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After enduring a sharp downturn in early April due to aggressive U.S. tariff policies, the S&P 500 has staged a remarkable comeback. The index is on the verge of notching its longest winning streak since 2004, after registering its eighth consecutive winning session on Thursday. This underscores a renewed wave of investor confidence in the face of lingering economic uncertainty.
The three ultra-popular ETFs tracking the index — Vanguard S&P 500 ETF VOO, SPDR S&P 500 ETF Trust SPY, and iShares Core S&P 500 ETF IVV — gained about 6% each in the last eight days.
The surge was primarily driven by strong earnings reports from major technology firms and easing concerns over trade tensions. Will the strong trend continue? Let’s delve deeper:
Big Tech Earnings Lift Optimism
Strong quarterly earnings reports from software giant Microsoft MSFT and Facebook parent Meta Platforms META spread strong optimism in the tech sector, the heart of the market rally last year. The dual earnings outperformance underscores that strong demand for AI is helping both companies navigate tariff-driven economic uncertainty (read: AI ETFs Set to Gain on Robust Meta, Microsoft Earnings).
After the closing bell on Thursday, Amazon AMZN and Apple AAPL also announced quarterly results with the beat on both earnings and revenues. However, their shares are falling due to tariff uncertainties. Apple warned of a $900 million tariff headwind in the ongoing quarter. The good news is that Apple is shifting its assembly of all iPhones for the U.S. market to India as soon as next year. About 50% of iPhones for U.S. markets are now produced in India, while iPads, Macs, Apple Watches and other products are increasingly sourced from Vietnam.
Amazon’s CFO Brian Olsavsky issued a cautious outlook due to uncertain consumer demand in the face of President Trump's shifting tariff policies. Amazon faces significant exposure to Trump’s tariffs, primarily through its retail unit.
Tariffs and Trade Deal Talks
The Trump administration seems to be softening its stance on tariffs, raising hopes of a resolution of the trade conflict. At a White House press conference last week, Trump called the current 145% reciprocal tariffs "too high" and said they would "come down substantially."
Meanwhile, China is evaluating the possibility of starting trade negotiations with the United States. According to several reports, China might suspend its 125% tariff on some U.S. goods, which boosted market sentiment.