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The US stock rally starting to lose some steam after the S&P 500 wipes out its losses for the year. Investors in wait and see mode during the 90-day tariff pause, but Wall Street is optimistic with recession calls beginning to fade. So what's needed to keep the rally going? Yahoo Finances Josh Shafer joins us now with more. What's on the shopping list? What do we need?

Yeah, actually, I mean it seems like you need perhaps a little bit more news in terms of trade deals, right? And then also strategies coming out and saying that perhaps just more confidence in the economic data story. Because right now, it seems like you have a market that is no longer pricing in a recession and perhaps pricing in economic resiliency. So if you see some stronger data or data continue to hold up, that would probably be a key part of this. But I think, guys, I want to zoom out a little bit here too and just sort of highlight, you guys just mentioned off the top, we erased our gain, or our losses for the year for the S&P 500. That happened. So 15% drawdown year to date for the S&P 500. S&P 500 bounced back in less than six weeks erasing those losses. That is the fastest climb back since 1982 for the major index. That gives you a little bit of perspective on just this massive, massive rally really that you have seen in the last couple weeks. And now strategists sort of sitting back and saying, "Okay, we have a little bit of a market price for perhaps perfection here at this point, based on all the uncertainties that are out there." So people starting to feel a little bit more uneasy at least in the short term as far as where markets at next.

How much does AI need to be a part of the continued rebound?

I think it definitely does, Brad, right? So overall, I mean, that's what's been driving the market over the last couple days. You guys just hit on Nvidia shares being up this morning. And I think it's interesting, we've talked a lot about S&P 500 is back to positive on the year. Nasdaq is back to positive on the year. You know what's not positive on the year? The Mag 7 index. Mag 7 index still off about four and a half percent. I was just looking on the year. Of course, that also includes Tesla, which has had a massive drawdown. But I think overall, you're starting to see some of these strategies that see higher targets, David Costin over at Goldman Sachs highlighting that he thinks more investors are going to continue to pile into big tech and AI related names, given that's where your earnings growth is. You're looking at an environment now where you have the 10-year near four and a half percent. You've seen investors come into tech names in that environment. And he was looking just simply at first quarter earnings season. We haven't heard from Nvidia yet, but if you use the other six names in the mag 7 earnings growth over earnings growth of 30% year over year, then look at the S&P 493 earnings growth of 9%, so you're still seeing a lot of strength in those big tech cohorts. So it might make sense for people to continue to maybe go back into those names.

You know, one of the interesting things that we had heard from investors over and over again before the tariff thing is that they thought this would be a pro-growth presidency, right? And it was sort of predicated on tax relief as well as regulatory relief. Now, the regulatory stuff, I don't know what's going on there. It's sort of piecemeal depending on the industry. The tax bill though, we're waiting on it. But at this point, it feels like it is more status quo than significant upside for the market. In other words, if it wasn't going to happen, then that would cause a big issue for stocks. But it happening and happening kind of as expected doesn't seem to be maybe a catalyst.

No, but you know what is interesting in terms of tax cuts? I thought so we mentioned the recession call, right? And so Michael Feroli, JP Morgan, had a recession call. Took his recession call off because of the tariff scale back. He said, well, if tariffs are taxes, and I was penciling in 24% tariffs. Now, I pencil in 14% tariffs. That's a $300 billion tax cut on the American consumer. So if you're positive on maybe more tariff cuts coming, and the tariff rate actually coming lower, that's also perhaps a form of a tax cut. Now, it's a tax cut that the administration, or a tax that the administration had certainly put on without most people necessarily expecting it, but if you're just penciling in growth, a way to actually kind of bring taxes on the consumer down in some way would be bringing that tariff rate down as well. So I think that's kind of an interesting other lever that they have as the administration kind of keeps tracking the market.

Is it that clear of an offset though, if companies are saying, all right, well, if the tariff rate is higher and we're just going to pass that cost onto the consumer anyway, how much of a real cut is it for consumers who are still going to kind of bear the burden of that at a cost?

Well, I mean, I think he's sort of playing it out as a math equation, right? So if you're going to increase tariffs at a certain rate, and the company's just going to flat out pass that on, right? So if it's 145% tariff on this product I'm getting from China and I'm going to pass all of that on to you. And then you cut that down to 30%, it is just kind of taking it off, right? If the company still is only charging you 30% more, but if they come down to 15%, or the 10%, right? Then it is just passed on to you at a lower level.