The S&P 500 is preposterously poised to make an all-time high. This incredible recovery comes after it was in deep crisis just two months ago. On Tuesday, that index closed at just 0.85% from its all-time high on February 19. That extraordinary turnaround is the result of a few driving forces. These factors made improved investor sentiment and the buoyant market performance of recent weeks a deciding factor.
Following a very stormy period where the S&P500 was flirting with a bear market, the index has had an incredible recovery. It has rolled ahead with momentum and is climbing. Only two months ago, anxieties over the initiation of President Trump’s eventual tariff policy caused a steep drop in the confidence of the market. After a rough October 2023, the S&P 500 has come back with a vengeance. In May, it popped 6.15%, marking its highest monthly performance since November 2023 and its most robust showing in the month of May since 1990.
Recent Performance Highlights
So far in June, the S&P 500 has stayed on that bullish trend, recording a 3% increase so far. That remarkable streak included a two-day gain of 2.1% just in the last 48 hours. Whatever the reason, that positive momentum has been enough to distance the S&P 500 from its mid-morning losses today. It is now over 3.5% in the positive on the year.
Investor confidence has been bolstered by a series of events including President Trump’s decision to walk back his substantial “reciprocal” tariffs, which previously clouded the market’s outlook. In particular, analysts have noted that large technology companies are fueling the growth of the market. Their strong performance has been mighty important these last few years of recovery.
“And in the meantime, getting leadership from these big tech names is huge for a US market that’s hyper-concentrated in that area.” – Ross Mayfield
Factors Influencing Market Sentiment
As market dynamics continue to shift, TBD and others are closely monitoring companies’ ability to pass tariff-related price increases through. Together, these actions will have a monumental impact on inflation, interest rates, and economic growth. As Amtrak Board Member Eric Freedman pointed out, it will take at least three more quarterly releases to really judge these factors.
Market commentators have rightly sounded alarms about the volatility we can expect as geopolitical tensions ebb and flow. Chris Brigati remarked on how, “As Middle East tensions de-escalate, the focus will return to more fundamental concerns for investors such as tariffs, earnings, the federal deficit and President Trump’s One Big Beautiful Bill.” These are the types of factors that will determine where investors look next.
While there is certainly cause for concern about potential overvaluation in the current market, the consensus among most experts is that a bubble has yet to materialize. Ross Mayfield stated, “Does it become a bubble at some point? I think it’s possible, but I don’t think we’re there yet.”
Looking Ahead
As investors continue to chart a course through this fluid landscape, a number of industry analysts recommend taking a step back. Chris Brigati noted that “the main message for investors is to stay invested and avoid reacting sharply to any news or market reaction that may have a short-term negative impact upon equity prices.” This view fosters a patient, long-term investment approach, even in the face of short-term volatility.