By Krystal Hur

A historic and tumultuous quarter is wrapping up with U.S. stocks at records and many investors betting the ride isn't over yet.

The April swoon that carried the S&P 500 to the brink of a bear market has been erased and then some. The broad index has now added more than 8% since President Trump announced sweeping tariffs that sparked havoc in markets.

Now, investors have more reasons to feel upbeat. Both the S&P 500 and Nasdaq Composite Index hit fresh all-time highs on Friday. Robust corporate earnings and solid economic data suggest that the growth remains resilient. Inflation is trending near the Federal Reserve's 2% target. Banks that slashed their year-end targets for the S&P 500, such as JPMorgan Chase and Goldman Sachs, are raising them again.

"Markets can take some comfort in that we've, in a sense, weathered some of the storm," said Yung-Yu Ma, chief investment strategist at PNC Asset Management. "The worst is probably behind us."

That optimism has fueled fresh gains for some recent stalwarts. The AI trade has rebounded from a rocky start to the year, when the emergence of Chinese upstart DeepSeek's artificial-intelligence model erased billions of dollars of value from Nvidia and other tech giants.

Nvidia shares have climbed 17%, Meta Platforms has gained 25% and Microsoft has added 18%. Shares of data-analytics firm Palantir Technologies and chip maker Broadcom, are up 73% and 16%, respectively.

The price of bitcoin has climbed back above $100,000, with Trump reaffirming his promise to make the U.S. the "crypto capital of the planet" and Congress seeking to advance legislation that could integrate crypto into the mainstream financial system. Coinbase led the recovery from the April lows, rising around 130%.

At the same time, some warn that it is just a matter of time before tariffs hurt economic growth, rekindle inflation and weigh on corporate earnings. Trump on Friday announced he was halting trade talks with Canada over what he said were egregious tariffs on dairy products and a digital-services tax on American tech companies.

Such worries have the Fed pausing its interest-rate reductions, while concerns about Trump's tax bill and the massive U.S. deficit have driven the dollar down 8.1%.

The yield on the benchmark 10-year Treasury note was at 4.283% on Friday, below where it ended last year at 4.577%, according to Tradeweb.

"The U.S. has remained strong -- that doesn't mean that the second half of the year will be easy," said Saira Malik, chief investment officer at Nuveen. "Whether the impact of tariffs shows up in inflation data, we've not seen that yet. I think we will see it in the next two to three months."

Investors' worries have also manifested in a dizzying rally in haven assets including gold and silver futures, which are both up 25% this year.

Shares of economically resilient companies such as utilities -- which investors often buy when they are nervous about growth -- have also outpaced the benchmark index's 5% gain. Meanwhile, stocks that tend to rise when the economy is booming, like the consumer-discretionary sector and small-caps, are lagging behind.

"That's just not traditional bull-market leadership," said David Lundgren, chief market strategist and portfolio manager at Little Harbor Advisors. "This is not the time to pile into equities, because you're kind of in a very broken, fragile, frayed environment."

Adding to investors' concerns, some of the "Magnificent Seven" tech heavyweights that have powered market gains in recent years have lost their luster. Shares of Tesla have tumbled about 20% this year, dragged down by weak sales in China and consumer backlash to Elon Musk's role, and later, fallout, with the Trump administration. Shares of Apple and Alphabet have declined about 20% and 5.7%, respectively, with investors worrying the companies have fallen behind in the AI race.

Analysts polled by FactSet expect companies in the S&P 500 to report earnings growth of 9.4% this year, below the 14.3% they expected in January.

Still, analysts project earnings will rise 13.7% next year. Many remain hopeful the economy can dodge the worst of the trade fight and that negotiations will produce deals mitigating the fallout.

And despite stocks looking pricey -- the S&P 500 was recently trading at 22 times its expected earnings over the next 12 months, above its 10-year average of 18.7 times -- many think indexes can still rise from here.

"That will temper the returns, but we do think that stocks can grind higher," said Tim Thomas, chief investment officer at wealth-management firm Badgley Phelps. "We feel pretty good about the market overall."

Write to Krystal Hur at krystal.hur@wsj.com

(END) Dow Jones Newswires

June 30, 2025 05:30 ET (09:30 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.