Despite the looming risks of tariffs and weak consumer spending, the S&P 500 recently reached a record high. Analysts note that consumer spending is significantly slowing, contributed to by tariff impacts, with predictions for Q3 further decrease. Many investors believe that either tariff deadline extensions or Federal Reserve interest cuts could mitigate these concerns, providing support for stock prices. Observers remark on a surprising calm in markets, as fears seem to lessen even amidst prevailing economic uncertainty.
The effect of those tariffs is already starting a drag on the economy... spending likely rose at an annualized pace of only about 1½% in the first half this year, well below last year's 3% average.
Many investors seem to be expecting that, in the event of bad news, either Trump will come to their rescue by extending the tariff deadline or that the U.S. Federal Reserve will lower interest rates later in the year.
As we step into the second half of the year, a strange calm has settled in... despite all the noise, equities have remained resilient.
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