President Donald Trump is taking recent stock-market highs as a sign investors approve of his threats to slap tariffs on trading partners—and so far, the markets are proving him right.
“If ‘tariff’ isn’t the word of the year for stock investors so far, then perhaps it’s ‘uncertainty,’” LPL Financial wrote in a research note Monday. “Tariffs influence the key drivers of stock market performance: economic and corporate profit growth, inflation, and interest rates. If stocks continue to move higher in the second half of the year, trade policy will need to cooperate.”
While markets so far have been sanguine, data releases this week could upend that. On Tuesday and Thursday, the Labor Department is set to release inflation data for June. Analysts expect it to show consumer inflation accelerated last month from 2.4% to 2.6%.
“Tariffs are not magically disappearing if they don’t show up in consumer prices but somewhere along the supply chain someone is getting clipped,” Peter Boockvar, chief investment officer at Bleakley Financial Group, said in a note.
