S&P 500 Nears Record High Amid Volatile Year for Markets and Global Tensions

Hadisur Rahman, JadeTimes Staff

H. Rahman is a Jadetimes news reporter covering Business

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Image Source: Yuki Iwamura/AP

The S&P 500 is once again within striking distance of a record high, marking a stunning reversal just months after the index teetered on the brink of a bear market. Despite mixed performance across Wall Street on Wednesday, the broader index remains less than 1% below its all-time peak, buoyed by easing geopolitical tensions and renewed investor enthusiasm for technology and artificial intelligence stocks.

The Dow Jones Industrial Average slipped by 107 points, or 0.25%, while the Nasdaq Composite gained 0.31%. The S&P 500 finished the day flat after a strong two-day rally fueled by a fragile ceasefire between Israel and Iran.

After falling into correction territory in March and flirting with a bear market in April, the S&P 500 has staged a powerful comeback. Following the announcement of the ceasefire and a rollback of proposed tariffs by President Trump, the index climbed more than 6% in May and is up 3% so far in June. Year-to-date, the index has gained over 3.5%.

The S&P 500 had last reached a record high on February 19, driven by optimism during the early months of Trump’s second term. But the rally was abruptly halted when the administration introduced steep “Liberation Day” tariffs on April 2, sending the index plummeting nearly 19% from its peak. By April 8, $9.8 trillion in market value had been wiped out, according to FactSet.

The sharp rebound since then has been led by renewed optimism around US trade policy and surging interest in AI and tech stocks.

Nvidia (NVDA), a bellwether for the AI industry, jumped 4.33% on Wednesday, hitting a new all-time high and helping propel the Nasdaq 100 to its first record since February. The chipmaker had fallen 37% between January and April but has since rallied strongly as investor sentiment shifted.

Ross Mayfield, an investment strategist at Baird, credited tech and AI firms with helping reestablish market leadership. “Getting leadership from these big tech names is huge for a US market that’s hyper-concentrated in that area,” he noted, while also warning of the potential for overvaluation.

Headwinds Remain

Despite the optimism, several headwinds remain for markets. Analysts caution that rising tariffs, persistent inflation risks, and an increasing federal deficit could challenge further gains.

Keith Buchanan, senior portfolio manager at Globalt Investments, warned that the market might be ignoring the economic realities. “It can do that at times in an irrational way,” he said. “There are concerns about what the future holds from a profitability standpoint.”

Torsten Slok, chief economist at Apollo, noted that the current average tariff rate could lead to the highest levels in nearly a century, posing a risk to economic growth and potentially extending the Federal Reserve’s higher interest rate regime.

With second-quarter earnings season beginning in mid-July, investors are eyeing how companies have handled the impact of rising tariffs. Eric Freedman, CIO at US Bank Asset Management, said that how firms pass along costs to consumers will be closely watched for inflationary implications.

Meanwhile, Mohit Kumar of Jefferies emphasized the importance of jobs data and Treasury yields over the coming months, suggesting these will be key indicators for market direction.

Despite the volatility, many experts advise a steady approach. “The main message for investors is to stay invested and avoid reacting sharply to any news or market reaction that may have a short-term negative impact upon equity prices,” said Chris Brigati, CIO at SWBC. “It is nearly impossible to attempt to time the market, therefore maintaining a disciplined and long-term investing approach serves investors well.”

As the S&P 500 approaches a new high, the resilience of US markets will be tested by global events, economic fundamentals, and the enduring optimism of investors betting on innovation.