From early April, the S&P 500 index rose 10% from a low of around 2581 to 2,846 on July 25th. That was within 26 points—less than 1%–of its late January all-time high of 2,872.87.
Since then, it slipped a bit to just above 2800, but then retraced its steps to close at 2827 Thursday.
The Dow Jones Industrial Average followed a similar trajectory, while the Nasdaq Composite and small-cap Russell 2000 indexes, which had healthy rallies of 22.6% and 14.3%, respectively, from their February lows, made new all-time highs in July. They, too, have slid in the weeks since and are beginning to inch up again.
The escalating trade war between the U.S. and China—and it’s no longer a question of “whether” we’re in a trade war; it’s how serious it’s going to be—has had an impact, particularly on the Dow, which includes giant exporters like Boeing and Caterpillar.
But 30% of the S&P 500’s revenues comes from overseas, and the big tech companies on the Nasdaq have huge international sales, too. Even the mostly domestic Russell, lately a haven for trade war-wary investors, would be hurt by the higher inflation punitive tariffs would unleash.
The big question now is, can the market get to new highs, and why does that matter?