The S&P 500 began the third quarter with cautious optimism, thanks to predicted tailwinds and a shift in global trade mood that boosted investor confidence. Historically, the period between July and September has been favorable for US stocks, particularly IT stocks, which tend to rise when people begin spending money on back-to-school things and become enthusiastic about the holidays.
This year, there may be a bigger reason for change. Talks between the United States and China about cutting semiconductor tariffs have resumed, boosting investor confidence. Nothing is finalized yet, but the potential of reduced trade tensions offers huge businesses like NVIDIA, AMD, and Intel hope, as their supply networks and income streams are inextricably linked to global flows. According to Reuters, negotiations are underway to reduce some of the tariffs imposed during the Trump administration. Traders promptly factored this into technology-heavy indices.
The Federal Reserve’s softer tone on inflation, combined with the possibility of a pause in rate hikes, has strengthened the positive case. Investors are increasingly confident that the central bank would prioritize economic stability over aggressive tightening, allowing tech stocks to breathe more freely.
Goldman Sachs’ top analysts, on the other hand, believe the IT industry is still too big for its own good in the third quarter due to robust profitability and increased demand for AI.
The S&P 500’s success may depend on whether these positive factors align as consumer data, earnings reports, and global trade news are released. If they do, Q3 may surprise even the most seasoned market analysts.
Also read: Tech Stocks Poised for a Q3 Rally as S&P 500 Hits New Highs
