In a year marked by geopolitical shocks, tariff battles, and AI-fueled rivalries, Wall Street has pulled off a comeback that few saw coming. The S&P 500 is now just 0.85% from a new record high, rebounding sharply from an April correction that nearly pushed it into bear market territory. The Nasdaq 100 has already broken new ground, driven by a resurgence in tech and AI that continues to defy gravity.
Portfolio manager Kevin Simpson calls the rebound “remarkable,” especially given the backdrop of war in the Middle East and trade tensions. But investor optimism returned fast, thanks in part to easing fears about oil supply disruptions and President Trump’s strategic pivot away from harsher tariffs. A trade truce with China, which includes commitments on rare earths supply, has helped calm the waters.
Adding fuel to the rally is a solid economic foundation: unemployment remains low at 4.2%, inflation data shows minimal impact from tariffs, and the Fed is signaling two rate cuts later this year. Corporate earnings, too, remain resilient, with the S&P 500 posting a nearly 5% gain in Q2, marking eight straight quarters of growth.
AI continues to be the engine under the market’s hood. Nvidia’s blockbuster earnings and Big Tech’s unwavering investment have kept investors firmly in the growth camp, despite early-year jitters from overseas competitors like China’s DeepSeek.
UBS strategist Ulrike Hoffmann-Burchardi summed it up: “The AI trend is not just intact — it’s accelerating.”
Between policy easing, strong fundamentals, and unshaken faith in AI innovation, the market’s new highs aren’t a fluke. They’re a reflection of confidence, liquidity, and strategic resilience. In true Trump-era fashion, the market isn’t just surviving chaos — it’s thriving on it.
JPMorgan estimated that AI could drive $1 trillion of spending by 2030, including investments in generative AI computing, networking, and storage infrastructure.
Still, the next few weeks could bring more volatility to the market. Investors are bracing for a July 8 deadline for reciprocal tariff suspension, while more jobs data are on deck next week to gauge the health of the labor market.
“Markets often tend to see more volatility in the build-up to conflicts and then rally or turn to other factors once it’s started,” said Carol Schleif, chief market strategist at BMO Private Wealth.