Wall Street investors share 3 predictions for what could make or break the stock market's recent rebound
The stock market has been on a winning streak for six days — a welcome change from the downward slide in the days and weeks after " Liberation Day."
While Wall Street is feeling more optimistic now than they were earlier this year, a lasting stock-market rally is far from guaranteed. There are a few key factors in particular that could shape the direction of the market for the rest of the year, investors shared in the Evercore ISI Flash Survey.
Evercore surveyed over 450 institutional investors on May 16 and found that 45% of respondents expected a US recession to start in 2025. That's down from 67% just a couple of weeks prior, on May 2, but still substantially elevated.
Although the S&P 500 has made a round trip back to its pre-Liberation Day levels, the US weighted average tariff rate is still at 14%, significantly elevated from 2.5% at the beginning of the year.
Investors are still overwhelmingly pessimistic about the impact of tariffs, with 63% of respondents saying that investors and the global economy are worse off than before the announcement of tariffs.
Here's what investors think will determine whether the S&P 500 advances higher.
5% Treasury yields will stop stock-market gains
Evercore ISI
Treasury yields have been and will be a big topic of discussion this year, according to investors. Of the survey respondents, 48% said a 5% 10-year Treasury yield would stop S&P 500 gains, and another 45% said a yield of 4.75% would be enough. The 10-year yield was near 4.4% on Tuesday.
Bond vigilantes, investors who sell in protest of fiscal or monetary policies they don't agree with, have been on high alert this year. In the wake of President Donald Trump's Liberation Day announcement, bond yields spiked as investors sold off their holdings — eventually leading to Trump announcing a 90-day pause.
Now, with Moody's downgrading US debt, yields are under even more scrutiny. The yield on the 30-year Treasury bond jumped to 5.02% on Monday, the highest level since late 2023.
The "sell America" trade will continue
Evercore ISI
Investors are leaning toward diversifying outside the US for stock market gains, showing that the " sell America" trade is going strong.
While US exceptionalism dominated the stock market in 2024, tariffs have shaken that narrative. Among survey respondents, 35% said the MSCI All World index would be the highest performer from now to 2025 year-end, followed by 31% who said the S&P 500 would take that title.
Investors aren't giving up on the Magnificent Seven, though — almost 25% of respondents said those Big Tech stocks would be the top performers for the second half of the year.
Tech stocks will continue to perform
Evercore ISI
Despite everything that's happened in 2025, the tech sector is still an investor favorite.
Within the S&P 500, information technology was the most popular sector for investors looking to deploy "fresh money" and buy the dip, as 36% of respondents said it was the most attractive opportunity.
Financials were a distant second choice, with 18% of responses.
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