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A LOOMING US deadline for more severe global tariffs is among a barrage of upcoming events threatening to disrupt an increasingly calm US stock market that has set a string of all-time highs.
President Donald Trump has extended a deadline to Friday for when higher levies will take effect on an array of trading partners unless deals are struck. That could boost market volatility heading into next Friday.
Much more is on the calendar that could move markets. Investors will watch the Federal Reserve’s monetary policy meeting, the monthly US employment report and earnings reports from megacap companies Apple, Microsoft and Amazon.
“There is going to be a lot to digest for markets into next week,” said Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments.
The benchmark S&P 500 kept tallying new all-time highs during the week. Equities have recovered from a plunge after Trump’s April 2 “Liberation Day” tariff announcement set off fears of a recession that have since ebbed.
The S&P 500 has surged 28 per cent since its low for the year a week later, while the tech-heavy Nasdaq Composite has jumped 38pc in that time.
Market volatility measures have eased considerably. The Cboe Volatility Index spiked to 60 in April, but has been below its long-term median of 17.6 for most of July and on Wednesday posted its lowest close in five months.
However, pockets of volatility have emerged in the past week. Eye-popping gains in highly shorted stocks such as Kohl’s and Opendoor Technologies heralded the possible return of a ‘meme stock’ craze that could signal some over-exuberance in risk appetite, at least among retail investors.
Meanwhile, the record-setting rally has lifted valuations to historically expensive levels. The S&P 500 was trading at 22.6 times earnings estimates, well above its long-term average P/E ratio of 15.8, according to LSEG Datastream, which could make the market vulnerable to disappointments in the coming week.
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