The stock market saw a mild pullback last week, with the S\&P 500, Dow, and Nasdaq all dipping slightly. Despite the declines, major indexes remain above key technical levels, signaling that the broader trend is still intact. Investors spent the week digesting a mix of headlines, with U.S.-China trade talks taking center stage. President Trump floated the idea of cutting tariffs on Chinese goods, which provided some hope, but with no concrete deal in place, markets held back on making bold moves.
The Fed
The Federal Reserve held interest rates steady, with Chair Jerome Powell signaling a wait-and-see approach. He acknowledged that rising tariffs could increase inflation and hurt jobs, but the Fed wants more data before changing its stance. This cautious tone from the central bank helped keep volatility in check, even as uncertainty around trade policy loomed. Meanwhile, the corporate earnings season continued with a few dramatic movesâLyft and Insulet surged on strong results, while Sweetgreen and Expedia took heavy hits after disappointing investors.
Sector review
Health care stocks were the weakest performers, dropping more than 3%, while industrials led the pack with modest gains. This rotation suggests investors are getting a bit more selective, focusing on sectors with clearer earnings growth. In commodities, gold rose over 3% as traders sought safety, and oil bounced back with a 4.5% gain. Bitcoin was the standout, blowing past \$100,000 and closing the week at \$103K, highlighting risk-on sentiment in parts of the market.
The labor market remains stable, with jobless claims ticking up slightly but continuing claims moving lowerâshowing people are still finding work. Looking ahead, markets will keep a close eye on any movement in trade negotiations and listen carefully to Fed comments. Thereâs no sign of a breakdown here, just a pause while investors wait for the next clear catalyst.
Buckle Up: This Week Could Get Interesting
Alright, deep breathâthis weekâs shaping up to be a wild one. Thereâs a lot going on, and frankly, a lot that could go either way. Weâve got U.S.-China trade talks simmering, inflation data hitting mid-week, and Walmart dropping earnings. Any of those could swing the market on their own, and theyâre all happening in a tight window. If youâre the type to check your portfolio first thing in the morning, maybe keep some coffee handy.
Trade Talk Tension
Letâs talk about trade first. Over the weekend, U.S. and Chinese officials met in Switzerland, and the buzz is that Trump might slash tariffs from a ridiculous 145% down to something in the 50-60% range. Thatâd be a major pivot. Markets like that kind of talk, but theyâre not ready to throw a party until they see action. And if negotiations break down instead? Expect some turbulence. Some analysts are even tossing around the idea of a 20% market drop if things go south. That might be dramatic, but it shows you how much is riding on these talks.
The Inflation Check-In
Then thereâs inflationâyep, still hanging around. CPI numbers come out Tuesday, and theyâre a big deal. Last time we saw a 2.4% annual increase, which wasnât awful but definitely kept the Fed on its toes. If inflation comes in hot again, the Fed might have to stay in “wait and watch” mode longer than people want. Thatâs not great news for folks hoping for rate cuts this summer. And Thursday piles on with PPI and retail sales, so by the end of the week, weâll have a pretty good idea if consumers are still spending or starting to pull back.
Speaking of consumers, Walmartâs earnings will be a must-watch. Itâs not just about the stockâitâs about what it says regarding the average shopper. Are people buying more, trading down, tightening their wallets? Walmart has a front-row seat to all of it. If they report strong numbers and upbeat guidance, thatâs a win for the economy. But if things look shaky, it could spook investors and add to the pile of market nerves.
Whatâs the Mood?
The vibe in the market right now is cautiously optimistic. The S&Pâs up about 18% since early April, which is a big runâbut you can feel the hesitation. Traders are asking whatâs next. Without a clear âwinâ on trade or some shift from the Fed, thereâs not a ton of juice left to keep pushing higher. That doesnât mean a crash is comingâit just means the market might be due for a pause or a reality check. So yeah, keep your eyes open this week. Between the headlines, the data drops, and the big-name earnings, thereâs no shortage of signals to watch. Itâs one of those weeks where staying nimble is more important than being aggressive. And hey, maybe by the weekend, weâll actually have some answers. Or, at the very least, a clearer path forward.