CNBC Daily Open: Despite all the uncertainty, the S&P 500 is flirting with record highs — strange times

• The S&P 500 is at the cusp of a new high.
• Trump threatened Spain with a tough trade deal.
• Tesla sales in Europe plunged in May.
• Nvidias the most valuable company again.
• Risks could knock the S&P 500 off course.

Have we gone back in time? It certainly seems on the markets front. Just look at the S&P 500 and you will think that it's back in February — before U.S. President Donald Trump's “reciprocal” tariffs, before the White House's “One Big Beautiful Bill Act,” and before the war between Israel and Iran.

On February 19, the broad-based index closed at an all-time high of 6,144.15. Yesterday, it ended the trading session at 6,092.16. That's a difference of less than 1%. A light breeze (or rogue social media post from the sitting U.S. president) could push the S&P 500 beyond that level.

In another sign investors seemed to be back to the days before trade and geopolitical uncertainty, Nvidia's again in the headlines after it surged 4.3% to close at a newhigh, a symbol of the optimism surrounding artificial intelligence that drove much of 2024's market gains.

What's strange is that the market appears to have shrugged off heavy loads that have been weighing it down since March.

Tariff worries still persist. Trump on Wednesday threatened Spain that he would “make them pay twice as much” in a trade deal because the European country is resisting an increase in spending on defense.

The war between Israel and Iran, though currently paused thanks to a ceasefire, is not conclusively over. And that truce appears fragile — it was almost broken just hours after it kicked in. Who knows how the planned U.S. talks with Iran next week will go. (Hopefully not as badly as the shouting match in the Oval Office when Ukrainian President Volodymyr Zelenskyy was there.)

Nostalgia is alluring. But that allure can be dangerous.

What you need to know today

The S&P 500 is at the cusp of a new high. The index, however, ended Wednesday little changed. Tech stocks rose, with many hitting intraday highs.The Stoxx Europe 600 index fell 0.74%, despite European defense stocks climbing on news of a NATO deal.

Trump threatened Spain with a tough trade deal. The U.S. president made those comments at NATO's annual summit after the alliance's allies — barring Spain — agreed to meet a defense spending target of 5% of gross domestic product by 2035.

Tesla sales in Europe plunged in May. Elon Musk's electric vehicle company recorded a 27.9% year-on-year drop in sales within the European Union, Britain and the European Free Trade Association, as consumers in the region switched to Chinese EVs.

Nvidia's the most valuable company again. Shares jumped 4.3% on Wednesday and closed at a record — the first time it's done so since January. The chipmaker's market capitalization is now $3.77 trillion, inching ahead of Microsoft and Apple.

[PRO] Investors are holding their breath. The U.S. market seems surprisingly resilient to trade friction and geopolitical instability. In fact, the S&P 500 seems on track to close at a fresh record. But risks that could knock it off course remain.

And finally...

What's next as the British pound hits its highest in more than three years?

The British pound is hovering at its highest level in more than three years — and analysts are divided on the potential for further upside.

According to Janet Mui, head of market analysis at RBC Brewin Dolphin, much of the pound's upward trajectory has more to do with underlying dollar weakness than faith in sterling itself.

Moreover, the outlook for the British pound is not overly compelling in the coming months, Mui said, but noted that geopolitical developments could catalyze further upward movements in the longer term.