After President Donald Trump’s announcement regarding a trade deal with the UK, the S&P 500 saw an impressive rise of 1.6%, reaching 5,720 on Thursday. This marks the highest level since the index was falling from its record high of 6,144 on February 19. The index is now on track to extend its winning streak for three consecutive days. While the post-election rallies had their struggles, it seems the president’s actions contributed to some of the downturn. The rapid ascension of the S&P 500 post-election was notable, even as it plummeted to its low of 4,982 on April 8. It exemplifies that predicting market timing can often lead to poor decisions. Back in February, when the S&P was thriving, many anticipated losses linked to tariff issues, including investor Jim Kramer, who was somewhat optimistic but chose to trim positions like Constellation Brand and Best Buy. Conversely, in April, a lot of investors seemed hesitant to buy amidst the prevailing negativity. True to our usual approach during such times, we cautiously bought small amounts of stocks including Capital One and Dover just before and after the April low.
Since Election Day and following the suspension of tariffs—which many speculate will impact both the bond and stock markets—the dialogue around tariffs has shifted somewhat. On April 9, after announcing significant tariffs that surpassed expectations, Trump decided to suspend certain tariffs for a 90-day period at a 10% baseline, excluding China. Since then, he’s also implemented measures to relieve some of the tariff pressures on US businesses, such as the exemption of electronic devices like smartphones and computers from certain tariffs, announced by US customs on April 12. In addition, recent changes include the suspension of regulations on artificial intelligence that were previously slated to go into effect in May. While China remains a focal point in trade discussions, this weekend the Swiss Treasury Secretary will engage with Chinese officials to initiate conversations about trade.
Nonetheless, Trump’s rhetoric remains strong, and he has hinted at upcoming industry-specific tariffs, especially concerning pharmaceuticals, which have already affected medical stocks. Even though he announced the UK trade agreement on Thursday, Trump’s stance suggests that other countries should expect that 10% tariffs could be the starting point, with higher rates being likely. Jim has reiterated that no one truly knows the future of the market, and if anyone claims otherwise, they might not be completely honest.
