The S&P 500 has made a remarkable recovery in April after a turbulent start to the year. The index rallied 5.3% this week, erasing its losses for the year. Just a few weeks ago, the S&P 500 was down about 15%.
Analysts warn that the tariff situation is not fully resolved and stocks could decline again. However, the rebound for U.S. stocks has been as dramatic and unexpected as the initial drop. President Trump announced steep tariffs on almost all U.S. trading partners on April 2, targeting China in particular with a 145% duty on imports.
China retaliated with 125% tariffs on U.S. goods, causing investors to flee stocks. On April 9, Trump announced a “90-day PAUSE” on most of the new tariffs, except those on China. This led to a significant market recovery.
Despite the stock market turmoil, economic data like employment numbers suggest the economy is still performing reasonably well. Recent reports show 177,000 jobs added in April and cooling inflation.
S&P 500 rebounds amid tariff pause
U.S. companies have continued to deliver better-than-expected profits amid the market volatility. Three out of four S&P 500 companies have beaten analysts’ expectations, including Microsoft and Meta Platforms. They are on track to deliver nearly 13.6% profit growth from a year ago.
Wall Street’s outlook has brightened this month as the U.S. signaled willingness to negotiate on trade. The administration struck a deal with the U.K. last week. The S&P 500 had its best day since the initial tariff pause.
However, many CEOs have warned of uncertainty ahead and are lowering or withdrawing their financial forecasts for the year. Market leaders like Apple and Alphabet are still down double-digits for 2025. The Nasdaq composite, with its many tech companies, remains down 0.5%.
Analysts caution that most tariffs have been paused rather than eliminated, and others remain in place. Trump kept a baseline 10% tariff on other countries, and U.S. tariffs on China are still at 30%. “I would advise investors to remain cautious in the near term and to be prepared for unexpected news from the trade front,” said Louis Wong, director for Phillip Securities Group in Hong Kong.
