#MarketRebound THE GAINS OF THE STOCK MARKET COULD SLOW DOWN AFTER THE STRONG REBOUND FROM THE FALL OF THE TARIFFS.

NEW YORK, May 16 (Reuters) - The market's momentum following the trade truce between the United States and China has brought stocks back near historic highs, but caution about the economic consequences of the remaining tariffs and the higher valuations of stocks could slow gains in the short term.

The S&P 500 (.SPX) has surged 18% since it hit its lowest closing point for the year on April 8, erasing the benchmark index's losses for 2025 and placing it about 4% from its historic peak reached in February.

However, the price-to-earnings ratio of the S&P 500 has reached its highest in two months, while earnings growth estimates for 2025 have decreased since the beginning of the year. Although U.S. tariffs appear less severe than before, import levies could still pressure corporate profits and consumer spending, raising concerns about the economy, according to investors.

"The momentum is very strong, so it could push markets higher," said Anthony Saglimbene, chief market strategist at Ameriprise Financial. "But I think it will be difficult for markets to maintain those levels due to the uncertainty of the environment."