Stock Market Strength Amidst Tariff Concerns
Despite headline-grabbing tariff plans from President Donald Trump, the stock market has exhibited resilience, indicating a continued upward trajectory for equities.
Since the AI-driven market sell-off, the S&P 500 has gained 0.3%, demonstrating the market's ability to withstand volatility. Despite pre-market downturns, the index remained within a 1% decline during peak tariff speculation.
Analyst Nicholas Colas highlights the average daily index range of 1.1% over the past decade, suggesting that recent market losses are not unusual. The VIX also remains below a critical level of 19.5, indicating that market volatility is not significantly increasing.
"Investors are disregarding trade war concerns," says Colas, attributing this to Trump's prior use of tariffs and their campaign prominence in 2024.
Strategists remain bullish on US stocks despite trade war fears, citing strong earnings growth. The S&P 500 is on track for 13.2% year-over-year earnings growth in Q4, exceeding analyst expectations.
Furthermore, earnings estimates have only been trimmed by 0.6% this quarter, deviating from the typical 1.3% reduction.
Recent economic data also supports market optimism. While job openings have declined, the ratio of openings to unemployed workers remains tight, indicating a stable labor market.
Additionally, the manufacturing PMI has rebounded, signaling increased activity in the sector, which typically correlates with higher S&P 500 earnings.
Head of Research Tom Lee emphasizes the positive data outlook and remains constructive on markets, aligning with Yahoo Finance's market analysis.