Last week’s bullish sentiment ended on a high note. The S&P 500 (IVV) and Nasdaq (QQQ) both closed at record highs. Speculators bet on the U.S. making a trade deal with the U.S.
On Sunday, the European Commission President Ursula von der Leyen met with President Trump. Last week, the media reported that the EU prepared counter-tariffs. World markets might wait for courts to uphold the illegality of tariffs.
Tariffs on the steel, aluminum, and copper industries are distorting prices. In response to recovering metal prices, investors bid shares of Freeport-McMoRan (FCX) higher. Despite posting another quarterly loss, Cleveland-Cliffs (CLF gained 20.68% last week. Markets speculated that the worst is behind the iron ore producer.
New Highs Ahead
The chances of the tech-heavy Nasdaq and S&P 500 trading higher continue to increase. Alphabet (GOOG) committed $85 billion in capital spending for cloud and AI services. This will force Meta Platforms (META), Apple (AAPL), and Microsoft (MSFT) to sustain their AI-related spending.
Price-to-earnings multiples expanded on expectations that the AI boom will not end. Despite the flaws in AI, stock markets are pricing it as the solution for nearly all industries.
Markets will realize that AI primarily benefits from automating software coding. It might replace customer service to a limited degree. However, hallucinations might cause unexpected mistakes. That would increase litigation-related risks for companies.
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