When firms raise prices, “gouging” their customers, many governments complain. Some cannot resist intervening. But in today’s China, the opposite is happening. In May the state reprimanded carmakers not for raising prices, but for cutting them. “There are no winners in this price war,” it said, blithely ignoring the happy customers who can now buy a zippy electric car for less than $8,000. More
LAST YEAR America ran a budget deficit of 7% of GDP. It may soon be even bigger. President Donald Trump’s One Big Beautiful Bill Act, now working its way through Congress, permanently extends tax cuts introduced in 2017, offers more to hospitality workers and old folk, and boosts payments to poor children. The proposed legislation amounts to trillions of dollars of extra borrowing over the next decade. More
It’s been a week of records for the U.S. stock market — and for several stocks in the CNBC Investing Club’s portfolio. The S & P 500 jumped to an all-time high of 6,187.68 Friday, while the tech-heavy Nasdaq Composite rose to a new record of 20,311.51. Both benchmark gauges advanced around 4% from last Friday’s close. These milestones cap off a remarkable comeback for financial markets since April. Stocks were pummeled by President Donald Trump’s “reciprocal” tariff announcement on April 2 as Wall Street panicked over what higher levies would mean for economic growth and geopolitical relations. The S & P 500 has jumped 24% since its 2025 lows on April 8 despite lingering uncertainty on three fronts: the administration’s trade policies, the Federal Reserve’s next monetary policy move and the ongoing conflict in the Middle East. That rebound in equities has lifted seven Club holdings to all-time highs, including Nvidia, Microsoft , Broadcom , GE Vernova , Capital One , Goldman Sachs and CrowdStrike . The outperformances highlight many of the driving forces of the stock market. In fact, we see three key themes: 1. The generative artificial intelligence trade is back. Wall Street had feared a slowdown in AI spending as U.S.-China tensions threatened semiconductor production and demand. Investors have since brushed off this uncertainty, which stemmed from tariffs and Trump’s chip export controls . That’s, in part, because of a slew of good news from AI behemoths like Nvidia, which hit a record of over $158 apiece on Friday as the stock heads for a five-day win streak. The recent gains have raised Nvidia’s market cap to $3.8 trillion, making it the most valuable publicly-traded company in the world. A blowout quarterly earnings report in late May indicated demand for the chipmaker’s offerings were still strong. Around the same time, CEO Jensen Huang announced a huge deal with startup Humain, which would send 18,000 of its latest artificial intelligence chips to Saudi Arabia. This all helped fellow chipmaker Broadcom as well, which on Friday hit a record of $272 apiece, its latest of several records over the month. That’s because the more demand there is for AI chips, the more sales both of these firms can rake in. Another beneficiary of the AI trade are the hyperscalers, the companies that help support the computational power and infrastructure needed for AI. One of those mega-caps, Microsoft, is benefiting because of its huge cloud computing business, Azure, which generates a large portion of its revenues. The stock reached a record high of over $499 on Friday. Club holding GE Vernova has been a recent AI winner, too. GE Vernova supports the build out of the data centers — the power-hungry facilities used to handle the computation demand of AI — with the production of its turbines. The industrial stock has hit a number of highs this year alone, mostly recently on Friday. Shares are up over 61% so far in 2025, compared to the S & P 500’s 5%. 2. Investors are turning to defense stocks. Geopolitical conflicts in the Middle East and around the world has companies looking for offerings that can protect them from virtual attacks. The companies, in turn, are seen as safe havens for investors. That’s what led cybersecurity names like CrowdStrike to hit a new record on Thursday of $506. Club holding and peer Palo Alto Networks is only 3.5% off its all-time high set back in February. 3. The U.S. economy has been more resilient than expected. Last week, Federal Reserve Chair Jerome Powell described the economy as “still solid” and said the central bank was “well positioned to wait” before cutting interest rates. A resilient economy can lead to a pick up in Wall Street dealmaking such as initial public offerings. That means more companies will tap Goldman’s crucial investment banking business to help with their public debuts. Goldman was named the lead underwriter on big-name IPOs like Chime and eToro over the past month alone. The stock hit an all-time high of roughly $694 on Friday. For Capital One, a stable economic environment means lower odds of a consumer spending slowdown, which is good news for the credit card issuer. Investor sentiment has also improved after the company completed its $35 billion acquisition of Discover earlier this month. We’ve long pounded the table that the deal was a key catalyst for the stock. Shares of Capital One hit a record high Friday of nearly $213 apiece. “I think people should still be buying the stock,” Jim Cramer said during Friday’s Morning Meeting, adding that Capital One trades at a discount to rivals like American Express. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. More
The first domino has fallen in the Trump administration’s bid to loosen regulations on Wall Street’s biggest banks. The Federal Reserve proposed changes Wednesday that would lower capital requirements for large U.S banks that were implemented in the years following the 2008 financial crisis. Tweaks to these rules, known as the enhanced supplementary leverage ratio, would allow the nation’s most important banks — including Club names Goldman Sachs and Wells Fargo — to lend more freely and maker it easier for them to buy more U.S. government bonds. The Fed now wants the enhanced supplementary leverage ratio to be applied on a bank-by-bank basis, depending on each firm’s mix of assets. It is currently set at a blanket level across the cohort of firms called global systemically important banks. Before it goes into effect, the central bank made the proposal open for a 60-day public comment window. “The proposal will help to build resilience in U.S. Treasury markets, reducing the likelihood of market dysfunction and the need for the Federal Reserve to intervene in a future stress event,” Michelle Bowman, the Fed’s new vice chair for supervision, said in a statement Wednesday afternoon . “We should be proactive in addressing the unintended consequences of bank regulation.” While not a needle-mover for our three financial names yet, the Fed’s proposal signals a bigger shift of easing banking sector regulation under President Donald Trump — just as investors expected to see as they bid up bank stocks in the wake of the November election. The Invesco KBW Bank ETF rose more than 1.5% Thursday, building on a 0.8% advance Wednesday. The ETF is riding a six-day win streak, and so are Wells Fargo and Goldman Sachs. Bowman, appointed by Trump to serve as the Fed’s top banking regulator, made it clear that Wednesday’s proposal is just the start of broader rollbacks on capital rules. “This proposal takes a first step toward what I view as [a] long overdue follow-up to review and reform what have become distorted capital requirements,” Bowman said in a speech Monday . Other regulatory requirements under consideration is the surcharge imposed on global systemically important banks. The Fed subjects those banks to more stringent capital requirements in case of another financial crisis — somewhere between 1% to 4.5% on top of emergency fund requirements that all large banks must adhere to. The exact amount can change from year to year. Investors will get the latest look at how big it needs to be Friday evening, when the Fed releases the results of its annual stress tests . Bowman can also play a key role in the Fed’s re-proposal of the Basel III Endgame, a set of global bank capital requirements. The U.S. central bank put forth an initial proposal in 2023 before Trump’s second term in office. If banks like Wells Fargo and Goldman Sachs are allowed to operate with smaller capital cushions, they can free up resources for other uses such as boosting shareholder dividends or increasing lending, which could drive up interest-based revenues. With less capital tied up, Wells Fargo can also expand its budding businesses such as investment banking. The bank has more room on its balance sheet, for example, to offer bigger bridge loans for mergers and acquisitions. Fees from dealmaking further diversify Wells Fargo’s revenues streams, so it’s not as reliant on interest-based incomes that are at the mercy of the Federal Reserve’s next monetary policy decision. Meanwhile, Goldman Sachs can grow its wealth management division further with additional flexibility in its capital use. For years, Wall Street executives have complained that capital restrictions for big banks are too stringent. Not everyone agrees. Some worry that the Trump administration’s regulatory agenda could come at a cost to the sector’s stability. Fed Governor Adrian Kugler, who objected to Wednesday’s enhanced supplementary leverage ratio proposal, said in a statement that “this reduction in capital requirements at the bank subsidiaries of the nation’s largest and most complex banking organizations will increase systemic risk in a manner that is not justified.” Meanwhile, Fed Governor Michael Barr also dissented, arguing that the changes will not help Treasury market function as much as proponents believe. Instead, banks will “distribute capital to shareholders and engage in the highest return activities available to them, rather than to meaningfully increase [in] Treasury intermediation,” Barr said in a statement. Wednesday’s regulatory development follows a series of positive news for Goldman and Wells. Goldman’s investment banking business is looking brighter as more companies continue to go public. Goldman was tapped to help facilitate the public debuts of Chime and eToro over the past month. Many on Wall Street also expect mergers-and-acquisitions activity to heat up later this year. Meanwhile, the Fed in June lifted Wells Fargo’s $1.95 trillion asset cap after seven years. (Jim Cramer’s Charitable Trust is long GS, WFC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. More
Federal Reserve Chair Jerome Powell now heads into his next challenge: a potential threat that President Donald Trump could undermine his authority by soon naming his pick to head the central bank.
In the wake of the intense criticism, Wall Street has been buzzing over the potential for a “shadow chair,” or someone Trump could install as a central bank gadfly until Powell’s term expires.
A report indicated that Trump is considering naming the successor sooner than expected in an attempt to influence interest rate policy.
Federal Reserve Chairman Jerome Powell testifies before the Senate Committee on Banking, Housing, and Urban Affairs during a hearing to “examine the Semiannual Monetary Policy Report to the Congress” on Captiol Hill on June 25, 2025 in Washington, DC.
Kent Nishimura | Getty Images
Federal Reserve Chair Jerome Powell mostly breezed through two hearings on Capitol Hill this week but now heads into a much bigger challenge: a potential threat that President Donald Trump could undermine his authority by soon naming his pick to head the central bank next year.
As Powell testified Wednesday before the Senate Banking Committee, holding generally cordial exchanges with lawmakers, Trump was at the NATO summit in The Hague lobbing his latest attacks on a man he had nominated for the Fed job nearly eight years ago.
“I think he’s terrible,” Trump said when asked during a news conference about his intentions for the next Fed leader. Trump then called Powell a “very average mentally person,” adding he has “a low IQ for what he does” and is “a very political guy.”
“I think he is a very stupid person, actually,” Trump said.
While Trump’s name-calling of Powell isn’t particularly new, the words now could signal action.
Potential candidates
In the wake of the intense criticism, Wall Street has been buzzing over the potential for a “shadow chair,” or someone Trump could install as a central bank gadfly until Powell’s term expires in May 2026.
The talk has impacted markets: Traders on Thursday accelerated bets on rate cuts this year, with three reductions now at about a 60% odds, compared to a strong likelihood of two just a few days ago, according to CME Group data. Treasury yields tumbled at the shorter end of the curve, which is where the Fed has its influence, falling much more than those at the long end. The dollar also was down sharply against its global counterparts.
Trump confirmed that he has a list of potential Powell successors down to “three or four people,” without naming the finalists.
The cadre of potential candidates has become familiar: Treasury Secretary Scott Bessent, National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh, and as a dark horse in-house pick Christopher Waller, who is a Trump appointee serving as governor and as of late has been an advocate for lower interest rates.
In some circles, Bessent has been considered a front-runner, though sources familiar with Trump’s thinking say that is not necessarily the case. Bessent himself has said he’s not interested in the job, though that could change if Trump would ask him to take it.
A report in The Wall Street Journal Wednesday evening suggested that former World Bank President David Malpass also is in the running. The Journal report indicated that Trump is considering naming the successor sooner than expected in an attempt to influence interest rate policy.
White House officials did not respond to a request for comment beyond Trump’s remarks at the news conference.
An active Fed
There are several issues making Trump’s desire to name a chair now problematic. For one, there are no immediate open positions, though Governor Adriana Kugler’s term ends in January 2026. Powell’s term as governor itself doesn’t expire until 2028, though the chair term runs out next year.
“This plan probably isn’t constitutional and would politicize the Fed for a few months before stability is restored next May,” Greg Valliere, chief strategist at AGF Perspectives, observed Thursday. “But the damage to the Fed’s independence would be considerable if Trump becomes a monetary back-seat driver, second-guessing Fed policies this fall.”
The latest Trump-Powell tumult comes during a busy time for the central bank.
Over the past several days, the Fed has taken two significant steps aimed at banking: removing “reputational risk” as a criteria for bank exams, a seeming nod to Trump’s complaint over politically motivated de-banking at large institutions, and the relaxing of reserve capital rules for systemically important banks. The latter measure was pushed by Vice Chair for Supervision Michelle Bowman, also a Trump appointee but someone who is thought to be at best an outside hopeful for “shadow chair” finalist.
Nevertheless, Trump’s biggest gripe, namely the Powell-led Federal Open Market Committee’s refusal to lower interest rates, remains a sticking point.
Chicago Fed President Austan Goolsbee told CNBC in a Thursday interview that the political waves are not a factor in decision-making, nor would be the naming of a shadow chair.
“That would have no effect on the FOMC itself,” Goolsbee said. “Just look at the minutes and transcripts. You can see, word for word, what the rationale are in making the decisions, and they’re not about elections and they’re not about partisan politics.” More
Republican legislation known as the “One Big Beautiful Bill Act,” which has President Donald Trump’s backing, would make the financial lives of immigrants more difficult, experts said.
That includes both immigrants who are here lawfully and unlawfully.
The GOP would strip access to the child tax credit from certain immigrant households.
Lawmakers would also tax remittances and add fees for certain actions like applying for asylum.
Senate Majority Leader John Thune (R-SD) speaks to reporters at Capitol Hill on June 24, 2025 in Washington.
Tasos Katopodis | Getty Images News | Getty Images
A Republican megabill that lawmakers are trying to pass by the Fourth of July would clamp down on the finances of immigrant households, including those in the U.S. legally, economists and policy experts said.
The legislation, championed by President Donald Trump, would restrict access to tax benefits like the child tax credit. Republican lawmakers in the House and Senate have also included a tax on the money immigrants send abroad, called remittances, and a $1,000 fee for those who seek asylum.
The provisions “make life harder for immigrants in the U.S., both legal and undocumented immigrants,” said Tara Watson, director of the Center for Economic Security and Opportunity at the Brookings Institution.
“I think this will make a significant difference” in their financial lives, Watson said.
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The Republican-majority House Judiciary Committee, chaired by Rep. Jim Jordan, R-Ohio, said in a statement last month that some of the financial measures aim to make immigration services “self-sustaining.”
“This is about providing resources to enforce our immigration laws … and implement responsible fiscal policy,” the committee said.
Republicans are cutting safety net spending more broadly to help finance their so-called one big beautiful bill, the centerpiece of which is a multitrillion-dollar package of tax cuts. The benefits of those largely accrue to wealthy households, data shows.
The cuts also come as the Trump administration pursues an aggressive deportation agenda.
The legislation is still in flux and differs somewhat between House and Senate versions. The Senate may vote on its measure as soon as this week.
In some cases, GOP lawmakers may not be able to restrict benefits to the extent they’d like.
For example, the Senate parliamentarian, a nonpartisan procedural advisor, ruled in recent days that the GOP must strip a provision from the legislation that would curb some immigrants’ eligibility for Supplemental Nutrition Assistance Program benefits, formerly known as food stamps.
The parliamentarian also dealt a blow to Republicans’ proposals to deny certain legal immigrants from federal health benefits, according to a Senate Budget Committee release on Thursday. The bill text included provisions to cut access to Medicaid, Medicare and Affordable Care Act insurance subsidies from refugees and individuals seeking asylum, among others.
It’s unclear how Republicans may alter the legislation to reconcile these rulings.
Barring immigrants from tax benefits
A view of the Internal Revenue Service (IRS) building in Washington, D.C., U.S., February 16, 2025.
Annabelle Gordon | Reuters
Among the most impactful tax changes is one that would restrict the child tax credit, Watson said.
A 2017 tax law enacted during Trump’s first term barred parents from claiming the credit for children who don’t have a Social Security number. The House and Senate would make this provision permanent, impacting an estimated 1 million children.
GOP lawmakers would further cut access for kids whose parents don’t have a Social Security number. The change would “exclusively” impact kids who are U.S. citizens or legal residents, according to the Institute on Taxation and Economic Policy.
The House bill’s language on this issue is stricter than the Senate, Watson said.
In the House bill, kids would be ineligible for the credit if either of their parents doesn’t have a Social Security number, she said. The Senate would allow a child to receive the benefit if at least one parent has a work-eligible SSN.
The House bill’s policy would cut access to about 4.5 million children with Social Security numbers, according to the Center for Migration Studies.
The five states in which the largest estimated number of kids would be impacted are California (910,000), Texas (875,000), Florida (247,000), New York (226,000) and Illinois (196,000), the center said.
Parents and caregivers with the Economic Security Project gather outside the White House to advocate for the Child Tax Credit in advance of the White House Conference on Hunger, Nutrition, and Health on Sept. 20, 2022.
Larry French | Getty Images Entertainment | Getty Images
“If a U.S. citizen is married to an undocumented immigrant, or if a citizen child has an undocumented parent, then the House bill considers the citizen to have forfeited their right to a range of tax breaks,” ITEP researchers Carl Davis and Sarah Austin wrote in an analysis in May.
Beyond the child tax credit, those also include existing tax breaks like the American Opportunity Tax Credit and Lifetime Learning Credit and new benefits proposed in the legislation, from so-called Trump accounts to tax breaks for tips and overtime, experts said.
Many immigrants are members of such mixed-status families, Davis and Austin wrote.
The policy debate comes as the Trump administration is trying to end birthright citizenship, the precedent that anyone born on U.S. soil automatically gets citizenship at birth. The Supreme Court is expected to soon rule on the policy.
The House bill also requires all parents to file a joint tax return if they are married and claiming the child tax credit, according to the National Immigration Law Center.
This provision would also impact nonimmigrant households in which married couples typically file separate tax returns, as happens if one spouse has substantial student loan debt or has been a victim of identity theft, for example, Davis and Austin wrote.
Tax on remittances
A man works on the street exchanging dollars for lempiras (official Honduran currency) in Tegucigalpa on April 8, 2024. Guatemala, El Salvador, Honduras, and Nicaragua together received almost US$42 billion in family remittances in 2023, according to AFP calculations based on official data from central banks and the intergovernmental Central American Monetary Council, a record figure that represents a quarter of the combined GDP of these countries.
Orlando Sierra | Afp | Getty Images
Republicans would put a tax on “remittances.” These are transfers of money such as earnings to family members and others abroad.
Remittances have been “growing rapidly” and have become the largest source of foreign income for many developing countries, Dilip Ratha, lead economist for migration and remittances at the World Bank, wrote in 2023.
India, Mexico, China, the Philippines and Pakistan are the top five recipients for global remittances, according to World Bank data from last year. The U.S. was the largest source of global remittances in 2023, it said.
The House and Senate bills would put a 3.5% tax on remittances, to be paid by the sender.
Such taxes would come on top of remittance fees that providers like banks or money transfer services like Western Union already charge to send money abroad electronically. Such fees can be high, perhaps 10% or more, Ratha wrote.
There are some differences. For example, the House would require this tax for all noncitizens, while the Senate would do so for those without Social Security numbers, according to the National Immigration Law Center. Others would be able to claim a tax credit for any taxes they pay on remittances.
New fees for asylum, other applicants
The Senate and House bills would add fees for immigrants who apply for asylum or interact with many other levers of the U.S. immigration system.
According to the National Immigration Law Center, the fees include, among others:
A $1,000 application fee for asylum, a protection that lets individuals remain in the U.S. instead of being deported to a nation where they fear persecution or harm. (There’s no current fee.)
Asylees would need to pay at least another $550 every six months to get work authorization. (There’s no current fee.)
A $500 application fee for Temporary Protected Status. (The current fee is $50 and another $30 for biometrics.)
A $5,000 fee for anyone apprehended between ports of entry and determined inadmissible. (There’s no current fee.)
These are minimum fees without waivers, and the legislation provides for regular annual increases, according to the National Immigration Law Center. More
In the latest step in an intensifying price war, Chinese smartphone company Xiaomi revealed its luxury YU7 SUV will cost less than Tesla’s Model Y.
Xiaomi’s luxury YU7 SUV will start at 253,500 yuan ($35,322), CEO Lei Jun announced Thursday, pointing out that is 10,000 yuan cheaper than Tesla’s Model Y.
People check out an electric SUV Xiaomi YU7 at a Xiaomi Store in Hangzhou in east China’s Zhejiang province Thursday, June 26, 2025.
Feature China | Future Publishing | Getty Images
BEIJING — Chinese smartphone company Xiaomi is taking aim straight at rival Tesla with a new electric SUV.
Xiaomi’s luxury YU7 SUV will start at 253,500 yuan ($35,322), CEO Lei Jun said Thursday, pointing out that the vehicle is 10,000 yuan cheaper than Tesla’s Model Y, which starts at 263,500 yuan in China.
Prior to the official price announcement, a Citi report had listed expectations that the YU7 SUV would be priced around 250,000 yuan to 320,000 yuan ($34,800 to $44,590), forecasting monthly sales of about 30,000 units. Once the pace picks up, Citi predicts annual sales of 300,000 to 360,000 units.
Xiaomi’s company’s SU7 sedan launched last year was also priced below Tesla’s Model 3.
Lei on Thursday claimed the YU7 beat Tesla’s Model Y on a range of metrics, but still came short on driver assist. The YU7 comes with driver-assist software, the most advanced version of which is powered by Nvidia’s Thor chip. Pre-sales start at 10 p.m. on Thursday, with deliveries expected within one to five weeks.
Just three minutes after the launch of YU7 pre-sales, Xioami said it had received more than 200,000 orders.
Features
Xiaomi had initially said it would launch its YU7 in July. The earlier event takes place amid an intensifying electric car price war.
Xiaomi revealed its YU7 SUV in late May, less than a year after launching its first electric car, and claimed the vehicle would have a driving range of at least 760 kilometers (472 miles) on a single charge.
That’s well above the 719 kilometers advertised for Tesla’s extended-range Model Y. Driving range has been a selling point for consumers worried about frequent battery charging.
While Xiaomi has not promoted its artificial intelligence as much as other consumer brands, Thursday’s launch event showcased several AI car features, such as allowing drivers to change a song using hand motions, or ask a phone app to describe where the car is parked.
The YU7 also supports Apple Car Play and Apple Music, Lei said.
Smart glasses
The Chinese smartphone and home appliance company launched several other products on Thursday, including highly-anticipated artificial intelligence-connected glasses.
The AI glasses, which rival Meta’s Ray Bans smart offering, can change the tint of the lenses and scan a QR code to make payments, mimicking China’s mobile smartphone apps. Xiaomi also announced similar features to those of the Meta glasses, such as being able to take photos and videos, as well as use interactive AI to identify a flower or translate text.
Xiaomi’s AI glasses start at 1,999 yuan ($279). A Xiaomi spokesperson said there were currently no plans to sell the glasses overseas. Meta’s version isn’t officially sold in China.
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Traders work on the floor at the New York Stock Exchange on June 23, 2025.
Brendan McDermid | Reuters
An aggressive trade war, Middle East escalation and AI competitions overseas — None of 2025’s big curveballs managed to spoil the market’s epic comeback from the year’s lows as stocks stand within reach of a new record. Here’s why.
The S&P 500 is just 0.85% away from closing at a new record, rebounding from a near 20% sell-off in April. The tech-focused Nasdaq 100 is already one step ahead, hitting an all-time high on Tuesday. The latest leg higher came as investors bet a ceasefire in the Middle East could prevent a major disruption to global oil supply.
“I’m surprised by the magnitude of the rebound,” said Kevin Simpson, portfolio manager at Capital Wealth Planning. “When you factor in the geopolitical backdrop — the ongoing conflict, volatility and uncertainty — I wouldn’t have expected the S&P 500 to snap back to new highs this quickly. This kind of strength speaks to just how much liquidity is still in the system and how eager investors are to buy dips in a market dominated by megacap tech and AI enthusiasm.”
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Overall, the wall of worry has been crumbling little by little over the past four months. Perhaps most importantly, President Donald Trump backed off from the stiffest tariffs on key U.S. partners as countries continue to negotiate trade deals in the summer. Earlier this month, the U.S. reached a trade truce with China with Beijing agreeing to supply rare earths.
“We expect more trade deals to provide some additional clarity and eventually reduce corporate, consumer and investor anxiety,” Chris Haverland, global equity strategist at Wells Fargo Investment Institute., said in a note. “Deregulation, tax cuts and lower short-term borrowing rates should further bolster earnings.”
Also, corporate earnings have held up well despite policy uncertainty. For the second quarter, the S&P 500 earnings grew by 4.9%, marking the eighth consecutive quarter of year-over-year earnings growth for the index, according to FactSet.
Economy in good shape
Another reason for market resilience is the U.S. economy, which remains on solid footing. The unemployment rate remains low at 4.2% also the May nonfarm payrolls report showed only a slight softening in the labor market. The most recent inflation data also indicated that tariffs have done little to affect prices.
The Federal Reserve expects to make two rate reductions later this year, according to the closely watched “dot plot.” Fed Chair Jerome Powell reiterated that he expects policymakers to stay on hold until they have a better handle on the impact tariffs will have on prices.
“In our baseline scenario we believe a US recession will be avoided,” Dubravko Lakos-Bujas, chief global equity strategist at JPMorgan, said in a note to clients. “Recent weakness in some of the labour market indicators and limited pass-through from tariffs to inflation so far could prompt a Fed easing earlier than our December forecast.”
AI story intact
Meanwhile, the artificial intelligence story that has supported the market well over two years continues to be unfazed. The latest earnings season has restored investor confidence — Nvidia continued to grow at a rapid clip, while Big Tech’s spending on AI hasn’t slowed down. Investors were rattled at the beginning of the year as China’s DeepSeek startup raised the question whether the billions of dollars of investment was justified.
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Nvidia leading the rally
“The secular trend of AI remains robust, and recent adoption and monetization trends should underpin the next leg of the AI rally amid a supportive backdrop,” Ulrike Hoffmann-Burchardi, head CIO global equities at UBS, said in a note to clients.
JPMorgan estimated that AI could drive $1 trillion of spending by 2030, including investments in generative AI computing, networking and storage infrastructure.
Still, the next few weeks could bring more volatility to the market. Investors are bracing for a July 8 deadline for reciprocal tariff suspension, while more jobs data are on deck next week to gauge the health of the labor market.
“Markets often tend to see more volatility in the build up to conflicts and then rally or turn to other factors once it’s started,” said Carol Schleif, chief market strategist at BMO Private Wealth. More
