All-time highs for the S&P 500 are likely absent major trade shocks, Wharton and WisdomTree economist Jeremy Siegel said Monday, noting resilience in the U.S. economy.
While risks remain, the equity market is focused again on forward earnings, driven by artificial intelligence, now that aggressive tariff measures are off the table for the moment, Siegel wrote in his weekly commentary, noting strong AI spending and ongoing demand.
Investor sentiment last week benefited from signals of progress, or a pause, in U.S.-China trade tensions, he said, taking the absence of acrimony as a positive sign. "I continue to believe the market can digest tariffs of 10% across the board and 30% for China with limited sector-specific increases like aluminum at 50%."
Last week's employment report helped stabilize markets and calmed worry about potential labor deterioration, he wrote.
Unemployment data, meanwhile, provided further evidence that the job market is "cooling gradually, not collapsing," Siegel wrote. "In short, the economy is decelerating, but in a controlled manner."
More inflation data is coming this week, he noted, "though I expect much of the pricing pressure from recent tariff activity won’t appear until later this summer due to lagging inventory effects."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.