The S&P 500 has been on a roundtrip this year as President Donald Trump’s trade policy has jolted markets. The benchmark index on Thursday was just a whisker away from hitting an all-time high.
The index has soared 22% since hitting its low point on April 8 in what has been a remarkable come back from the precipice of a bear market. As the S&P 500 tests a new record high, it is set to recover $9.8 trillion in market value since its low point in April.
US stocks were higher on Thursday. The Dow was higher by 305 points, or 0.71%. The broader S&P 500 gained 0.64% and the tech-heavy Nasdaq Composite rose 0.66%.
The S&P 500 on Wednesday had closed just 0.85% away from an all-time high. The Nasdaq had closed roughly 1% away from an all-time high.
Stocks pushed higher on Thursday morning amid a flurry of economic data, including data that showed a downward revision to how much the economy contracted in the first quarter.
That revised data is “backward looking,” and markets were higher on Thursday because they have already priced in the turmoil from earlier this year, Paul Stanley, chief investment officer at Granite Bay Wealth Management, said in an email.
“The market is betting on continued progress on trade and a de-escalation of tensions in the Middle East is giving investors confidence,” Stanley said.
The S&P 500 hit a record high on February 19 before dropping as low as 18.9% by early April as tariff confusion rocked markets. The index has since nearly recouped all of those losses.
At its low on April 8, the S&P 500 had shed $9.8 trillion in market value since its record high on February 19, according to FactSet data. The index is set to recover all of that market value as it tests a new record high.
The index as of Wednesday had recouped about $9.3 trillion in market value since its April low.
Wall Street analysts are mixed on whether the S&P 500 can grind higher, or whether its return to record highs means there’s more downside to come.
As tensions in the Middle East have settled, the focus returns to Trump’s agenda. Lawmakers hope to deliver the president’s budget bill to his desk by July 4, and his administration’s deadline for trade deals is July 9.
“Meaningful progress on any of the two matters can bolster equities to fresh records,” José Torres, senior economist at Interactive Brokers, said in a note.
Investors in coming weeks will be focused on how tariff rates ultimately settle and whether Trump’s trade policy might reignite inflation.
“It would help stocks if we were to see a narrative shift from a focus on tariff, trade policy and geopolitics to company fundamentals,” Carol Schleif, chief market strategist, BMO Private Wealth, said in a note.
Despite the rally, the ratio of bullish versus bearish outlooks for the market remains below the historical average, Ed Yardeni, president of Yardeni Research, said in a note.
“That suggests more upside for the stock market since many investors remain wary and are not overly bullish,” Yardeni said.
The US dollar on Thursday dropped to its lowest level since February 2022 after a report by the Wall Street Journal that Trump plans to announce his pick for Federal Reserve Chair Jerome Powell’s successor as early as this fall.
Powell’s term ends in May 2026, meaning there would effectively be a “shadow” Fed chair in the months before his term expires.
The US dollar index, which measures the dollar’s strength against six major foreign currencies, dropped as much as 0.7% overnight before parsing some losses and trading down 0.4% in the morning.
“A candidate who is perceived as being more open to lowering rates in line with President Trump’s demands would reinforce the US dollar’s current weakening trend,” Lee Hardman, senior currency analyst at MUFG, said in a note.
The dollar index has tumbled nearly 10% this year. The euro and British pound this year have both hit their highest levels against the dollar in four years.
Francesco Pesole, an FX strategist at ING, told CNN that concerns about the Fed’s independence have been one of the contributing factors to the dollar’s broad decline this year.
“One of the key foundations of the strong dollar, of the dollar as a dominant currency globally, is to have an independent central bank,” Pesole said. “So, if [global investors] feel there is greater influence of politics into the Fed’s decisions, then they are pricing in a greater risk for the dollar.”
Greg Valliere, chief US policy strategist at AGF Investments, said in a note that Trump announcing Powell’s successor is a “terrible idea,” as it would be “sure to annoy and confuse the financial markets if there are two Fed chairs.”
“The damage to the Fed’s independence would be considerable if Trump becomes a monetary back-seat driver, second-guessing Fed policies this fall,” Valliere said.
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