How the stock market has recovered new records – even though it’s still worried

A radical trade war, Middle East escalation and AI play overseas – 2025’s big curve balls can’t ruin the market’s epic comeback as stocks have new records. This is why.

this S&P 500 Less than 0.1% from the end of the new record, rebounding from nearly 20% in April’s sold-out. Technology-centric Nasdaq 100 It was already a step ahead, reaching an all-time high on Tuesday. The latest leg is higher because investors bet that the Middle East ceasefire could prevent significant damage to global oil supply.

“I was surprised by the magnitude of the rebound,” said Kevin Simpson, portfolio manager for Capital Wealth Program. “When you consider the geopolitical context (continuous conflict, volatility and uncertainty), I wouldn’t expect the S&P 500 to quickly return to new highs. This advantage shows how much liquidity is still in the system and how investors eager to buy in the market of Megacap Tech and AI passions buy falls in the market.”

Overall, the wall of concern has collapsed slightly over the past four months. Perhaps most importantly, President Donald Trump pulled out the worst tariffs on major U.S. partners as countries continue to negotiate trade deals over the summer. Earlier this month, the United States A trade cease with China Beijing agrees to provide rare earths.

“We expect more trade deals to provide some extra clarity and ultimately reduce anxiety among companies, consumers and investors,” Chris Haverland, global equity strategist at Wells Fargo Investment Research Institute, said in a note. “Deregulation, tax cuts and lower short-term lending rates should further boost revenue.”

Furthermore, despite policy uncertainty, the company’s revenue is still good. According to FACTSET, the 500 S&P 500 earnings rose 4.9% in the second quarter, marking the index’s eighth consecutive quarter of earnings growth.

Good economic conditions

Another reason for market resilience is the U.S. economy, which maintains a solid foundation. Unemployment remains below 4.2% Possible non-agricultural wage report Show only a little Labor market softening. most Recent inflation data It also shows that the tariffs have little impact on prices.

According to closely watched “DOT episodes”, the Fed is expected to lower it twice later this year. Fed Chair Jerome Powell reiterates He hopes policymakers stay on hold until they have a better impact on the impact of tariffs on prices.

“In our baseline scenario, we believe we will avoid the U.S. recession,” said Dubravko Lakos-Bujas, chief global equity strategist at JPMorgan. “The weaknesses of some recent labor market indicators, whose limited transmission from tariffs to inflation so far, may prompt the Fed to alleviate earlier than our December forecast.”

AI story is intact

At the same time, the AI ​​story that supports the market within two years continues to be dissatisfied. The latest earnings season restores investor confidence – Nvidia continues to grow In the fast clip, although Big Tech spends on AI are not slowing down. Investors were rattled early this year as China’s DeepSeek startup asked a question.

“The secular trends in AI are still strong, and recent adoption and monetization trends should support the next in the next context of AI rally,” Ulrike Hoffmann-Burchardi, head of global equity at UBS, said in a report to clients.

JPMorgan estimates that AI could earn $1 trillion in spending by 2030, including investments in generating AI computing, networking and storage infrastructure.

Still, the next few weeks may bring more volatility to the market. Investors are preparing for the July 8 reciprocal tariff moratorium, while there are more employment data on the deck next week to measure the health of the labor market.

“The market usually sees a buildup of conflict and then gathering, or turning to other factors once it starts,” said Carol Schleif, chief market strategist at BMO Private Wealth.