OnApril 8, when stocks were on the verge of plunging into abear market, few Wall Street experts were predicting that the market wouldhit a record highjust 80 days later.
That’s what the market appears to be set to do Friday. The S&P 500 is on pace to open in record territory. If it closes there, the market will set its first all-time high since February 19.
S&P 500futuresgained 0.3%. The index closed within 3 points of a record Thursday.
Futures for the Nasdaq Composite index gained 0.4%, also on pace to set an all-time high, its first since December 16, 2024. The Nasdaq has become synonymous with Big Tech, and the AI boom has fueled a tech rally in recent months. The smaller Nasdaq 100, made up of top tech stocks, set a record earlier this week.
Dow futures rose 130 points, or 0.3%. The Dow, dragged down by UnitedHealth, Apple, Merck and Nike, still has about 1,600 points left to gain before it hits its all-time high.
It’s been an incredible journey since mid-February. President Donald Trump alarmed traders with historic tariffs that economists said could reignite inflation and plunge the economy into a recession.
The Trump administration then doubled down on those tariffs, culminating in the president’s April 2 “Liberation Day” announcement. That sent tariffs for dozens of nations surging — some as high as 50%. US tariffs on China eventually eclipsed 145% for some products, effectively creating a blockade on America’s second-biggest trading partner.
On April 9, heeding warnings from the stock, currency and especially the Treasury markets, the administration paused its “reciprocal” tariffs for 90 days. Last month, it reached frameworks for trade deals with the United Kingdom and China, giving investors a sense that the most punishing trade policies were in the past, and more trade deals could be forthcoming.
Markets got another boost Friday afterChina signaledit would reopen its rare earth market to the United States, hours after White House officials said the two sides had reached a deal — a major breakthrough following weeks of negotiations.
Despite a 10% universal tariff that remains in place, in addition to 50% tariffs on steel and aluminum, and 25% tariffs on autos and auto parts, markets have largely looked past trade in recent weeks, focusing instead on other reasons for optimism or concern.
A boom in AI, fueled by surging sales for Nvidia’s chips and a Republican-led effort to deregulate the industry, has been one of the primary catalysts that have fueled stocks and helped investors move beyond the trade war. Hopes for a rate cut from the Federal Reserve, backed by reasonably strong economic numbers and low inflation, have also helped stocks in recent months.
Markets had temporarilygrown jitteryafter the House passed Trump’s sweeping tax cut and domestic policy agenda last month. But demand for Treasury bonds has remained surprisingly strong, giving investors confidence that foreign countries and investors will continue to support America’s debt, allowing the country to borrow unimpeded.
Still, stocks face several challenges in the coming weeks and months ahead.
If Congress reaches a stalemate in the domestic policy bill, which includes a provision to raise the debt ceiling, America could once again come close to defaulting on its debt because it is unable to borrow enough money to pay back its creditors. And if few (or no) more trade deals are forthcoming, tariffs could rise again as soon as July 9 as the 90-day reciprocal tariff pause expires.
The prospect of war breaking out in the Middle East remains a concern after a fragile truce between Israel and Iran was reached this week. And existing tariffs threaten to raise prices in the coming months, which could hurt economic growth.
Stocks face less existential threats, as well. Valuations are surging well above earnings expectations. The S&P 500’s price-to-earnings ratio has surged past 23, a relatively high number that means stocks have become quite expensive compared to their profit expectations.
So, markets may be celebrating at 4 p.m. ET today. But it’s not clear how long the party will last.