From Panic to Peak: Markets Nearly Erase Trade War Losses
- VOO, QQQ are within striking distance of new all-time highs.
- It’s a stunning turnaround few would’ve predicted back in April.
Just two months ago, the stock market was reeling. The S&P 500 had plunged nearly 20% from its highs, rattled by an escalating global trade war. The Nasdaq-100 fared even worse, falling more than 22%. Bear-market talk was everywhere.
Today, investors are scanning the horizon—not for more pain, but for fresh all-time highs.
VOO, QQQ Back at Highs
The Vanguard S&P 500 ETF (VOO) is now less than 2% below its record high, while the Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100, is down just 1% from its peak.
It’s a stunning turnaround few would’ve predicted back in April, when markets hit their low point amid fears that President Donald Trump’s sweeping tariffs—slapped on trading partners including Canada, Mexico and, eventually, the rest of the world—would tip the U.S. economy into recession and stoke inflation.
On April 8, the S&P 500 briefly fell into bear market territory on an intraday basis, dropping 20% from its February highs before closing the day down 18.9%. The Nasdaq officially crossed into bear territory, falling more than 22% from its highs.
But the mood began to shift in May. President Trump announced a pause in the trade war, pulling back on the so-called "Liberation Day" tariffs and dialing down the severity of the duties. Markets responded immediately.
At the same time, incoming economic data calmed investor nerves. Growth remained resilient, and inflation—far from surging—continued to drift lower. That rare combination of solid growth and cooling prices was just the recipe markets needed to rally.
Revisiting the Bullish Case
VOO, QQQ and other broad index-tracking ETFs have been leading the charge higher ever since, helped along by tech sector strength, earnings optimism and relief that the worst-case trade war fears didn’t materialize.
The S&P 500 last hit an all-time high on February 19, buoyed by optimism over Trump’s deregulatory and pro-business agenda. While that optimism was quickly overshadowed by trade tensions, investors are now revisiting the bullish case.
Markets haven’t yet broken through to new highs, but they’re knocking on the door. And if the current momentum holds, it may not be long before the headlines shift from “trade war turmoil” to “bull market breakout.”
