Stocks Stumble Despite U.S.- U.K. Trade Deal Array ( [cookie] => 811481-775eca-fb3095-72dffa-2b13a1 [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 2 [max_usage_crypto] => 2 [lock] => [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 151461 [user_id] => [reason] => Usage under limits [method] => ) 1 and can accesss 1
Our Views
- Despite the minor intra-day pullback from earlier highs, S&P 500 still managed to close at multi-day highs, and should fuel a further rise in prices up above 5750 to near 5800 into late next week before a possible peak.
- The day of 5/19 has significance in timing, given that this lies 90 calendar days from mid-February, which turned out to be an important peak, and based on Gann theory, projecting forward 90 and 180 days from important peaks can often have importance in timing.
- This also would allow the S&P 500 to potentially record its first TD Combo “13 Countdown” exhaustion signal since the early April lows (which has more significance than a TD Sell Setup registered this past Monday).
- Overall, we believe the fact that six sectors experienced gains of more than 1% today is positive, and Industrials in particular outperformed.
- Crypto investors reacted positively to news of Treasury Secretary Scott Bessent’s upcoming visit to Europe to start trade negotiations with China, with Bitcoin leading a rally.
- On a related note, China enacted a domestic-stimulus package this week. While I suspect this signals deteriorating economic conditions in China, it is also arguably a positive tailwind for Bitcoin as it represents a further easing of global liquidity conditions.
- Recent improvement in strength for ETH relative to Bitcoin has us considering putting ETH back on our radar, as it suggests that ETH might be trying to bottom out.
- Last but not least, it’s worth noting that crypto reached a milestone this week, with New Hampshire becoming the first state to create a Strategic Bitcoin Reserve and Arizona following suit shortly afterwards.
- Treasury Secretary Scott Bessent will be in Switzerland to begin trade negotiations with China’s top economic official, with President Trump having hinted at a willingness to lower tariffs on Chinese imports.
- The president’s willingness to negotiate was also in evidence earlier this week, which saw the announcement of a preliminary trade deal with the United Kingdom.
- House Republicans will continue work on Trump’s budget bill next week, with Medicaid likely to be one difficult issue of contention.
Wall Street Debrief — Weekly Roundup
Key Takeaways
- The S&P 500 declined 0.5% this week to close at 5,659.91, while the Nasdaq Composite fell 0.3% to 17,928.82. Bitcoin was at USD 103,325.70 on Friday afternoon.
- Fundstrat Head of Data Science Ken Xuan finds the Federal Reserve’s latest meeting to be hawkish, as Chair Jerome Powell didn’t broadcast an interest rate cut in June.
- Washington Policy Strategist Tom Block liked that no one dissented in the committee against holding rates steady.
“To be a bishop is not to live in a palace, but to walk with the people.” — Pope Leo XIV
Good evening,
The unveiling of the first trade deal wasn’t enough to lift stocks out of their rut this week.
The S&P 500 fell 0.5% this week, while the Nasdaq Composite declined 0.3% Both logged their first down week in three weeks.
Markets have recently sharply rebounded from their April lows, emboldened by a good earnings season and progress on trade deals. Risky assets have made a big comeback. Bitcoin shot up to over $100,000, Tesla has rallied, and the small-cap Russell 2000 index has finished in the green for five straight weeks.
About 90% of the companies in the S&P 500 have reported earnings, with profits projected to have climbed 13.6% from a year ago, according to FactSet. Big Tech earnings in particular have been good, helping improve the market sentiment some, according to Head of Data Science Ken Xuan.
The biggest highlight of the week was the Federal Reserve meeting, where members unanimously decided to extend their wait-and-see outlook on interest rates yet again. Fed Chair Jerome Powell warned that tariffs were raising risks of higher unemployment and higher inflation. However, as he and the FOMC see it, the impact from tariffs hasn’t shown up in concrete data to the extent that a rate cut would be justified at this juncture.
Xuan interpreted the meeting as hawkish.
“I know it’s no surprise that they didn’t cut in this meeting, of course, but I thought if they’re going to cut in June, Powell should start to telegraph some signal. But he didn’t really signal much,” he said.
The Fed has faced pressure in recent months to cut rates from the president. The calls have intensified as foreign central banks have embarked on a rate-cutting cycle. The latest example this week came from the Bank of England, which cut its benchmark rate to 4.25% from 4.5%, its fourth cut since last summer.
Washington Policy Strategist Tom Block said that it’s impressive that no one in the committee dissented against holding rates steady.
“If there's anybody on the board who has ambitions to be chair, this would have been a great opportunity to dissent and support Trump,” Block said. “And nobody took that bait, and so I think it showed that Jay has really, at the present, complete control over the board, which I think is good for him.”
The ball on trade deals got moving this week. President Trump announced on Thursday that the U.S. intends to sign a trade deal with Britain. Details have yet to emerge, but definitely showed progress and the administration’s willingness to quickly get deals done, Xuan said.
Both indexes have eased their losses for the year. The S&P 500 is down 3.8%, while Nasdaq’s tumbled 7.2%.
Elsewhere
We have a new pope. Francis’ successor Pope Leo XIV, who is from Chicago but spent much of his life abroad, was chosen Thursday in a conclave that began May 7. He presided over his first Mass as a leader of the 1.4 billion Roman Catholics on Friday, pledging to align himself with the ordinary people and against the rich and powerful. He has an insurmountable task ahead of him: Can he unify a divided church?
A dangerous military confrontation between India and Pakistan escalated this week, after India said it intercepted missiles and drones launched by its neighbor on Thursday. That came a day after India hit Pakistan with military strikes in retaliation for a deadly militant attack on tourists in Kashmir. Pakistan has denied any involvement.
The happiest place on Earth is expanding. Walt Disney announced this week that it’s planning a theme park and resort in Abu Dhabi, United Arab Emirates. This would mark Disney’s seventh global theme park and its first in the Middle East, so the hope is that it’ll help draw millions of visitors from the Middle East, Africa, India, Europe, and elsewhere. Shares have rallied 15% this week.
Share buybacks are hot again. Given the market turmoil, U.S. companies are planning to buy back a record $500 billion of their shares. That’s according to a running tally of announced buybacks over the past three months, which would mark the biggest three-month sum on record, Deutsche Bank data cited by the FT show.
And finally: Bill Gates is rushing to give away his wealth. The billionaire philanthropist has pledged to give away $200 billion over the next 20 years and wind down his foundation by 2045, stepping up after he was “horrified” by the Trump administration’s decision to cut global humanitarian aid programs. Whether these efforts can replicate government aid remains to be seen.
Important Events
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Stock List Performance
Small Cap Stock List Performance
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SMID Granny Shots
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-0.88%
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+6.59%
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+25.31%
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