S&P 500, Nasdaq close Q2 at record highs owing to tariff uncertainty

NEW YORK

The S&P 500 and Nasdaq closed the second quarter of the year at record highs, owing to tariff uncertainty since April, when US President Donald Trump announced sweeping reciprocal tariffs.

Sharp sell-offs in the stock markets followed Trump's tariff announcement, lowering the S&P 500 and Nasdaq indexes to 15-month lows in April, but the indexes recovered due to tariff delays and negotiations, as optimism for new agreements grew stronger.

US stock markets rallied with expectations of corporate tax cuts and regulatory reforms after Trump won the presidential elections in November last year, reaching all-time highs.

The Dow Jones hit a record high of 45,014.04 points in December last year, while the Nasdaq closed the month at an all-time high of 20,173.89, and the S&P 500 reached its highest in February this year at 6,144.15 points.

In January-March, the Dow Jones fell 1.3%, the S&P 500 4.6%, and the Nasdaq 10.4% due to trade war concerns and tariff threats, as Trump’s tensions with China, Canada, and Mexico rose and uncertainties riddled supply chains and markets.

China’s retaliations added to the fears of an escalating global trade war, which prompted large sell-offs in the technology-dominant Nasdaq.

On April 4, precisely two days after Trump announced his reciprocal tariffs, the Dow Jones fell 9.3%, the S&P 500 10.5%, and the Nasdaq 11.4%, wiping out around $6 trillion from US markets, marking the highest daily losses since the pandemic.

Losses extended to Asian stocks and crypto markets over the weekend in early April, but the losses did not reach the feared levels.

On April 7, the Dow Jones closed at 36,611.78 points, the S&P 500 at 4,835.04, and the Nasdaq at 14,784.03 points, the lowest levels of the year. The indexes’ decline in value versus the previous highs was 18.7%, 21.3%, and 26.7%, respectively.

Trump’s calls to stay calm and keep buying followed the turmoil in the US stock markets, as the president said all would be well on April 9, and at noon on the same day, he announced a 90-day tariff pause except for China, fueling a rise in the market while increasing the reciprocal tariffs on Beijing to 125%.

On April 9, the Dow Jones rose nearly 8% near the close, the S&P 500 9.5%, and the Nasdaq over 12%. The Dow Jones saw its highest increase since March 2020, the S&P 500 since 2008, and the Nasdaq since January 2001, and its second-highest daily gain in history.

The Dow Jones ended April with a decline of 3.17%, and the S&P 500 0.76%, while the Nasdaq ended the month on a 0.85% climb.

In a surprising turn of events, the US and China took steps to ease trade tensions. The US agreed to lower its tariffs on China from 145% to 30% for 90 days, while China reduced its 125% tariffs on American goods to 10%, giving markets a boost in May.

The Dow Jones gained nearly 4%, the S&P 500 over 6%, and the Nasdaq 9.6%, while strong financial results by big corporations and the US economy’s resilience in May eased recession fears.

Easing geopolitical tensions after a ceasefire between Israel and Iran in June led to the optimism that the US would make more trade agreements to lower tariffs and the Fed may cut rates in the coming months, pushing the S&P 500 and the Nasdaq to their highest ever at 6,204.95 and 20,369.73 points, respectively.

Following these developments, the Dow Jones rose 4.3% in June, the S&P 500 around 5%, and the Nasdaq 6.6%, while the indexes gained 5%, 10.6%, and 18%, respectively, in the second quarter.

In the first half of the year, the Dow Jones climbed 3.64%, and the S&P 500 and the Nasdaq were up 5.5%.