
S&P 500 comeback leaves it within 3% of new high. What it will take to get it over the top
Two months after the market's climactic low, in a moment commonly called "peak uncertainty," there remains plenty for investors to fret over. But the behavior and messaging of the market itself are not among them. The S & P 500 is up 24% from its intraday low of April 7, one of the strongest and fastest rebounds from a severe correction on record. In the process, the market reasserted its longer-term uptrend, the mega-cap favorites are back in gear, credit conditions are steady, non-U.S. equities are leading the way higher, industrial stocks are making new highs, Treasury yields remain within established ranges and the economy is acting roughly as it did pre-Liberation Day. It has all made for an exceptional resurgence from a steep borderline bear market, with the present path running ahead both of the average and medium snapbacks from severe corrections, as shown graphically here by Strategas Research. Deutsche Bank equity strategy team extols the unusual speed and ferocity of Wall Street's comeback from a sudden volatility storm: "In effect, this has proven to be the shortest selloff on a vol shock on record. Around prior episodes, as the shock got absorbed or receded slowly, equities typically took around 2 months to bottom and then another 4 to 5 months to recoup the selloff, or a total of 6 to 7 months for a roundtrip. This time round, with the original tariff shock itself diminishing very rapidly, equities have roundtripped in under 2 months and are already 4% higher. Usually at this stage of past vol shocks, the S & P 500 was still down almost -10%." The fact that the anticipatory market shock was triggered by a tariff-policy proposal that was both vastly more severe that the wisdom of crowds had predicted, and that was almost instantly walked back, helps account for the extreme torque of the recovery. The notion that "markets hate uncertainty" is both an overworked cliché and an unhelpful one. Uncertainty about the future is the permanent state of existence, and the markets surely are not always in hate mode. What markets react poorly to are sudden surges in perceived uncertainty, and acute suspense around hard-to-handicap policy decisions. The ultimate outcome of the tariff structure, the nature of any impending trade deals and the economy's interaction with these factors in the form of front-loaded demand or paused investments are all still uncertain. But investors are making an educated collective guess that the policy result will be manageable. A rational bet, perhaps, but one that at some point will be tested. RBC Capital U.S. equity strategist Lori Calvasina says her models indicate that "current pricing in the S & P 500 already reflects the step-up improvement in macro fundamentals that occurred two weeks ago when the US-China trade war experienced a significant de-escalation." This suggests some potential downside if trade-talk snags or re-escalation should hit. Though assuming cooling trade tensions is plausible enough given that the White House's apparent eagerness to convey progress (requesting a call between President Trump and China's Xi, then announcing the call), resembles strategic retreat. A couple of key reasons Wall Street has been able to recapture most of the lost market value and a good portion of its confidence: the economy has largely held in OK and the negativity expressed by the intense early-April selloff lowered the bar for what qualified as decent news. And so it was that last week's gallop by the S & P 500 back to the 6000 threshold felt like a victory, perhaps even an unearned one, even though the index first reached that level some seven months ago, and since then big companies have posted two quarters of impressive profit growth. If you give someone a good enough scare, just learning that it was only a scare will make them feel better than they did before the fright struck. Within 3% from high How far can such endorphin-releasing relief carry the tape? The S & P 500 is now within 3% of its former record high, close enough that the move is highly unlikely to be a fluky head fake, suggesting it will attempt to revisit the peak before too long – say within weeks. Professionals who monitor the flow of funds and the mechanical triggers that cause various fund strategies to buy or sell continue to insist that many hedge fund cohorts "need" to chase the market higher for a bit, assuming volatility continues to bleed lower. Goldman Sachs says global macro hedge funds have voraciously added market exposure, but only to bring their risk positioning to neutral. Renaissance Macro points to the S & P 500 making a new 65-day high last week, a quantitative siren call for trend-following black-box funds to get more involved. That said, the large-cap benchmarks are looking moderately overbought technically — not a bearish condition necessarily, but one that can lead to chop and churn, fatigue and shakeouts over the next little while. (I've noted in the past that market reactions to a monthly jobs report – such as Friday's nice little rally on a mixed but better-than-feared payroll gain – sometimes serve as the culmination of a market move rather than the start of one.) But one can pretty easily project that a quick return to the old highs would leave the tape even more stretched just as seasonal factors grow a bit less friendly and deadlines approach both for the tariff "pause" and the Congressional budget bill. Valuation by then would have re-expanded to, say, 22-times 12-month forward earnings for the S & P 500. While nasty valuation compression tends not to happen when earnings are growing and the Federal Reserve is not tightening, it would pinch the risk-reward calculus while making the market less tolerant of adverse headlines. As we all wait to see whether the market has enough in the tank to keep climbing what remains of the wall of worry, it's worth paying attention to the various rotations and pockets of enthusiasm taking hold. Race to the next hot thing The small-cap Russell 2000 is perking up and just broke above a six-month downtrend last week. This says more about investors' risk-seeking behavior and search for parts of the market that haven't moved much yet, than it does about any hoped-for economic acceleration. It's a vast and in many ways troubled index yet several of its top holdings are momentum story stocks such as Hims & Hers and Rocket Lab . Last week the IPO of stablecoin issuer Circle sent the speculative juices flowing. A clutch of early investors were happy to sell some of their stake at Circle at the issue price of $31 a share, before a panting public gunned the stock to $107 over two days. Circle now has a market cap exceeding State Street , a somewhat analogous asset intermediary for plain old financial products, which nonetheless has some $46 trillion under custody. This shows that old, loose, bull-market instinct to race toward the next hot thing. The party keeps moving to new locations, each promising a fabulous future if the longshot bets hit, from quantum computing to electric helicopters to drones to uranium processors. And then there's CoreWeave , the AI infrastructure play adjacent to Nvidia , whose moonshot path since coming public two months ago looks an awful lot like SuperMicro's discovery as an AI proxy in late 2023. This isn't about tut-tutting investor aggression or claiming that the market more broadly looks dangerously reckless. Bull markets require a certain measure of "Hey, you never know" thinking in order to keep rolling beyond a certain point. And there's history of the market going from existential panic to exhilarating audacity in a blink, such as when the 1998 near-bear market on hedge-fund blowups reversed to give way to the gluttonous risk binge of 1999. The latter phase was possibly a once-in-a-lifetime manic melt-up, but things can rhyme without precisely repeating. For now, the most intense fun is happening around the edges of a market that is, for now, working off the relief of the last scare and not yet forced to contemplate the next one.
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16 minutes ago
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Trump tariffs live updates: US-China trade talks going well, could stretch into Wednesday, Lutnick says
Trade talks between the US and China resumed on Tuesday, with talks stretching well into the evening in London. Commerce Secretary Howard Lutnick said the talks were progressing "really, really well," but that they could stretch into Wednesday as the sides iron out details. After day one, US officials were upbeat but vague on progress. President Trump said on Monday he received "good reports" but added that "China's not easy." The high-stakes negotiations follow Trump's call with Xi Jinping last week, which both leaders framed as positive. US-China tensions have risen in the aftermath of the countries' trade truce reached in mid-May in Geneva, with both countries accusing the other of breaching that truce while ratcheting up pressure on other issues. The US and China are also now using their control over certain key materials to gain control in the trade war. Bloomberg reported on Friday that the US dominates in exports of ethane, a gas used to make plastics, and China buys nearly all of it. Washington is now tightening control by requiring export licenses. China's curbs on exports of rare earth minerals, crucial for autos in particular, have drawn Washington's ire. Read more: What Trump's tariffs mean for the economy and your wallet The US-China talks come as Trump pushes countries to speed up negotiations. The US sent a letter to partners as a "friendly reminder" that Trump's self-imposed 90-day pause on sweeping "reciprocal" tariffs is set to expire in early July. White House advisers have for weeks promised trade deals in the "not-too-distant future," with the only announced agreement so far coming with the United Kingdom. US and Indian officials held trade talks this week and agreed to extend those discussions on Monday and Tuesday ahead of the July 9 deadline. New tariffs are coming into play: Effective Wednesday, June 4, Trump doubled tariffs on steel and aluminum from 25% to 50%. Meanwhile, Trump's most sweeping tariffs face legal uncertainty after a federal appeals court allowed the tariffs to temporarily stay in effect, a day after the US Court of International Trade blocked their implementation, deeming the method used to enact them "unlawful." Here are the latest updates as the policy reverberates around the world. US-China talks stretched on Tuesday, and they may continue into Wednesday, US Commerce Secretary Howard Lutnick told reporters outside of Lancaster House in London, where delegations from both countries are meeting. "I think the talks are going really, really well," Lutnick said. "We're very much spending time and effort and energy — everybody's got their head down working closely." "I hope they end this evening," he added, "but if they need be, we'll be here tomorrow." The teams from China and the US, including Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, have been holding negotiations since Monday. The London summit followed a phone call between President Trump and Chinese President Xi Jinping. Stocks rose to near session highs following Lutnick's comments on an otherwise fairly muted day in markets. Read more here. Bloomberg reports: Read more here. Yahoo Finance's Rick Newman reports: Read more here. From Reuters: Read more here. Banking fees and trading revenue for one of the world's largest investment banks is expected to climb this quarter despite the concerns that surround US tariffs, Citigroup's (C) head of banking Vis Raghavan said on Tuesday. Raghaven added, that M&A activity continues to be active but the IPO market has been "stagnant." Reuters reports: Read more here. The World Bank cut its global growth forecast for 2025 on Tuesday by 0.4 percentage point to 2.3%. The international financial institution, which provides loans to governments said that high tariffs and uncertainty were a "significant headwind" for nearly all economies. Reuters reports: Read more here. Yahoo Finance's Alexis Keenan reports: Read more here. On Tuesday, US Commerce Secretary Howard Lutnick said trade negotiations with China were going well, as the two sides met in London for a second day of talks. Reuters reports: Read more here. The CEO of Freeport-McMoRan Inc. (FCX), North America's top producer of copper has warned that tariffs could hurt an industry that President Trump is trying to help. Bloomberg News reports: Read more here. Reuters reports: Maruti Suzuki has cut near-term production targets for its maiden electric vehicle e-Vitara by two-thirds because of rare earths shortages, a document showed, in the latest sign of disruption to the auto industry from China's export curbs. India's top carmaker, which said on Monday it had not seen any impact yet from the supply crisis, now plans to make about 8,200 e-Vitaras between April and September, versus an original goal of 26,500, according to a company document seen by Reuters. It cited "supply constraints" in rare earth materials that are vital in making magnets and other components across a range of hi-tech industries. Read more here. Both the US and China are finding new tools to use as bargaining chips within trade negotiations. Here's an example of just some of them: Bloomberg News reports: Read more here. The de-escalation in trade tensions likely contributed to an improvement in US small-business confidence in May. However, uncertainty remained due to the overall economic outlook. Reuters reports: Read more here. Chinese stocks fell on Tuesday ahead of the second day of trade negotiations between the US and China. Investors are cautious as the two biggest economies seek to resolve some contentious issues. Bloomberg News reports: Read more here. As US-China trade negotiations resume in London on Tuesday, both sides are eager to rebuild the truce established in May. While, the US has tightened controls on AI chip exports, China may be holding the most valuable card in these talks. CNN reports: Read more here. Advertising firm, WPP said on Tuesday that global advertising revenue is expected to grow 6% this year, lowering its earlier target of 7.7% due to the uncertainty surrounding US trade policies. Reuters reports: Read more here. Bloomberg reported that trade talks between the US and China will resume tomorrow morning at 10 a.m. in London after six hours of negotiations on Monday. US officials were looking for a "handshake" on Monday, National Economic Council director Kevin Hassett told CNBC, as the two sides look to ease tensions over tech and rare earths. President Trump weighed in on the progress, telling reporters on Monday: "We are doing well with China. China's not easy. ... I'm only getting good reports.' Treasury Secretary Scott Bessent, meanwhile, said it was "good meeting" and Commerce Secretary Howard Lutnick called the talks "fruitful," sending an upbeat signal on the talks' progress. The Chinese delegation, led by Vice Premier He Lifeng, did not comment on the talks. From Bloomberg: Read more here. The number of ocean containers from China bound for the US fell precipitously in May when President Trump's 145% tariffs on Chinese goods were in effect. Supply chain technology company Descartes said Monday that seaborne imports from China to the US dropped 28.5% year over year, the sharpest decline since the pandemic, per Reuters. Overall, US seaborne imports fell 7.2% annually in May to 2.18 million 20-foot equivalent units. The decline snaps a streak of increases fueled by companies frontloading goods to avoid higher duties, which has kept US seaports, such as the Port of Long Beach, busy. "The effects of U.S. policy shifts with China are now clearly visible in monthly trade flows," Descartes said in a statement. Read more here. In today's Chart of the Day, Yahoo Finance's Josh Schafer writes that tariff headlines have been rattling markets to a lesser degree than they did in April, despite an escalation of trade tensions recently: Sign up for the Morning Brief newsletter to get the Chart of the Day in your inbox. US import costs of steel and aluminum are expected to rise by more than $100 billion after President Trump doubled tariffs on the metals to 50% this week. That is expected to impact automakers such as Ford (F), as well as importers for a variety of goods, from baseball bats to aircraft parts. The Financial Times reports: Read more here. Tariffs have brought challenges for many, but Century Aluminum (CENX) and top recycler Matalco stand to benefit from President Trump's metal import duties as domestic prices rise. Reuters reports: Read more here. US-China talks stretched on Tuesday, and they may continue into Wednesday, US Commerce Secretary Howard Lutnick told reporters outside of Lancaster House in London, where delegations from both countries are meeting. "I think the talks are going really, really well," Lutnick said. "We're very much spending time and effort and energy — everybody's got their head down working closely." "I hope they end this evening," he added, "but if they need be, we'll be here tomorrow." The teams from China and the US, including Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, have been holding negotiations since Monday. The London summit followed a phone call between President Trump and Chinese President Xi Jinping. Stocks rose to near session highs following Lutnick's comments on an otherwise fairly muted day in markets. Read more here. Bloomberg reports: Read more here. Yahoo Finance's Rick Newman reports: Read more here. From Reuters: Read more here. Banking fees and trading revenue for one of the world's largest investment banks is expected to climb this quarter despite the concerns that surround US tariffs, Citigroup's (C) head of banking Vis Raghavan said on Tuesday. Raghaven added, that M&A activity continues to be active but the IPO market has been "stagnant." Reuters reports: Read more here. The World Bank cut its global growth forecast for 2025 on Tuesday by 0.4 percentage point to 2.3%. The international financial institution, which provides loans to governments said that high tariffs and uncertainty were a "significant headwind" for nearly all economies. Reuters reports: Read more here. Yahoo Finance's Alexis Keenan reports: Read more here. On Tuesday, US Commerce Secretary Howard Lutnick said trade negotiations with China were going well, as the two sides met in London for a second day of talks. Reuters reports: Read more here. The CEO of Freeport-McMoRan Inc. (FCX), North America's top producer of copper has warned that tariffs could hurt an industry that President Trump is trying to help. Bloomberg News reports: Read more here. Reuters reports: Maruti Suzuki has cut near-term production targets for its maiden electric vehicle e-Vitara by two-thirds because of rare earths shortages, a document showed, in the latest sign of disruption to the auto industry from China's export curbs. India's top carmaker, which said on Monday it had not seen any impact yet from the supply crisis, now plans to make about 8,200 e-Vitaras between April and September, versus an original goal of 26,500, according to a company document seen by Reuters. It cited "supply constraints" in rare earth materials that are vital in making magnets and other components across a range of hi-tech industries. Read more here. Both the US and China are finding new tools to use as bargaining chips within trade negotiations. Here's an example of just some of them: Bloomberg News reports: Read more here. The de-escalation in trade tensions likely contributed to an improvement in US small-business confidence in May. However, uncertainty remained due to the overall economic outlook. Reuters reports: Read more here. Chinese stocks fell on Tuesday ahead of the second day of trade negotiations between the US and China. Investors are cautious as the two biggest economies seek to resolve some contentious issues. Bloomberg News reports: Read more here. As US-China trade negotiations resume in London on Tuesday, both sides are eager to rebuild the truce established in May. While, the US has tightened controls on AI chip exports, China may be holding the most valuable card in these talks. CNN reports: Read more here. Advertising firm, WPP said on Tuesday that global advertising revenue is expected to grow 6% this year, lowering its earlier target of 7.7% due to the uncertainty surrounding US trade policies. Reuters reports: Read more here. Bloomberg reported that trade talks between the US and China will resume tomorrow morning at 10 a.m. in London after six hours of negotiations on Monday. US officials were looking for a "handshake" on Monday, National Economic Council director Kevin Hassett told CNBC, as the two sides look to ease tensions over tech and rare earths. President Trump weighed in on the progress, telling reporters on Monday: "We are doing well with China. China's not easy. ... I'm only getting good reports.' Treasury Secretary Scott Bessent, meanwhile, said it was "good meeting" and Commerce Secretary Howard Lutnick called the talks "fruitful," sending an upbeat signal on the talks' progress. The Chinese delegation, led by Vice Premier He Lifeng, did not comment on the talks. From Bloomberg: Read more here. The number of ocean containers from China bound for the US fell precipitously in May when President Trump's 145% tariffs on Chinese goods were in effect. Supply chain technology company Descartes said Monday that seaborne imports from China to the US dropped 28.5% year over year, the sharpest decline since the pandemic, per Reuters. Overall, US seaborne imports fell 7.2% annually in May to 2.18 million 20-foot equivalent units. The decline snaps a streak of increases fueled by companies frontloading goods to avoid higher duties, which has kept US seaports, such as the Port of Long Beach, busy. "The effects of U.S. policy shifts with China are now clearly visible in monthly trade flows," Descartes said in a statement. Read more here. In today's Chart of the Day, Yahoo Finance's Josh Schafer writes that tariff headlines have been rattling markets to a lesser degree than they did in April, despite an escalation of trade tensions recently: Sign up for the Morning Brief newsletter to get the Chart of the Day in your inbox. US import costs of steel and aluminum are expected to rise by more than $100 billion after President Trump doubled tariffs on the metals to 50% this week. That is expected to impact automakers such as Ford (F), as well as importers for a variety of goods, from baseball bats to aircraft parts. The Financial Times reports: Read more here. Tariffs have brought challenges for many, but Century Aluminum (CENX) and top recycler Matalco stand to benefit from President Trump's metal import duties as domestic prices rise. Reuters reports: Read more here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19 minutes ago
- Yahoo
US-China Trade Talks Go On For Second Day: Here's What's At Stake
Negotiations between the U.S. and China continued into a second day Tuesday. The two sides seek to lower trade barriers they've imposed on one another in tit-for-tat fashion in recent months. Industries in both countries have been damaged by restrictions on the flow of crucial materials. Financial markets have been buoyed by the prospect of reduced trade trade negotiations between the U.S. and China continued into a second day Tuesday, as both sides sought to defuse a trade war that threatens both in London led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng continued into the night Tuesday, Bloomberg reported, citing Treasury Department officials. The two sides were hammering out technical details of an agreement, according to ongoing talks between the two economic superpowers reassured investors, boosting stocks, on the prospect of lowering the tit-for-tat trade barriers the two countries have put up in recent months. A key aim for the U.S. is restoring access to Chinese rare earth minerals used to make batteries and advanced electronics. In return, the U.S. reportedly could lift restrictions on exporting jet engine parts, computer chip design software, and other high-tech items to two countries have also imposed high import taxes on one another, although some of those are paused while negotiations continue. A breakdown in talks could threaten industrial supply chains in both nations, and cause price hikes and shortages for U.S. consumers, according to trade the favorable reaction of the stock market to the talks could carry its own risks, according to David Folkerts-Landau, Group Chief Economist at Deutsche Bank."One key concern is that the Trump administration, buoyed by the market rebound, may resume aggressive tariff rhetoric—potentially triggering renewed retaliation from China and Europe, as seen earlier this year," he wrote in a the administration of President Donald Trump is pursuing trade deals with multiple other countries. Less than a month remains until Trump's 90-day pause on his "Liberation Day" tariffs expires, which would raise tariffs to double-digit levels on dozens of U.S. trading partners. The outlook for trade talks has become cloudier in recent weeks, as U.S. courts first ruled that many of the tariffs were illegal, only to have another court allow them to proceed while lawsuits play have warned the U.S. economy could fall into a recession if tariffs are restored to the high levels Trump announced April 2. Read the original article on Investopedia Sign in to access your portfolio
Yahoo
22 minutes ago
- Yahoo
Welsh railways to get £445m investment in spending review
Welsh railways are set to receive a £445 million investment when the Chancellor announces her spending plans for the coming years on Wednesday. Rachel Reeves is expected to announce the additional funding as part of her spending review, aiming to address what the Treasury sees as years of underinvestment in Welsh infrastructure. Understood to be a combination of direct funding and additional money for the Welsh government, the investment is expected to be spent on projects such as fixing level crossings, building new stations and upgrading railway lines. A Treasury source said: 'With this Government, Wales will thrive, and the Chancellor has prioritised bringing forward a package that has the potential to be truly transformative.' On Tuesday, Welsh First Minister Eluned Morgan told members of the Senedd that her government was 'expecting something positive from the spending review'. She said: 'I've been clear and I've been consistent when it comes to rail funding that we have not been getting our fair share of funding, in a position that the Tories left us with for over a decade. 'The difference between the Tories and the UK Labour Government is that they've recognised that injustice.' Baroness Morgan's comments came in response to criticism from Plaid Cymru leader Rhun ap Iorwerth of a decision to classify the £6.6 billion Oxford-to-Cambridge line as an England and Wales project. The designation means Wales will not receive the additional rail funding it would get if branded an England-only project. Mr ap Iorwerth said Wales had been 'getting our share until Labour actively moved the goalposts'. The expected announcement of additional funding for Welsh railways is one of several transport-related investments set to be confirmed on Wednesday. Ms Reeves has already announced plans to spend a total of £15.6 billion on public transport projects in England's city regions, and is understood to be preparing to extend the £3 cap on bus fares in England until March 2027.