Markets Rally Amid Optimism

The S&P 500 hit 6,000 recently, driven by hopes of a U.S.-China tariff truce and a strong jobs report. Investors cheered as Trump paused EU tariff hikes, boosting global stocks. However, some analysts warn of overconfidence, with risks like stagflation—slow growth with rising inflation—still looming.

Corporate Earnings Face Tariff Threat

Citigroup CEO Jane Fraser noted that tariffs’ impact on earnings may hit harder in the third quarter. Companies like Walmart face pressure to absorb tariff costs, as Trump urged them to “eat” the expenses. This could squeeze profits, especially for retail giants, and lead to higher consumer prices.

• Market highs: S&P 500 and Dow climb.
• Earnings risk: Tariffs may dent profits.
• Consumer impact: Prices could rise.

Labor Market Holds Strong

Despite tariff turbulence, the U.S. labor market remains resilient. Initial jobless claims rose to 247,000 for the week ending May 31, but continuing claims dipped slightly. Friday’s jobs report is expected to shed light on how trade policies are affecting hiring. A strong labor market supports consumer spending, a key economic driver.

Stay Cautious, Stay Invested

Financial advisors recommend a balanced approach: stay invested but diversify. Bonds are less appealing as Treasury yields climb, with the 30-year bond hitting 5.161%. Focusing on fundamentally strong stocks, like KB Financial, which rose 21.3% in four weeks, can offer stability. Keeping an eye on economic data is essential.