The stock market wrapped up its best week of 2024 with a strong rally, spurred by robust consumer sentiment and optimism over potential corporate tax cuts promised by Donald Trump. Major indices continued their upward trajectory, marking the fourth consecutive day of gains, with the S&P 500 notching its 50th record high this year. The index briefly crossed the 6,000 threshold, ultimately closing out the week with a 4.7% rise.

Investor enthusiasm was palpable, with $20 billion flowing into U.S. equity funds on the day of Trump’s tax cut announcement—a level not seen in five months. Small-cap stocks, particularly vulnerable to shifts in trade policy, saw a substantial boost as well, logging the largest inflows since March. Trump’s proposed tariff policies could benefit small-cap companies in the short term by increasing demand for U.S.-made goods; however, economists are warning that such tariffs could carry a hefty cost to the U.S. economy, potentially amounting to hundreds of billions of dollars.

As markets celebrate the prospect of favorable policy changes, the risks remain real. Investors are weighing the potential benefits of tax relief against the longer-term impact of trade tariffs, setting the stage for a dynamic close to the year.