In the first half of 2025, the US stock market displayed dramatic swings, initially declining and then sharply rebounding to complete a 'Deep V' reversal. By the close on June 30, the S&P 500 Index had risen more than 28% from its intraday low on April 7, while the Nasdaq climbed over 37% from its low, both reaching record highs.
Looking back at this year's performance, the market rallied early on, fueled by the AI boom and optimistic economic expectations. However, the so-called 'DeepSeek shock' and the impact of Trump’s tariff policies triggered a sharp sell-off, with the S&P 500 nearly touching bear market territory in early April. Subsequently, a softening in Trump’s tariff stance helped the market stabilize and sparked a robust rebound.
Looking ahead, the US stock market still faces multiple challenges. Next week, the 90-day suspension period for Trump’s tariffs will expire, and the future direction of Federal Reserve monetary policy remains unclear, prompting investors to adopt a cautious outlook. According to the latest Gallup poll, nearly three-quarters of surveyed investors believe the US stock market will experience further turbulence in the remainder of 2025.
Trump’s Tariff Deadline Approaches, Negotiations at an Impasse
On April 2, Trump announced the introduction of so-called 'reciprocal tariffs,' which sent US financial markets tumbling. On April 9, he announced a 90-day suspension of high 'reciprocal tariffs' for some trade partners while maintaining a 10% 'base tariff,' and warned that US trade partners must conclude negotiations with the US by July 8.
With the 90-day suspension for the highest tariffs set to expire next week, markets are watching closely for a potential agreement between the US and its trading partners. If a deal is reached, concerns over trade friction may ease, supporting the stability and potential rise of US equities. Conversely, failure to reach an agreement could trigger significant market volatility.
Despite the looming deadline, negotiations remain fraught. As of now, the US has yet to reach trade agreements with major partners such as the EU, Canada, and Japan, and talks remain deadlocked.
Just days ago, Trump stated he had no intention of extending the 90-day tariff suspension for most countries and regions beyond July 9, and again threatened to end negotiations and impose tariffs on multiple countries.
Market analysts warn that as the deadline approaches, failure to reach a deal could shock the global trading system. However, some researchers remain optimistic about US equities, arguing that policy uncertainty will only cause short-term market swings.
Tariff Policy Hinders Rate Cuts; Future Cuts Depend on Data
The Trump administration’s trade policies are also affecting the Federal Reserve’s path toward rate cuts. On July 1, Fed Chair Jerome Powell stated that if not for Trump’s tariff policies, the Fed would likely have cut rates further this year. The tariffs have caused nearly all US inflation forecasts to rise sharply.
At its June policy meeting, the Fed kept the federal funds rate target range unchanged at 4.25% to 4.50% for the fourth consecutive time. The accompanying dot plot indicated two rate cuts are expected in 2025.
Currently, markets are closely monitoring several key data points to assess policy direction.
On Tuesday, the US Bureau of Labor Statistics released the Job Openings and Labor Turnover Survey (JOLTS), showing job openings in May rose to 7.77 million, above both the market expectation of 7.3 .This Thursday, the US will release the June nonfarm payrolls report.
Tech Giants Face Sell-Offs as Market Awaits Q3 Earnings
In the first half of the year, tech giants saw broad gains driven by AI investment, but many have recently experienced pullbacks. On the first trading day of July, Tesla closed down more than 5%, Netflix fell over 3%, and Nvidia dropped nearly 3%, as these giants came under selling pressure.
Ameriprise Chief Market Strategist Anthony Saglimbene commented, 'In the past two months, the market has been in a classic risk-on mode, favoring stocks with strong structural growth drivers like AI and technology.' However, he also noted that this type of trading has lost momentum.
Regarding Nvidia, CEO Jensen Huang has also been selling company shares. Media reports indicate that Nvidia insiders, including Huang, have sold over $1 billion in company stock over the past 12 months. Notably, around $500 million was sold in the past month alone as Nvidia’s share price hit new highs.
Additionally, the Q3 earnings season for US equities will kick off in mid-July, and the market is eagerly awaiting more operational data. Corporate earnings will be a key factor shaping the trajectory of US stocks in the second half of the year.
If most companies deliver earnings above expectations—especially demonstrating strength in cost control and resilient demand—market confidence could be bolstered. On the other hand, if the data reveal weak growth or profit pressures, combined with ongoing concerns over Trump’s tariff policies, the stock market could face further downside pressure."
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