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Trump changed the market narrative on trade policy this week, easing fears that have weighed on investors.
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The president has shifted investors' focus to his pro-growth agenda.
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A flurry of executive actions and announcements helped lift the S&P 500 to fresh records.
President Donald Trump flipped the script on one of the market's biggest worries about his presidency this week — his plan to levy steep tariffs on imports— and it's sent stocks climbing to new records as concerns about trade policy fade for the time being.
The week's developments represent a considerable shift in the market narrative, as traders have fretted over the potential inflationary impact of Trump's tariff plan for months.
In early January, stocks sold off and bond yields spiked on reports that Trump was considering using his emergency powers to bring tariffs early on in his presidency.
The message was clear: The market believed tariffs would stoke inflation, which could lead to interest rates staying higher for longer and crush hopes that looser monetary policy would extend the bull market into its third year.
But Trump's orders in the first days of his presidency seem to have turned that narrative upside down, with markets getting a major leg-up this week on optimism for economic growth over the next four years.
Stocks have climbed steadily higher since Trump's inauguration, when the president promised that tariffs would lead to "massive amounts of money" pouring into the US.
The S&P 500 closed at a record high on Thursday, recovering from a sell-off at the start of the year as traders digest a slew of orders and policy announcements from the White House.
"Now investors are focused on, okay, the executive orders are coming through, he's serious about deregulation, he's serious about getting the tax cuts," Nancy Tengler, the chief investment officer of Laffer Tengler Investments, told Business Insider.
"Those are important elements for the market, because — whether you agree with him or not, that's never the issue. The issue is the uncertainty. And so it looks like we're going to have a regular order of business and things are going to chug along," she added.
The bond market also appears to have recovered some of its losses. The yield on the 10-year US Treasury crept up slightly this week but is down about 20 basis points from its peak earlier in the month. The yield was hovering around 4.6% Friday after approaching 5% a few weeks ago, a level that has historically been a threshold for a sell-off in stocks when crossed.