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 moves—Lyft 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 lower—showing 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. There’s 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 breath—this week’s shaping up to be a wild one. There’s a lot going on, and frankly, a lot that could go either way. We’ve 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 they’re all happening in a tight window. If you’re the type to check your portfolio first thing in the morning, maybe keep some coffee handy.
Trade Talk Tension
Let’s 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. That’d be a major pivot. Markets like that kind of talk, but they’re 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 there’s inflation—yep, still hanging around. CPI numbers come out Tuesday, and they’re a big deal. Last time we saw a 2.4% annual increase, which wasn’t 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. That’s 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, we’ll have a pretty good idea if consumers are still spending or starting to pull back.
Speaking of consumers, Walmart’s earnings will be a must-watch. It’s not just about the stock—it’s 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, that’s a win for the economy. But if things look shaky, it could spook investors and add to the pile of market nerves.
What’s the Mood?
The vibe in the market right now is cautiously optimistic. The S&P’s up about 18% since early April, which is a big run—but you can feel the hesitation. Traders are asking what’s next. Without a clear “win” on trade or some shift from the Fed, there’s not a ton of juice left to keep pushing higher. That doesn’t mean a crash is coming—it 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, there’s no shortage of signals to watch. It’s one of those weeks where staying nimble is more important than being aggressive. And hey, maybe by the weekend, we’ll actually have some answers. Or, at the very least, a clearer path forward.