The stock market witnessed an upswing in Friday’s afternoon trading, setting Wall Street on the course for a robust week, and potentially ending at an all-time high. The S&P 500 experienced a marginal gain of 0.7% and appeared geared to surpass its prior peak achieved in February. Simultaneously, the Nasdaq composite was also on an upward trajectory, with a growth of 0.6%, and looked set for a record-breaking performance. As of 12:13 p.m. Eastern, the Dow Jones Industrial Average had advanced by 1.2%, which translated to about 510 points, reaching 43,898.
If the S&P 500 ends up achieving a record, it would be indicative of a drastic reversal from a few months ago. Back then, Wall Street’s primary health indicator had plunged nearly 20% from its February high. This decline was driven by apprehensions that President Donald Trump’s trade policies could disturb the economy. Nonetheless, Friday saw a widespread upswing, with almost every sector within the S&P 500 registering gains.
The broader market appears to no longer be strongly affected by anxieties regarding the conflict between Israel and Iran, which had the potential to disrupt the worldwide supply of crude oil and escalate prices. Currently, a ceasefire prevails between the two nations. Consequently, the crude oil prices within the U.S. have largely remained steady on Friday. These prices have reverted back to the levels observed before the conflict.
Investors are keenly observing any prospective advancements concerning the trade conflicts between the U.S. and other global economies, particularly China. In a positive turn of events, the U.S. and China have inked a trade agreement aimed at facilitating American firms in obtaining essential elements for manufacturing and microchip production, including magnets and rare earth minerals, from China.
In affirming this development, China’s Commerce Ministry also revealed that both nations had ‘further substantiated the details of the framework’ for their trade negotiations. The trade landscape looked hopeful as Friday also saw a moderate upward shift in inflation figures for May, closely aligning with economists’ prior forecasts.
Nevertheless, inflation persists as a major concern for both companies and consumers. The inconsistent tariff policy implemented by President Trump has made it challenging for firms to project future outcomes accurately. Numerous businesses, spanning from automobile manufacturers to retailers, have expressed concerns that elevated import taxes might pose a risk to their revenues and profit margins.
Currently, the U.S. enforces a baseline tariff of 10% on all imported goods, amplified further for Chinese goods, along with additional import taxes on steel and automobile products. So far, the economy and consumer behavior have demonstrated a degree of resilience in the face of these tariffs.
However, predictions from analysts and economists suggest that as these import taxes continue to filter through businesses to consumers, the impacts are poised to escalate. Moreover, the possibility of more stringent tariffs imposes an additional layer of uncertainty on the economy.
As it stands, a temporary hiatus on a round of retaliatory tariffs targeted at a wide range of nations is due to lapse in July. The inability to negotiate deals or extend the tariffs’ postponement could potentially destabilize both investors and consumers.
As a part of its key inflation focus, the Federal Reserve continues to keep a close eye on the tariff scenario. The inflation rate has been persistently hovering just above the central bank’s 2% target. According to a report released Friday, its referred measure, the personal consumption expenditures index, saw an increment to 2.3% in May, experiencing a slight bump from the earlier 2.1%.
Hitherto, in 2025, the Fed has withheld rate cuts due to the fear that tariffs could retrigger inflation, thereby negatively impacting the economy. Nevertheless, economists are forecasting a minimum of two rate cuts before the year concludes.
Bond yields have held their ground and retained relative stability. The 10-year Treasury yield underwent a minor elevation to 4.25% from 4.24% on the previous day, Thursday. Similarly, the two-year Treasury yield increased marginally from 3.72% late Thursday to 3.73%.
Overall, the market outlook remains cautiously optimistic amid potential developments in the trade and tariff policies, with investors and analysts keeping a watchful eye on the impact of these factors on the future economic landscape.