The S&P 500 index reached a new high on Friday, marking an end to its rapid recovery from a tariff-induced downturn in early April. However, the significance of this milestone is uncertain, with experts weighing whether it signals a new bull cycle or merely a temporary reprieve.
According to economist Hugh Johnson, the market’s performance suggests that it may be at the beginning of a new economic-interest rate cycle, similar to those seen since 1890. Nevertheless, several headwinds, including tariffs, trade wars, and budget deficits, could hinder growth in the labor market.
President Donald Trump’s decision to end negotiations with Canada over a digital service tax has further complicated matters. The Canadian government subsequently scrapped the tax, but concerns about its impact on trade talks remain.
The government’s revised estimate of first-quarter economic growth was also concerning, with a 0.5% contraction in the economy attributed to increased imports and weaker consumer spending. A separate measure of inflation showed prices rising at an annual rate higher than the Federal Reserve’s 2% target.
Economists are divided on the outlook for the second half of the year, with some predicting a slowdown but not a recession. Mark Vitner, chief economist at Piedmont Crescent Capital, noted that while business investment and durable goods orders showed surprising strength, underlying demand was softer than expected, and key measures were flashing warning signals.
The upcoming monthly jobs report from the Labor Department is expected to show 113,000 jobs created in June, with expectations of a slight decrease from May. The report will be closely watched by the Fed, which faces pressure from Trump over interest rates.
Overall, the S&P 500’s new high marks an uncertain juncture for the economy, with tariffs and economic growth competing for attention. While some experts predict a slowdown, others believe the Fed still has room to act, potentially sparking two rate cuts this year.
Source: https://www.usnews.com/news/economy/articles/2025-06-30/economy-enters-second-half-facing-tight-fed-trump-tariffs-but-the-stock-market-is-roaring