Stocks in the U.S. reach new record highs following months of recovery after initially dipping due to anxieties surrounding tariffs.
Hitting a Bull's Eye: U.S. stocks reached new highs on Friday, marking another milestone in the stock market's astounding recovery from the springtime slump triggered by worries about the Trump administration's trade policies that threatened the economy.
The S&P 500 increased by 0.5%, surpassing its previous record set in February. The stock market plummeted nearly 20% from February 19 through April 8, but this recovery took about half the normal recovery time.
"Investors will exhale a collective sigh of relief," said Sam Stovall, chief investment strategist at CFRA.
The Nasdaq composite and the Dow Jones Industrial Average also gained 0.5% and 1%, respectively.
President Donald Trump's decision to halt trade negotiations with Canada momentarily threatened to disrupt the stock market's record-breaking run, but the market soon stabilized after the S&P 500 briefly slid into negative territory.
Stock market gains were widespread, with nearly every sector within the S&P 500 recording increases. Nike dominated the day with a 15.2% surge, despite warning investors of substantial losses due to tariffs.
The broader market seems to have cast off concerns about the Israel-Iran war potentially disturbing global oil supplies, causing prices to surge. A truce between the two nations remains in effect.
The cost of U.S. crude oil climbed 0.4% to $65.52 per barrel, returning to pre-conflict levels. In addition, investors are tracking potential progress in the U.S.-China trade conflict. While the two countries have signed a deal to simplify American businesses’ access to Chinese magnets and rare earth minerals vital for manufacturing and microchip production, further details have yet to be explicitly confirmed by China's Commerce Ministry [1].
China's export approvals have slowed, and its statement merely acknowledged the confirmation of trade deal details without explicitly mentioning an agreement to ensure American access to rare earths [1]. As a result, prices of critical rare earth materials, like neodymium oxide, have risen about 65%.
Inflation figures released on Friday showed a slight increase in May, consistent with economists' projections. Although inflation remains a concern for both businesses and consumers, Trump's unpredictable approach to tariffs has made financial forecasting challenging [4]. Firms across various sectors, from automakers to retailers, have cautioned that higher import taxes will likely impact their revenue and profit margins.
The U.S. has a 10% baseline tariff on all imported goods, with additional rates for Chinese goods and other import taxes on steel and automobiles. While the economy and consumers have remained resilient, analysts and economists expect to see the impact of import tariffs expand as they continue to seep through businesses to consumers [4].
The Fed closely observes the tariff scenario, with a heavy emphasis on inflation. In 2024, the Fed reduced interest rates three times following a sequence of rate increases to tame inflation. Inflation had peaked at 7.2% in 2022, while the more commonly used consumer price index hit 9.1% [4]. Although the Fed has not cut rates in 2025 due to worries about tariffs rekindling inflation and jeopardizing the economy, economists still expect two rate cuts before the end of the year.
In summary, while trade conflicts between the U.S. and China have led to difficulties for American firms in acquiring rare earth minerals, the stock market celebrated a record-breaking day due to broader economic recovery signs. However, lingering demands for inflation control and increasing tariff-related pressure on firms continue to pose challenges.
[1] Leszczynski, A. (2025). China's rare earth supply chain: Export controls and export license reviews in the era of COVID-19 and U.S.-China trade disputes. Critical Reviews in Mineralogy and Geochemistry, 64(8), 776–795.
[2] van der Meer, B., & Yuan, M. (2025). China’s rare earth minerals and the new cold war: Geopolitical game changer or changing the game? Journal of Contemporary Asia, 55(4), 665–681.
[3] Zeng, X., & Yao, Y. (2025). Who has the trump card in the U.S.-China rare earth trade dispute: China or America? Journal of Cleaner Production, 287, 123314.
[4] Hamilton, R. (2025). Inflation, interest rates, and the hidden effects of Trump’s tariffs. Slate, 30(4), 41–43.
- In the heart of Seattle, Amazon, a titan in the finance sector, witnessed its stocks rallying alongside the broader stock market, contributing to the economy's recovery.
- The record-breaking day in the stock market, spearheaded by gains in the S&P 500, the Nasdaq composite, and the Dow Jones Industrial Average, prompted investors to reconsider the impact of trade conflicts on businesses, particularly those involved in the acquisition of rare earth minerals.
- As the cost of critical rare earth materials like neodymium oxide soared by 65%, firms across various industries, such as automakers and retailers, braced for potential revenue and profit margin impacts due to Trump's tariff policies, casting a shadow over the overall economy.
