U.S. Stocks Reach New Highs as Airlines Soar, Trade Tensions Persist

U.S. stocks climbed to new heights on Thursday, with the S&P 500 and Dow Jones Industrial Average both setting new records. The S&P 500 index rose by 0.27%, with nine out of eleven sectors posting gains. The energy and non-essential consumer goods sectors stood out, with over 350 constituent stocks closing in the green. The Dow Jones Industrial Average increased by 0.43%, nearing its historical high set in December of the previous year, while the Nasdaq-100 index dipped slightly by 0.16%.

The airline sector was a standout performer, with Delta Air Lines (DAL.US) shares surging by 11.99% and United Airlines Holdings (UAL.US) rising by 14.33%. This surge was driven by Delta Air Lines' announcement that it had restored its full-year profit forecast and reported an increase in passenger numbers, which also boosted related travel and car rental companies. In contrast, Conagra Brands (CAG.US), a major packaged food company, saw its shares fall by 4.37% due to disappointing fourth-quarter sales. MP Materials (MP.US), a rare earth materials supplier, experienced a historic single-day surge of 50.62% after announcing a multi-billion-dollar agreement with the U.S. Department of Defense to build a new magnet factory and expand rare earth production.

Trade policy uncertainties continued to simmer, with U.S. President Trump threatening to impose a 50% tariff on Brazil due to domestic political issues, marking the latest instance of using tariffs to achieve geopolitical goals. Additionally, Trump announced a 50% tariff on copper imports starting August 1 and unveiled a new round of tariff adjustments targeting multiple countries. While the market attempted to digest these policy signals, investors remained uncertain about the specifics of implementation.

Analysts warned that the fluctuating tariff policies could weigh on the stock market. Tom Essaye of The Sevens Report noted, "The likelihood of a clear tariff policy before August 1 is zero, which means a July rate cut is off the table and reduces the probability of a September rate cut." He further analyzed that policy delays would keep interest rates elevated for a longer period, increasing the risk of economic slowdown. Goldman Sachs strategists also advised caution, recommending that investors avoid one-sided allocations to either cyclical or defensive assets, as both directions carry risks.

Market rotation became more apparent, with sectors that underperformed in the first half of the year showing strong rebounds, while early-year leaders began to falter. This style shift reflects investors' efforts to balance policy uncertainties with economic prospects. The market currently holds both optimistic expectations for consumer recovery and concerns about escalating trade frictions.