With nine straight sessions of gains, the S&P 500 has extended its longest winning streak since 2004, as it erased losses from early April’s tariff announcements. It lifts 15% off a year-to-date decline in mid-April. Positive employment data, easing trade tensions, and strong corporate earnings have been cited by analysts as the reason recovery has been positive.

Key-Takeaways:

• Strong data for jobs, easing on trade tensions and the upbeat earnings on the tech front boosted the index for nine straight days before surpassing April’s tariff news losses.
• Sentiment also rose from trade negotiations and Trump’s tariff pause, but there are concerns from Apple and Amazon. Trade developments and decisions from the Fed’s rate are key to the direction of the S&P 500.

S&P 500 Rebounds on Positive Signals in Economy

The S&P 500 rose 1.47% on Friday’s market session to close Friday’s session at 5,686. It is its ninth straight day of gains, a rare feat not achieved since November 2004.

In past years, there had been several seven and eight day winning streaks to the index. But for nearly a couple decades, the elusive nine day streak had still eluded him.

Friday’s rally was enough to allow the S&P 500 to recover from losses after President Trump on April 2 said he was taking reciprocal tariffs. Those losses have all been erased by the gains.

But April’s jobs report, which showed the economy adding 177,000 jobs, was supportive of the S&P 500’s upward momentum. With an expected around 135,000, that was a substantial increase compared to the number.

With its refusal to let down the labor markets, the unemployment rate stayed put at 4.2%, despite a still clouded economic outlook. This provided the S&P 500 some more fuel for its rally.

The jobs report was good news to investors who view the economy as still strong despite issues such as trade tensions. This gave the market advance a boost of confidence.

Trade Relations Driving the S&P 500 Performance

It has become more sensitive to U.S.-China trade news in the S&P 500. The index has been helped up by recent signs of possible negotiation.

“We are considering whether the US proposals are appropriate at the moment,” China’s Commerce Ministry said it is “currently evaluating” US proposals for trade talks. It has raised hope for true progress on this subtle change in tone.

This is seen as a good signal by investors. That is part of an expanding crowd of reasons to support the S&P 500’s rally.

Other bidders have seen their market share boosted by reports China is considering ways to address U.S. concerns over fentanyl. Such support to the S&P 500’s ongoing climb.

Tensions have also been eased by Trump′s softened rhetoric and a 90 day pause on most “reciprocal” tariffs — that is, which affect Americans and are depended on by China — excluding China. This helped create a more beneficial market environment.

The culmination of these developments has brought optimism back to the investor. Some of them have helped to bolster the rally on the S&P 500 and the major indices.

Market strategists believe the future course of the S&P 500 will mirror what happens with trade policy. Negotiations will be ongoing in order to influence the market.

Memory of demand imbalances dictates that the path of the labor market is also tied to trade policy, head of economics at Macquarie, David Doyle, observed. That is a key point that his remarks make, because these negotiations are so important in terms of preserving the momentum of the S&P 500.

Major tech firms have added to the S&P 500’s rally with strong earnings. Meta and Microsoft beat quarterly estimates and gave some breathing room to the tech industry, particularly for AI.

Microsoft jumped 2.3% on Friday after a 7.6% gain the previous day while Meta gained 4.3%. These gains erased the Nasdaq Composite’s losses since April 2.

Not every tech earnings helped S&P 500. On Friday, Apple said that Trump’s tariffs could cost the company around $900 million in Q2, forcing its shares to fall 3.74 percent.

Other top executives also warned that costs could go up further without changes to tariffs. To avoid such tariffs, Apple is set to transfer more of its production to India and Vietnam.

Second, market sentiment was dented by Amazon also issuing soft guidance for its second-quarter operating income. A key risk for the company was uncertainty from tariff policies or recession fears.

Andy Jassy, the CEO, said, it is not clear how or when the tariffs will be resolved. However, that also helped boost investor caution even as markets advanced.

S&P 500’s Path Forward

Even though the S&P 500 recovered well, it wasn’t enough to ward off economic concerns. It is the first time in years that the economy contracted last quarter, according to Commerce Department data.

This was further compounded by ADP’s report that there was a sharp slowdown in private sector hiring for April. But these signals have given cause for new worry that the economy’s foundation remains weak.

The S&P 500 will still be significantly influenced by the Federal Reserve’s policy decisions. Traders knocked the odds for a June rate cut to 36.6%, after Friday’s strong jobs report last week, from 55% the day before.

Both Barclays and Goldman Sachs also changed their predictions, predicting the first rate cut will begin in July rather than in June. It’s a manifestation of a shift in expectations about what the Fed does when it hears different economic data.

Conclusion

Rebounding strongly from the S&P 500 is at a key point but still vulnerable to policy uncertainty. In regard to the progress in tariff talks, Nationwide’s Mark Hackett warned investors of still high volatility despite it because of ‘elevated investor emotions.’ Monday will be the first 10-day winning streak for the index since the 1990s.