Key Points:
- U.S. stocks, including the S&P 500, reached record highs on June 27, 2025. There was an 18% drop earlier in April.
- Atlanta Fed President Raphael Bostic cites economic uncertainty arising from shifting trade policies and the impacts of tariffs.
- The impact of Trump’s “big, beautiful bill” on inflation and growth is unclear.
On June 27, 2025, the S&P 500 closed at an all-time high of 613.43, rebounding from an 18% year-to-date drop in April. While rising, Atlanta Fed President Raphael Bostic said that economic modeling is “complicated” due to constant changes, such as Canada’s reversal on its digital services tax. This is happening partly due to a U.S.-China trade framework that reduces restrictions on rare earths and technology. It masks uncertainty over tariffs, inflation, and interest rates.
Trump’s Bill and Inflation Challenges
President Trump’s “big, beautiful bill” changed the market. Both consumers and companies anticipate price increases. However, it remains unclear when this will occur, and tariffs could extend into 2026.
Elon Musk condemns the measure for taxing renewable energy, therefore increasing economic instability.
Fed Chair Jerome Powell emphasized the need to maintain steady monetary policy until the effects of tariffs are fully understood. Still, markets see a 50% chance of three-quarter-point rate cuts by year-end, targeting a 3.25% to 3.5% Fed Funds rate.
Trade Deals and Global Tensions
A U.S.-China trade agreement, effective June 30, 2025, which reduces tariffs on British cars and aerospace parts, has boosted market sentiment. However, broader trade talks with Canada, the EU, Taiwan, Japan, and India remain unresolved, with Canada’s talks faltering.
Bob Parker of the International Capital Markets Association warned that markets are “naive” about trade complexities, predicting negotiations could extend into 2026.
Trump’s criticism of Powell and hints at naming a successor have raised concerns about a “shadow Fed,” potentially increasing market volatility, according to Gilles Moëc of AXA Investment Managers as of June 30, 2025. The Fed’s “dot plot” reflects the diverse outlooks of officials, underscoring the uncertainty that exists.
While the S&P 500’s climb to 618.17 on July 2, 2025, per the finance card above, signals confidence, Moëc warned that foreign investors may shy away from U.S. assets if Fed leadership changes disrupt policy.