NEW YORK (AP) - In early April, the conditions in the stock market were terrible. President Donald Trump follows a campaign pledge and announces tariffs on most U.S. trading partners. The S&P 500 index fell 12% in four days.
Economists warn of recession. Consumer confidence has been weakening, further weakening. Company executives work hard to give investors a clear understanding of their financial prospects.
However, this week, the S&P 500 rose 5.3%, turning positive in 2025. A few weeks ago, the core index of many 401(k) accounts fell by about 15% that year.
Analysts warn that the tariff drama is hardly over and stocks may fall again. But U.S. stocks are as crazy and unexpected as falling. Here is what happened:
"Liberation Day"
Trump appeared in the Rose Garden on April 2 and announced the urgently needed tariffs on nearly all U.S. trading partners. He targeted China in particular and eventually raised his responsibilities for importing from China to 145%. Beijing retaliated by raising tariffs on U.S. goods to 125%. Investors fled the U.S. stock market.
Pause 1
On April 9, Trump announced on social media a "90-day pause" for most tariffs he announced a week ago, but targeted China. The S&P 500 soared 9.5% in one of its best days of all time.
Bonds and US dollars
Trump largely overlooked the damage to the stock market, which was surprised by a president who repeatedly boasted during his first term. But he can't ignore it Signs of trouble in bond and forex markets.
The price of U.S. government bonds is rising, fearing that the U.S. fiscal market is losing its safest place as the world's cash-keeping site. The value of the dollar has also sunk into another signal of faith in the United States as a safe haven for investors.
Unlike stocks, the Treasury and the US dollar did not fully rebound. Some of this may be due to expectations that the Fed will make about interest rates, but it also shows that global investors still have some fear of the United States.
economy
Although consumer sentiment has weakened - a measure has been down for five months in a row - investors call it "hard data", such as employment figures, suggests that the economy can still do it. Recent data showed employers added 177,000 jobs in April, and inflation has cooled.
Large profits
Through all the momentum of the market, U.S. companies continue to provide profit reports early this year that exceeded analysts’ expectations. In the long run, stock prices tend to follow profits, which is a significant increase in the market.
Three of every four companies in the S&P 500 have beaten analysts’ expectations for profits in recent weeks, including market heavyweights like Microsoft and Meta platforms. According to Factset, they are expected to achieve nearly 13.6% growth a year ago.
Pause 2
Wall Street's outlook this month is bright as the United States says it's willing to negotiate trade. Last week, the government reached an agreement with the UK. The biggest news follows: The U.S. and China said on Monday that they temporarily withdraw most of the tariffs they imposed on each other as the 500th index rose to its best day since the first tariff suspension.
What's next?
Even if the company provides more profits than expected, many warn that they are unsure of what will happen in the future. The CEO has been lowering or withdrawing financial forecasts for a year, given how Trump’s tariffs will eventually emerge.
Strong people in the market like Apple and Letters are still down double digits this year, while Nasdaq Composite's technology company is bigger, still down 0.5%.
Analysts were quick to remind investors that most tariffs have been suspended and not eliminated, while others remain. Trump retained a 10% tariff on other counties at baseline. The U.S. tariffs on China are still 30%.
“I recommend investors to be cautious in the short term and be prepared for unexpected news from the Trade Front,” said Louis Wong, director of Hong Kong Philip Securities Group.