The index reached its highest level since mid-February on Friday, as the broad S&P 500 index jumped across the board. It’s nearing a record that has been lost for the past few months. As of last Monday, that index boomed to just over 6,000. This increase is a substantial rebound from its annual low of April 8. The S&P 500 has rallied more than 20% since early April, following a period of uncertainty driven by trade policy announcements from the Trump administration.
For example, in March and early April, concerns over the prospect of enormous tariffs caused a substantial drop in the S&P 500. On March 13, the index officially went into correction territory, having dropped more than 10% since its February peak of 6,144.15. The index fell to as low as 4,982.77, an 18.9% decline from its high. The last two-month rally is indicative of a market that has become decidedly optimistic about a shift toward more moderate trade policies.
Friday’s performance brought the S&P 500 three weeks in a row — a bullish sign for the anxious investor. After such a drop, it’s been historically common for the S&P 500 to rebound by more than 10% according to analysts. This rebound typically happens in the subsequent 127 calendar days. If the index exceeds its past record peak, it would indicate a vigorous comeback. This potential feat would officially bring the correction phase that started in March to a close.
Wall Street banks have lowered their year-end S&P 500 forecast several times this year. Positive economic surprises have surprised most analysts, fueling some positive stimulus expectations in the market deepening the overall sentiment. Richard Saperstein, limited chief investment officer at Treasury Partners, said we have seen a reset of the capital markets.
“Markets have moved higher on tariff postponement and the perception that they will be more moderate than initially announced.” – Richard Saperstein
Despite this positive trend, caution is still the name of the game among some industry watchers. Sam Stovall, chief investment strategist at CFRA Research, emphasized that while recent gains are encouraging, they do not guarantee sustained upward movement.
“Meaningful, extended gains are not assured, however.” – Sam Stovall
The recent rollercoaster of trade policy has investors in a wait and see mood. After President Trump first announced his shocking plans to impose sweeping tariffs, many business and political leaders feared a disastrous trade war that would shake already fragile global markets. Yet even as the new administration came to moderate its tone, faith in the market started returning.
Analysts at JPMorgan Chase noted that if there are no significant surprises in policy direction moving forward, the market is likely to continue climbing.
“Absent major policy surprises, the path of least resistance is to new highs.” – Analysts at JPMorgan Chase
The benchmark S&P 500 index was up by 0.13% on Monday. This bump up indicates investors’ continued optimism as talks over a new trade agreement between Washington and Beijing persist. Not to worry – these discussions have enormous implications. As big as these changes are, they will surely set the course of the index’s trajectory in the weeks ahead.