 08:26:48 reply

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