The U.S. stock market recovery is nearly complete after a volatile spring. Major indexes like the S&P 500, Dow Jones, and Nasdaq have regained most of their losses, with the S&P 500 now just 0.5% away from its all-time high set in February. Investors are cautiously optimistic as big tech leads the rebound and macroeconomic data shows resilience.
Big Tech Powers the Rebound
The latest leg of the U.S. stock market recovery has been driven by strong performances in the technology sector. Companies like Nvidia (NASDAQ:NVDA) and Micron Technology (NASDAQ:MU) are seeing renewed investor interest, thanks to demand in artificial intelligence and data storage.
Nvidia, the most valuable company in the U.S. stock market, rose 0.5% and is now up 15.3% year to date. As the poster child of the AI revolution, Nvidia continues to benefit from long-term trends in machine learning and cloud computing.
Micron Technology, meanwhile, reported better-than-expected quarterly earnings. The company cited increasing demand for memory chips used in AI infrastructure as a key growth driver. Its stock rose 0.3% after the announcement, and its bullish outlook for the next quarter helped reinforce investor confidence in the sector.
Strong Earnings, Despite Tariff Concerns
While tariffs remain a looming threat, companies are finding ways to adapt. McCormick & Company (NYSE:MKC), known for its spices and food seasonings, jumped 5.3% after reporting a profit beat and issuing a strong full-year forecast. The company said it has strategies in place to offset increased costs from potential tariffs proposed by former President Donald Trump.
Though markets remain wary of tariff-related disruptions, the broader economic picture appears solid. Durable goods orders, including for items like washing machines, came in stronger than expected last month. Unemployment claims also fell, suggesting fewer layoffs and continued labor market strength.
Mixed Economic Data, But Optimism Persists
The U.S. stock market recovery is unfolding amid a backdrop of conflicting signals. On one hand, a recent report revised Q1 GDP downward, reflecting a sharper contraction than previously estimated. However, many economists believe this dip was a one-time distortion, as companies front-loaded foreign purchases in anticipation of tariffs. Most expect a return to growth in the second half of the year.
Bond markets were relatively quiet despite the data. The yield on the 10-year Treasury slipped to 4.26%, down from 4.29%. The 2-year Treasury yield, more sensitive to Federal Reserve moves, dipped to 3.73%.
There is growing speculation about political pressure on the Fed. A Wall Street Journal report suggested Donald Trump may announce a new nominee to replace Fed Chair Jerome Powell well before the election—an unusual and potentially disruptive move. Powell has been hesitant to cut interest rates amid inflation concerns, but Trump and his allies have been pushing for lower rates to stimulate the economy.
Economists warn that political interference at the Fed could undermine its independence and fuel inflation. Brian Jacobsen, chief economist at Annex Wealth Management, noted that even with a Trump-aligned Fed chair, the full committee would likely act as a check on extreme policy shifts.
Oil Prices Stabilize, Global Markets Mixed
Oil prices also rebounded slightly after a sharp drop earlier in the week. U.S. benchmark crude rose 1% to $65.55 a barrel, though prices remain below levels seen during the onset of the Israel-Iran conflict.
International stock markets were mixed. Japan’s Nikkei 225 surged 1.6%, while South Korea’s Kospi fell 0.9%, reflecting regional uncertainty.
Outlook: A Market at the Crossroads
The U.S. stock market recovery remains fragile but promising. With inflation cooling, corporate earnings resilient, and technology stocks surging, the S&P 500 is poised to hit new highs. However, geopolitical risks, Fed policy decisions, and the specter of new tariffs could still shake investor confidence. For now, Wall Street appears ready to ride the momentum—one cautious step at a time.
Featured Image – Freepik
