The S&P 500 is back near 6,000 despite tariffs and bond-market angst

The S&P 500 was on the verge of reclaiming its 6,000 foothold. Staying there could be harder.

The stock market has almost regained a foothold at the 6,000 level, recovering over a tumultuous eight weeks in which it fell almost 20% into a bear market.

Big round numbers don’t necessarily signal anything special for stocks, but they can serve as a psychological hurdle that, once overcome, could add to an existing rally — or serve as a gut check.

Investors and 401(k)s have recovered significant ground since President Donald Trump’s sweeping tariffs announced April 2 dealt a blow to the S&P 500 index and other major U.S. equity gauges.

Stocks have continued climbing even as U.S. courts have entered the mix, adding yet another potential wrinkle to the on-again-off-again tariff dynamic.

For the most part, however, tariff jitters were being offset by a view on Wall Street that the worst-case tariff scenario appears to be off the table. That’s been credited with helping the S&P 500 climb back to 5,970 as of Wednesday’s close, 19.8% above its April 8 low, according to Dow Jones Market Data.

Yet a firm grip on the 6,000 level could prove hard to achieve.

“The number itself doesn’t matter,” Donald Calcagni, chief investment officer at Mercer Advisors, said in a phone call Wednesday. What ultimately matters is corporate earnings, interest rates and valuations, he said.

In that regard, the S&P 500’s recent price-to-earnings estimate of around 21 suggests equity valuations look “pretty high,” Calcagni said, especially given all the uncertainty on the horizon.

Richard Steinberg, chief market strategist at Focus Partners Wealth, also sees potential stumbling blocks to holding on to the 6,000 milestone, especially with the Federal Reserve, big companies and investors stuck in wait-and-see mode on several fronts.

“I think it’s a tough road for the president,” Steinberg said, referring to the Republican tax and spending megabill awaiting action in the Senate, but we are in “a healthy part of the phase” in terms of pushback on the sweeping proposal.

It might end up being a case where, for Republicans, you “can’t always get what you want,” he said. “I think the markets are OK with that.”

Elon Musk, the chief executive of Tesla Inc. and until recently a top adviser to Trump, added to the uncertainty around the bill’s fate Tuesday,calling it an “abomination.”

Concerns about the economy also were in focus Wednesday after data suggested surprising weakness in private-sector jobs in May and signs of other potential cracks emerging in what’s known as the hard data.

Calcagni at Mercer said he sees the stock market as 10% to 15% overpriced at the moment and expects “the next shoe to drop” likely “on or around July 9.” That’s when a 90-day pause on some of Trump’s tariffs is due to expire.

Meanwhile, Wall Street equity strategists have been busy increasing their year-end targets for the stock market. Barclays bumped its S&P 500 target up slightly to 6,050 from 5,900, becoming the latest big bank to make upward adjustments. As of Wednesday, the S&P 500 was still 2.8% below its Feb. 19 record close.

Calcagni expects fallout over tariffs and the U.S. deficit to loom large over stocks in the weeks ahead, making it important for investors to diversify their holdings beyond U.S. stocks and bonds.

“It’s the bond market that’s going to finance all this debt,” he told MarketWatch, which gives it the “ultimate power.”

The Congressional Budget Office estimated on Wednesday that the Republican bill would add $2.4 trillion to the federal deficit. A review of CBO forecasts showed they have consistently underestimated actual U.S. deficits over the past 25 years.

“The No. 1 rule is this is not a hero’s market,” Calcagni said, adding that investors shouldn’t own just one stock or even one single asset class. And Rule No. 2? “Yesterday’s safe-haven assets will not be tomorrow’s safe-haven assets,” he said.