Market: why Wall Street broke records again and why it may not last

(BFM Stock Exchange) – The S&P 500 closed to a new history higher on Friday. Therefore, But some signals show that investors have not fully found confidence in American actions.

“Wall Street is back”. Furthermore, After having suffered in the spring of the uncertainty caused by Donald Trump’s procrastination on customs duties. Therefore, the American clues regain.

Let us recall that customs surcharge. Meanwhile, but also the uncertainties around the American finance bill (the famous “Big, Beautiful, Bill”) and the threats of Donald Trump vis-à-vis the independence of the American Federal Reserve (Fed), caused a disenchantment of investors. Therefore, The latter modified the allocation of their portfolios by strongly reducing their exposure to American assets. Consequently, such as actions, to the benefits of other geographic areas, in particular Europe. In addition,

This largely explains the outperformance of European markets, the market: why wall street broke Stoxx Europe 600 taking 9.1% since the start of the year against 5% for the S&P 500.

However, the American clues have reduced the gap in recent weeks. Meanwhile, The S&P 500 returned to 4% over the last month while the Stoxx Europe 600 abandoned 0.9%. Meanwhile, Over three months, the American index resumed 10% against an increase of 1.8% for the Stoxx Europe 600.

Friday, the S&P 500 and the Nasdaq Composite exceeded their historic records. Similarly, The S&P 500 had not broken record since February. Moreover, This Monday, the S&P 500 still increased by 0.2% at the start of the session. Therefore,

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Many reasons

In the second quarter, “American actions recorded good performances, especially in June, after being lagging behind in the first quarter,” notes Barclays. Consequently, The return market: why wall street broke to a better form of the American indices is explained by a conjunction of factors. Similarly,

The “seven magnificent” of Wall Street (Alphabet. Consequently, Tesla, Amazon, Nvidia, Microsoft, Apple, Meta) returned to the hair of the beast after suffering at the start of the year, penalized by the Deepseek storm, then by uncertainty on customs duties, a hazard likely to upset their supply chains. However,

Nvidia notably signed a higher historical last week after its founder. Consequently, Jensen Huang, once again declared that the demand for his products was robust, during the general assembly of the company. Therefore, The graphic processor specialist (GPU) had previously delivered reassuring results in May. Consequently, which also reassured investors on the prospects of artificial intelligence. Furthermore,

More broadly. “the demand of investors for the actions of Big Tech has improved due to the resilience of their financial results”, notes Barclays.

Other market: why wall street broke elements have played. The US administration has, of course, has shown inconsistency on the subject of customs duties. But it appears globally that the executive of Donald Trump is trying to reach agreements.

At the end of last week. Scott Bessent, the secretary of the Treasury, estimated that the trade agreements could be established in September implicitly suggesting that the deadline of July 9, to which the heavy US customs surchargees are supposed to come into force, could be postponed. Donald Trump then mentioned a potential postponement of this date.

In addition, tensions in the Middle East, sources of volatility for the market, especially on oil, have been peaceful. And several members of the Fed (but not its president Jerome Powell) pleaded for a drop in guiding rates. at the end of July. In essence. a drop in rates makes credit less expensive, which stimulates household consumption and market: why wall street broke business investment, carrying growth and the equity markets.

Last point: the American finance bill. another factor of uncertainties, is supposed to be approved by the American Congress this week.

Market: why wall street broke

“Section 899”

“The market ends the first half with great optimism with actions to new historic highs”. observes Xavier Chapard of LBPAM strategist.

“This reflects the idea that despite all the shocks of the first semester. everything always ends well: the trade war has designed, long rates (American, editor’s note) relaxed after budget fears, war in the Middle East lasted only 12 days, the United States withdrew the tax on foreign investments (section 899) …”, he says.

This “section 899” would have resulted in surcharging the foreign companies with a maximum of 20% that have important activities. subsidiaries in the United States. But the Trump administration has chosen to withdraw this measure in exchange for market: why wall street broke an agreement at the G7 level. which provides for an exemption from the subjugation of American companies to certain surcharge.

Did the return of American actions left to last? Several signs encourage caution. First of all, Bloomberg notes, in an editorial that record reached by the S&P 500 must be put into perspective.

The courses of companies making up the American index are expressed in dollars. while the greenback has plunged since the start of the year (-11.6% against the euro). If these courses were expressed in yen. euro (or worse in golden ounce), the S&P 500 would evolve between 5% and 10% under its levels reached on February 19, the date of its previous dollar record.

Then, the agency notes a set of hopes in the market which seem very fragile. In particular the fact that the margins of American companies would resist the impacts of customs market: why wall street broke duties.

Some indicators are, moreover, rather disturbing. Bloomberg notes that the real estate market is starting to show fairly serious stress signals. notably with stocks of unsold menu.

Disturbing signals

“The bad news in terms of macro (economics) is that the American consumer has been stopped since the beginning of the year. even before the impact of customs duties on the purchasing power of households has started,” notes Xavier Chapard.

“Consumption decreases by 0.3% in May after stagnating in April and was reviewed only 0.5% for the first half. And household confidence remains low in late June according to the final survey of the University of Michigan. even if it has been slightly rebounded since April thanks to the reflux of fears inflationist. The net slowdown in the first American growth engine pleads for a strong decline this year. even if a recession should be Avoid, “he develops.

Stephen market: why wall street broke Innes of Spi Amé evokes him “animal spirits” which carry Wall Street while on the side of the. data “Nothing sticks”. “The indicators are missing expectations. public finances are mistreated, policies are blocked” but “the markets sweep that with a backhand and go up,” he notes.

Deutsche Bank for its part fears that with Wall Street to the highest. yields of the treasury bills which retreat, “it is possible that the American administration feels embraced and again adopts an aggressive attitude” in the commercial negotiations. This would probably create new turmoil on the markets.

“On Friday. the United States announced that it was ending trade negotiations with Canada in retaliation for its taxes on digital services and that new customs duties would be applied during the week,” said the German bank. Even if Canada then decided to abandon this tax to relaunch discussions. the bank believes that it is market: why wall street broke “a recall bit for the whole world”.

In addition, weak signals are not in good shape. Bank of America. in his latest survey carried out with fund managers, notes that the difference between managers who overlooked the actions of the euro zone in their portfolios and those who under-ponde amounts to approximately +35%. It is the “best” figure, in front of all the major geographic areas. For the United States. the figure is nearly -40%, that is to say that managers have the vast majority of a negative view of the actions of the country of Uncle Sam.

In addition. the American bank pointed out in June that the S&P 500 remained in expensive in terms of valuation, regardless of the thermometer used. Bank of America then used no less than 20 valuation indicators.

In a note published in mid-June, Oddo BHF listed no less than six reasons to remain market: why wall street broke cautious about American actions. Among these reasons. the broker noted “that with a course ratio/profits at 22 by horizon twelve months, the valuation of American actions Rest (Ait) stretched”.

“Bond yields could start upwards due to the weight of the American debt deemed increasingly worrying,” added Oddo BHF. “Despite the good (economic) (‘soft data’) indicators (‘Soft Data’). the gap with official data (‘Hard Data’) remains significant, and the slowdown in future activity could coincide with a rise in inflation figures in the United States from July,” continued the design office.

Oddo BHF also judged that the consensus (the average forecast of analysts) on the growth of the profits of S&P 500 companies (10% in 2025. 14% in 2026) “appeared (Ait) optimistic”. In addition. “the status of refuge value ‘of American assets is beginning to be questioned, and the United States rotation movement to Europe and the emerging markets market: why wall street broke could accelerate,” noted Oddo BHF.

Julien Marion – © 2025 BFM Bourse