Following a series of tariff announcements by President Trump, referred to as "Liberation Day," the stock market has witnessed a significant rebound from its spring lows. Industry experts suggest that this could mark the beginning of a relatively tranquil summer session. According to Solidarity Capital CEO Jeff McClean, while volatility will persist, the extreme fluctuations experienced earlier may have subsided. This sentiment is echoed by Will McGough of Prime Capital Financial, who advises investors to take a break and enjoy the summer due to the lack of substantial catalysts likely to influence markets significantly in the near term.
In recent weeks, the S&P 500 has surged approximately 20% since reaching its April low, driven primarily by sectors such as Communication Services, Consumer Discretionary, and Technology. McClean anticipates that with fewer investors focusing on daily news triggers related to tariffs, summer volatility might be more subdued. Despite ongoing political noise, long-term Treasury yields have remained within a predictable range, further supporting the notion of a quiet market season ahead.
Nevertheless, several events loom on the horizon that could potentially disrupt this calm. These include the Federal Reserve's Jackson Hole symposium in August, a critical tariff deadline in early July, upcoming Fed meetings impacting rate-cut expectations, and progress concerning legislative initiatives in the Senate. However, traditional market drivers like earnings reports, economic data, and monetary policy seem overshadowed by political developments, particularly trade policies emanating from Washington.
Sam Stovall of CFRA Research highlights historical trends indicating that June tends to be a period of mild volatility for stocks. He characterizes the current correction as largely influenced by presidential trade decisions. Meanwhile, Andrew Slimmon of Morgan Stanley remains optimistic about the second quarter, predicting a possible return to all-time highs based on robust earnings forecasts and a stable economy. Yet, he warns that after a substantial rally and reduced volatility, markets might become more susceptible to adverse surprises.
As the market environment continues to evolve, shaped significantly by political dynamics, investors are encouraged to remain vigilant. While a peaceful summer session appears plausible, unexpected events could still prompt renewed volatility, underscoring the importance of strategic planning and risk management in these uncertain times.