S&P 500 hits all-time high as tariff fears fade and consumer sentiment climbs
Jun 27, 2025
Key Points
- The S&P 500 hit an all-time high as a 90-day tariff pause triggered its best day since 2008, a 9.5% surge driven by fading trade war fears and a fragile Middle East ceasefire.
- Nvidia's odds of becoming the largest company by market cap surged to 97% currently, with prediction markets giving it a 46% shot at holding the top spot by year-end versus Microsoft's 34%.
- Consumer sentiment climbs as inflation expectations drop to 5% from 6.6% in May, while companies prepared for worst-case tariff scenarios now sit flush with resources for a milder outcome.
Summary
The S&P 500 hit a new all-time high as tariff fears receded and consumer sentiment rebounded. Nvidia's odds of becoming the largest company by market cap jumped from 10% on June 24th to 97% currently, with a $3.87 trillion market capitalization. Prediction markets give Nvidia a 46% chance of holding the top spot by year-end, ahead of Microsoft at 34% and Apple at 15%.
Three forces converged to drive the rally. A fragile ceasefire between Israel and Iran sent oil prices lower and reduced fears of prolonged Middle East conflict. Simultaneous trade negotiations with China, Canada, and the European Union signaled progress on tariffs. Trump announced a 90-day pause on many of his planned tariffs after initially launching what proved to be a manufactured crisis. That pause triggered the S&P 500's best day since the 2008 financial crisis, a 9.5% surge.
The tariff reprieve shifted corporate sentiment. Companies that prepared for worst-case scenarios of 90% tariffs have reallocated resources and are now better equipped to handle a 10% baseline if it holds. Evidence of economic damage from tariffs remains sparse. The country's largest corporations reported strong profit growth last quarter.
Consumer sentiment is climbing. The University of Michigan's sentiment index hit 60.7 in June, up from May, though it remains 18% below December 2024 levels. Consumers now expect inflation to rise 5% in the year ahead, down from 6.6% in May. The S&P 500 is up 5% year to date despite maximum intraday volatility.