The S&P 500 is cruising upward—but behind the scenes, savvy analysts are tracking a ticking clock. July 9 marks the expiry of a temporary tariff pause, and Washington negotiators are racing to lock in deals with more than a dozen trading partners. A hiccup here could send markets wobbling yet again.
Why Negotiations Feel Fraught
Take the recent deal with Vietnam: the tariff reset to 20% is a welcome nod to diplomacy. But slippage with Japan and a still-unsettled agreement with India mean tension lines are still drawn. The uneven pace reflects that this isn’t a parade—it's high-stakes diplomacy in motion.
Retail Momentum
Since the April 8 trough—right after Trump’s tariff shake-up—the S&P has rallied roughly 26%. That rebound is less turf for big institutions and more a playfield for retail investors buoyed by bargain prices and resilient earnings. Add corporate buybacks to the mix, and the market’s pump feels resoundingly jacked by Main Street and company treasurers, not Wall Street giants.
Instagram | @therealmentallab | Donald Trump’s deal with Vietnam helps lift market mood as tariff deadline gets closer.
Lisa Shalett of Morgan Stanley soberly describes the scene: “This feels speculative.” And she’s right. Institutions are mostly parked, watching this party from the sidelines.
What’s Deterring the Big Players?
Institutional investors cite three persistent red flags:
Trade policy remains a rickety table—one missed deadline could topple it.
Valuations feel stretched if you blink at those round numbers.
U.S. growth forecasts are starting to decelerate.
If the July deadline passes without headlines—and that temporary tariff lift just rolls over—one layer of worry melts away. Irene Tunkel at BCA Research says we might see some saber-rattling, but don't expect fireworks. Janus Henderson’s Julian McManus calls the pause “a breathing space,” not a cliff.
When Institutions Step In, Markets Often Soar
Deutsche Bank’s Parag Thatte references post-2020 behavior: Institutions tiptoe in much later than retail. But once they do, stocks shoot higher. He points out that the current absence of institutional firepower leaves plenty of room for upside if sentiment shifts.
Combine that with July’s reputation as the S&P’s strongest month (2.5% average return, according to LSEG), and you’ve got a recipe for fresh gains, especially if retail enthusiasm and buybacks hold up.
Freepik | soul_studio | Cautious investors may fuel more growth if sentiment improves and July trends hold strong.
Now, attention turns to:
Inflation reports
Q2 earnings deliveries
Fed communications
If inflation cools while earnings stay steady, institutions might start warming up to equity risk. Shalett frames it bluntly: “Institutions are at a crossroads—lean in, or step aside.”
Recently, solid retail sales and upbeat earnings have already nudged the S&P and Nasdaq to fresh highs—proof that moderation in price tags isn’t denting momentum.
The Next Few Weeks Matter
With trade negotiations, mid-year earnings, and inflation data converging, July could anchor the direction for the rest of the year. The market’s mood looks more hopeful, but institutions remain key. Their re-entry, after weathering the tariff storm and digesting data, could spark the next leg up—or reveal the rally’s ceiling.
Here’s the deal: Retail traders and corporate buybacks have driven this rally so far. Now the ball’s in the institutional court. Will they join the game—or stay seated? The outcome will shape markets in the coming months—and perhaps define this cycle.