The stock market has been on a tear in recent weeks, shrugging off newly imposed tariffs, caution at the Federal Reserve and war in the Middle East.
The S&P 500 has soared 20% since an April low suffered after President Donald Trump’s “Liberation Day” tariff announcement. Over that period, the tech-heavy Nasdaq has climbed 28%, while the Dow Jones Industrial Average has jumped 12%.
Over the past month — even as a U.S.-China trade tensions resurfaced and the Iran war broke out — the S&P 500 climbed more than 5%.
Concern among investors about topsy-turvy economic policy has given way to cautious optimism about a dialed-back tariff posture and continued economic growth, some analysts told ABC News. While day-to-day price swings will likely persist, they added, the current outlook points to further gains over the remainder of the year.
“The market is making a pretty concerted effort to try to look past some of these near term disruptions,” Yung-Yu Ma, chief investment strategist at PNC Financial Services, told ABC News.
In recent weeks, Trump has rolled back some of his steepest levies, easing costs imposed upon companies and alleviating concern about a sharp surge of inflation.
A trade agreement last month between the U.S. and China slashed tit-for-tat tariffs between the world’s two largest economies and triggered a surge in the stock market. Within days, Wall Street firms softened their forecasts of a downturn.
The downshift of tariffs has coincided with data demonstrating a healthy economy.
Fresh inflation data earlier this month showed a slight acceleration of price increases, but inflation remains near its lowest level since 2021. Hiring slowed but remained sturdy in May as the uncertainty surrounding on-again, off-again tariffs appeared to curtail hiring less than some economists feared, a government report this month showed.
The outbreak of tit-for-tat strikes between Iran and Israel earlier this month sent stocks falling and hiked oil prices. Those challenges proved short-lived, however, as stocks resumed their gains and oil prices eased amid a ceasefire.
“The stock market doesn’t care about geopolitical events,” Ivan Feinseth, a market analyst at Tigress Financial, told ABC News. “The market might react for a day or two, but it was nothing sustained.”
Investors have also placed hope in an expected lowering of interest rates at the Fed. So far this year, the central bank has taken up a wait-and-see approach, holding interest rates steady as policymakers await the potential effects of tariffs. A recent Fed forecast suggested a likely pivot, however, predicting two quarter-point cuts this year as well as two quarter-point cuts next year.
“The stock market’s recent strength reflects growing optimism around a soft landing, improving corporate earnings and the potential for lower interest rates ahead,” Brian Buetel, managing director at UBS Wealth Management, said in a statement last week.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, June 25, 2025.
Jeenah Moon/Reuters
Still, the market faces meaningful risks, analysts said.
Trade tensions could worsen and tariffs could escalate, some analysts said, while noting the difficulty of anticipating exactly where the levies will land. A resumption of hostilities in the Middle East could drive up oil prices and hamper global economic growth, they added. A burst of tariff-induced inflation could nudge the Fed toward a cautious approach and delay potential interest rate cuts.
“Despite the market getting close to its highs, getting too enthusiastic is probably not what’s called for at this point,” Ma said. “It’s still a back-and-forth market.”
Nevertheless, analysts expect an upswing in the stock market over the remainder of 2025. Feinseth forecasted an uptick in the S&P from its current level of 6,090 to 6,500, which would mark an increase of 6%. Ma predicted similar gains, saying the market would rise at least 5%.
“We think the overall end destination is one that will be palatable for markets,” Ma said. “But it will be a bumpy path from here to there.”
