S&P 500 Hits New Highs as Corporate Profits Defy Tariff Fears

As of August 16, 2025, the S&P 500 index has continued to reach new record highs, defying earlier concerns over the impact of tariffs. The index has now recovered all the ground it lost during the global market sell-off in April, after the Trump administration announced sweeping tariffs. In fact, the S&P 500 is currently more than 5% above its last peak in February and almost 10% higher for the year.

While the effective tariff rate on U.S. imports is the highest it has been since the 1930s, disrupting supply chains and stoking inflation concerns, the economic reality of tariffs has yet to catch up with the market's earlier worries. Corporate profits remain strong, and the overall economy, despite some pockets of weakness, is still solid. The biggest companies that drive the S&P 500's performance have been largely insulated against the further impact of tariffs, propelled instead by the growth of artificial intelligence and other emerging technologies.

More than 40% of companies in the S&P 500 have raised their earnings estimates this quarter, anticipating a more favorable environment than previously expected. As one equity strategist at Citigroup noted, "Companies are telling you they have more clarity, because otherwise they wouldn't provide that guidance." This has helped allay many of the fears that had previously weighed on the market.