Boomerang
If Wall Street is worried about tariffs snapping back to Liberation Day levels, it’s hiding it well. Stocks that tumbled earlier this year have come roaring back to record highs.
Treasury Secretary Scott Bessent issued the warning last week: ‘President Trump’s going to be sending letters to some of our trading partners saying that if you don’t move things along, then on August 1, you will boomerang back to your April 2 tariff level.’
That came with fresh threats of a 10% tariff hike on BRIC nations’ imports and a 50% tariff on copper. Traders panicked enough to send COMEX copper to a record US$5.60. But elsewhere, markets barely blinked.
In fact, Wall Street is becoming familiar with another kind of boomerang effect – rebounding to pre-tariff levels and beyond. The Nasdaq and S&P 500 both hit records last week as AI giant Nvidia ($NVDA) became the first company to cross US$4t in market cap. Meta ($META) and Microsoft ($MSFT) are riding a similar wave.
Meta dipped after 16 consecutive days in the green earlier this year – at the time a Nasdaq 100 record – in the aftershock of Liberation Day tariffs. But it’s since rallied to a record high, fuelled by excitement over its new AI superintelligence group. Its previous surge came shortly after laying off 5% of staff – a move investors seem to favour.
Microsoft also announced job cuts as it pours billions into its AI buildout. The result: $MSFT rallied to a record high last week. Oppenheimer’s Brian Schwartz kept the momentum up with an ‘outperform’ rating and a US$600 price target.
The rally isn’t just tech-based. Rockwell Automation ($ROK), a firm that supplies robotics and sensors to help U.S. factories compete globally, is up 57% from April lows. Steel giant Nucor ($NUE) has gained 37% over the same period. And packaging firms Amcor ($AMCR) and Ball Corp ($BALL) have benefited from a more localised U.S. supply chain.
‘It is wild to think that valuations are above where we started the year considering all the uncertainties with tariffs…the market’s been extremely desensitised to all of this back and forth, and I think for good reason,’ said Horizon Investment’s head of research Mike Dickson.
The message from investors is clear: the only thing returning faster than tariffs is risk appetite. Some might call it counterintuitive, but then again, so is a returning piece of carved wood that defies gravity.
This is not financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
