Market Movers: Trade, Tariffs, and Trends

Fresh news and strategies for traders. SPY Trader episode #1140.
Hey everyone, it's your pal Penny Stockings here, and welcome back to Spy Trader! It's 6 am on Sunday, May 4th, 2025, and we're gearing up for another week in the wild world of the stock market. Buckle up, because we've got a lot to unpack. Before we dive in, I've got a knee slapper for you: Why did the stock market investor bring a ladder to work? Because they heard the market was going through the roof and wanted to be ready for the 'rally'! Haha! Alright, let's get down to business.

So, what's been shaking things up? Well, the market's been on a tear recently. The S&P 500, Dow Jones, and Nasdaq all enjoyed a nineday winning streak – the longest we've seen since 2004! This helped recover from some dips we saw earlier in April. However, it's not all sunshine and rainbows. The U.S. economy actually contracted in the first quarter of 2025, shrinking at a 0.3% annual rate. That's the worst performance since early 2022, and it's mainly blamed on businesses stockpiling goods ahead of those pesky tariff policies.

Speaking of tariffs, President Trump's trade policies are a big deal. They're causing some serious uncertainty, and some economists are even whispering about a potential recession this year. Companies are already adjusting their plans because of all this trade war talk. On the brighter side, the US added 177,000 jobs in April, which was better than expected. This, along with some positive chatter about easing USChina trade tensions, gave the market a nice boost.

We're also in the middle of earnings season. So far, about 76% of companies have surprised us with positive earnings. However, the outlook for the second quarter is a bit shaky because of all the uncertainty around consumers and trade. Last year, communication services and information technology sectors really led the charge, driven by those tech giants. Financials also did pretty well, while materials was the only sector that didn't perform. It's important to keep in mind where the strength is because buying stocks from sectors that are performing well can lead to better returns.

Now, what should you be watching for next week? Definitely keep an eye on any news about trade negotiations. The market is super sensitive to that stuff. Also, pay attention to any signals from the Federal Reserve about interest rates. The strong jobs report has made it less likely that they'll cut rates in June, but we need to stay vigilant. As for recommendations, with the market's recent rally and the economic uncertainty, I would advise a cautious approach. I'm leaning towards a 'wait and see' strategy, but keep in mind that sector performance is a crucial indicator of future returns. One expert even predicted a slightly bullish trend for the first half of last week, but a slightly bearish turn after the FOMC meeting, so be ready for a potential 'sell on the news' situation.

That's all for today's Spy Trader. Remember, do your own research, don't bet the farm on any single trade, and always stay informed. Until next time, this is Penny Stockings, signing off! Happy trading!