📈 S&P 500 and Nasdaq at highest level: Why is the market rising despite government policies?

Publish Date: July 8, 2025

When someone says that the stock market is at its highest level, it is usually a sign of economic strength. But when this boom continues amid the uncertainty of tax and trade policies, it raises an important question—are investors ignoring government intervention?

In the second quarter of 2025, the S&P 500 and Nasdaq Composite hit historic levels, while the government was making changes to the tax policy and trade agreement. Let us understand in this article what the reasons are behind this and how it can affect your investment portfolio.

🧭 Current Market Situation: Why are the S&P 500 and Nasdaq making records?

• S&P 500: 5,460.30 (Record high on 5 July 2025)
• Nasdaq Composite: 18,340.45 (same day)

This surge is mainly due to heavy investments in technology and AI-based companies.

🔹 Why is investor confidence intact?

• Investment in AI and Tech: Shares of companies like OpenAI, Nvidia, Microsoft, and Tesla at record levels.
• Q2 Corporate Results: Apple, Amazon, and Alphabet reported better-than-expected results.
• Expectations of a possible interest rate cut by the Federal Reserve further strengthened the rally.

🧾 Policy Crisis: Unsettled Tax and Trade Policy

🔹 Changes in Tax Policy

• The Biden administration is planning to raise corporate tax from 21% to 28%.
• This may affect the profits of large companies, but the market has not yet taken it negatively.

🔹 Impact of Trade Policies

• A new technology export policy is under discussion between the US and China.
• New export taxes proposed on electric vehicles and the chip industry.
• Reuters Report – Trade Policy Update

💼 Investor outlook: Risk or opportunity?

🔹 High Risk, High Reward

• Investors are still preferring growth stocks.
• Momentum investing is becoming more popular than value investing.

🔹 Hedging strategies are being adopted.

• Inflows continue in ETFs and index funds.
• Interest in treasury bonds, REITs, and gold ETFs has also increased.

📊 Example: Nvidia and Microsoft case study

🔹 Nvidia (NVDA)

• 110% return in the first half of 2025.
• Boom in demand for AI and GPUs.

🔹 Microsoft (MSFT)

• Stock rose 30% due to innovation in cloud and AI.

SIP Calculator: Know how much return can be obtained in the long term.

🔍 What should investors do?

🔹 Do risk analysis

• Don't invest just by seeing the boom.
• Understand the impact of policy changes.

🔹 Diversify

• Don't depend only on the tech sector.
• Maintain a balance between FDs, mutual funds, and index funds.

💰 Use FD Calculator to assess your fixed return potential.

❓ Frequently Asked Questions (FAQ)

Q1. What is the biggest reason for the rise of the S&P 500 and Nasdaq?

Investments in AI and tech companies, strong corporate earnings, and possible interest rate cuts.

Q2. Are changes in tax and trade policy a risk for investors?

Yes, but at the moment the market has not taken these changes negatively.

Q3. Is it still safe to invest?

If you diversify and manage risk, then yes.

Q4. Which sectors should one invest in?

One should focus on AI, tech, gold ETFs, REITs, and index funds.

Q5. Should investors prefer options like SIP and FD?

Yes, it is important for stability and risk management.

🔚 Conclusion: Is the market really ignoring policy instability?

The recent rally shows that investors are no longer dependent only on government policies. The long-term growth of technology and AI has given them confidence. But risks still remain—especially when changes in tax and trade policies come into effect. So it's time to make smart, data-driven decisions.