Stocks roar ahead, brushing off recession warnings

Wall Street's best forecasters have been warning that tariffs could spark a recession. Goldman Sachs puts the chances at 45% in the next 12 months. Apollo Global Management's top economist recently pegged it at 90%.

- Jack Pitcher & Sam Goldfarb

Someone forgot to tell stock traders. The market is roaring ahead, despite those gloomy predictions, as investors put their faith in solid economic data including Friday's jobs report, and bank on a swift de-escalation of President Trump's global trade war.

The S&P 500 just wrapped up a nine-day streak of gains—its longest since 2004—rising around 10% to erase the sharp losses that followed the president's unveiling of the tariffs last month. It has now declined just 3.3% for the year. Bond yields and the dollar have stabilized, suggesting that investors aren't that worried about what comes next.

"There's zero chance of an economic slowdown priced in," said Bob Elliott, chief executive of Unlimited Funds, an asset manager.

Many still expect a slowdown, once broad tariffs work their way through the economy and assuming that sky-high levies on Chinese imports are reduced, but not eliminated. Trump has scaled back some tariffs. But even at lower levels, sustained levies could have cascading effects through the American economy, from consumer spending to business investment to employment, according to many economists.

"With the amount of uncertainty still out there, the equity market rallying back here feels like they're whistling past the graveyard," said Tom Porcelli, chief U.S. economist at PGIM Fixed Income.

Investors will get a fresh take on the economy's health in the week ahead from Federal Reserve Chair Jerome Powell, who is set to deliver remarks at the conclusion of the central bank's May meeting on Wednesday.