- Even with significant macroeconomic concerns like impending tariffs and sluggish consumer spending, the market remains surprisingly resilient. The S&P 500 reached a new peak at 6,173.07, which has further boosted futures. Investors seem to be banking on either extending the tariff deadlines or a reduction in Federal Reserve fees to help support the stock market.
On Friday, the S&P 500 set fresh records, with S&P Futures climbing 0.37% this morning. It’s worth noting, at least for the moment, that there are evident macroeconomic risks looming that investors appear to be overlooking.
The upcoming tariff deadline stands out as the most unpredictable issue. President Trump has made deals with several U.S. trading partners until July 9, but over the weekend, he acknowledged that his administration hasn’t secured agreements with most of them. Instead, he indicated that many would simply receive notifications indicating a minimum tariff rate of 25%.
Research by Samuel’s Tomb and Oliver Allen at Pantheon Macroeconomics suggests that these tariffs are already beginning to impact the economy. They noted, “Real consumer spending fell by 0.3% in May, and a significant downward revision for the previous months means that growth is likely to hover around an annual rate of about 1.5% in the first half. If the labor market deteriorates, spending could slow even further in the third quarter.”
It seems many investors are pinning their hopes on Trump potentially extending the tariff deadline, or on the Federal Reserve cutting interest rates before the year’s end. Both scenarios would favor the stock market.
Kevin Ford from Combala shared with clients this morning, “As I stepped in later this year, a strange calm settled down. The big fear seems to be fading. Despite all the noise, the equity market is flirting with its highest ever mark (the new ATH of the S&P 500). Yet, the outlook remains unclear. So many questions linger: What’s happening with tariffs? It’s uncertain whether the White House will keep delaying due to ongoing negotiations with Europe, Japan, and South Korea.”
The Fed may also accommodate the interest rate cuts that Trump has called for.
The market is likely to stay focused on macro factors, which means we can expect increased scrutiny of labor market data, Fed policy expectations, and any potential new appointments to the Fed chair. Overall, the sentiment hinges on expected modest, temporary weak growth in the second half of 2025.
Here’s a quick overview of the market activity ahead of the New York Opening Bell:
- S&P 500 Futures: Up 0.37% this morning, prior to market opening.
- S&P 500: Closed up 0.52% on Friday, achieving a new record high (6,173).
- UK and Europe: The market was flat during early trading.
- Nikkei 225 in Japan: Increased by 0.84%.
- Main indices in China: Rose this morning, whereas Hong Kong and India saw declines.
