A trade war. A real war with bombs dropped in the Middle East. A barrage of insults hurled by the president of the United States at the head of the Federal Reserve.
The stock market has powered through all of that in the past few months to set a new record Friday and reward investors who stayed their ground through a volatile stretch. The S&P 500 closed at an all-time high of 6,173.
While Wall Street can take a bow — and breath a sigh of relief — there’s no let-up ahead. The pause President Donald Trump put in effect for many tariffs expires in early July. Second-quarter profit reports and upcoming economic indicators could reveal more about the impact of the tariffs that did go into effect. The Fed could face a tricky decision on interest rates.
Here’s a look at what’s happened in markets and what could lie ahead.
Tariff shock
Trump appeared in the Rose Garden on April 2 and announced steeper-than-expected tariffs on almost all U.S. trade partners. He especially targeted China, eventually raising the duties on imports from China to 145%. Beijing retaliated by raising tariffs on U.S. goods to 125%.
Within just four days, the S&P 500 fell about 12%, and the Dow Jones Industrial Average lost nearly 4,600 points, or about 11%.
Trump shrugged off the stock market drop but he couldn’t ignore the signs of trouble in the bond and foreign exchange markets. Tumbling prices for U.S. government bonds raised worries that the U.S. Treasury market was losing its status as the world’s safest place to keep cash. The value of the U.S. dollar also sank in another signal of diminishing faith in the United States as a safe haven for investors.
Time to pause
On April 9, Trump announced on social media a “90-day PAUSE” for most of the tariffs he’d announced, except those against China. The S&P 500 soared 9.5% for one of its best days ever.
In May, the administration struck a trade deal with the United Kingdom. Then came the biggest news: The U.S. and China said that they were temporarily rolling back most of the tariffs they’d imposed on one another. The countries have indicated they’ve reached a deal, but details are scarce.
Markets briefly got spooked when Trump threatened tariffs against the European Union, but he decided to hold off — until July 9 — as the countries negotiate.
War and oil
The trade war was pushed out of the headline by a real war this month as Israel and Iran attacked each other. The price of oil spiked, threatening to boost inflation and slow the global economy. A U.S. strike on Iranian nuclear facilities was followed by a cease-fire and oil prices dropped sharply. Relieved, Wall Street resumed its climb toward a new record.
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