S&P 500 Sets New Record Highs Amid Trump's Tariffs and AI Boom
The S&P 500 has been on a record-breaking streak, rising for six consecutive months despite initial jitters caused by President Trump's tariff plans in April. The index has gained 19.6% over the past year, driven by robust corporate earnings and enthusiasm for artificial intelligence investments.
Market volatility, as measured by the CBOE Volatility Index, has remained relatively low for most of the past six months, indicating a calm trading environment. Portfolio manager Jed Ellerbroek of Argent Capital Management views recent pullbacks in the S&P 500 as 'value days,' attributing them to natural adjustments in investor sentiment, particularly given the tech sector's leading role in the market. He also acknowledges that trade uncertainty will persist under President Trump's administration.
Analysts credit the stock market's gains to strong corporate earnings and increased investments in artificial intelligence. The 10-year US Treasury yield has decreased from 4.4% in November 2024 to 4.1% this month. President Trump attributes the market's performance to his policies. However, the S&P 500's concentration in big tech companies, with Nvidia (NVDA) accounting for 8% of its market value, has raised concerns about market diversity.
One year after President Trump's reelection, the US stock market continues to reach new highs, with the S&P 500's rise ranking among the best for a president's first year since World War II. However, an equal-weighted version of the index has lagged behind, gaining only 6% over the past 12 months, suggesting that the market's gains may be disproportionately benefiting larger companies.
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