Yesterday, the markets surged in response to some good news on tariffs. The US and China agreed on some "temporary" moves to lower tariffs on both sides. (My guess is that branding this agreement as "temporary" gave each country a face-saving element as they both moved to the center.)
This, of course, is unequivocally positive for the economy, stocks and many companies. While tariffs remain high on many goods, it's clear that talks are productive and, in the end, cooler heads are starting to prevail. They just might deliver a palatable result for investors.
Economically speaking, this makes a recession less likely. But predicting economic growth levels is not a business we want to be in (because no one does it well), and as we have written, a well diversified portfolio comprised of quality companies should survive economic downturns to later thrive when trends turn more positive.
Remember that it's not too optimistic to believe that companies that have operated for decades through a variety of crises will likely survive whatever they encounter. Volatility in their share prices is usually more severe than the fluctuations in their operations.
In the end, share prices are just "math".
I have referred to the markets as "amoral" (not to be confused with immoral) because stock markets are not some organic being. Instead, markets are the collective actions of millions of investors who "do the math", each deciding if a particular action or environment will improve the earnings of a company. Right now, investor math (rightly or wrongly) says that stocks are worth more based on a slightly more predictable future.
With a slightly better environment today, investors can watch how things unfold. In the end, there will be winners and losers among the companies that make up "the market", but with a constantly changing landscape, picking those winners is near impossible. Instead, a low-cost and well diversified portfolio looks more sensible every day.