Markets rallied hard last week, fueled by a mix of positive headlines and shifting expectations. The standout catalyst was the announcement of a 90-day tariff truce between the U.S. and China. That agreement sparked a sharp rebound on Monday, with the Dow gaining nearly 1,200 points and the S&P 500 and Nasdaq jumping 3.3% and 4.4% respectively. It wasn’t about resolution—it was about relief. Investors saw a break in the tension, and that alone was enough to drive a big move.
Midweek brought more good news in the form of softer inflation. April’s CPI numbers came in a bit lower than expected, which immediately stoked hopes that the Federal Reserve could consider easing up on rates later this year. That small shift in inflation was enough to change the tone in markets. Growth names responded particularly well, and the idea of a more dovish Fed began to build momentum.
Retail Earnings Could Set the Tone
This week, all eyes will be on big-name retailers as they step up to report earnings. Target, Home Depot, and Lowe’s are on deck, and what they say will matter—not just for their stocks, but for the market’s broader narrative. After Walmart’s warning last week about price hikes linked to tariffs, investors want to know if that pain is spreading. Are consumers tightening their belts? Are companies eating the cost or passing it on?
We’re also going to hear from TJX and Ralph Lauren, which will give a read on both value-focused shoppers and higher-end discretionary buyers. If both ends of the spectrum are holding up, that’s good news. But if we see weakness across the board, it could be a sign that the consumer—the engine of the U.S. economy—is starting to feel the squeeze.
Housing Data Will Reveal More Than Just Prices
Later in the week, we’ll get fresh data from the housing market, including existing home sales on Thursday and new home sales on Friday. These aren’t just numbers to glance over—they’re real-time indicators of consumer confidence, access to credit, and economic resilience.
Spring is typically the busiest season for home sales, so this batch of reports could tell us a lot. Are buyers stepping back because mortgage rates are still too high? Or are builders seeing a pickup as buyers adjust to the new normal? If there’s softness here, it could cool off some of the recent optimism. But if housing holds steady or surprises to the upside, it would be one more checkmark in the “soft landing” column.
The Fed Will Be Talking, and Everyone Will Be Listening
After last week’s cooler inflation report, investors are even more tuned in to what the Fed has to say. Several officials are scheduled to speak, including New York Fed President John Williams and Atlanta’s Raphael Bostic. Their comments could help clarify whether the market’s getting ahead of itself with hopes for rate cuts later this year.
The Fed has been walking a tightrope—acknowledging that inflation is coming down, but still signaling caution. This week’s speeches might not offer anything dramatic, but even a slight shift in tone could move markets. If the door cracks open just a little more on the idea of easing rates, expect a strong response from equities and bonds alike.
Momentum or Mirage?
Last week’s rally was impressive. The S&P 500 reclaimed its 200-day moving average, which a lot of traders and technicians view as a key line in the sand. Staying above it could encourage more buying, especially if earnings and economic data keep cooperating.
But there’s a catch. Valuations aren’t cheap anymore, and expectations for growth have come down. That means there’s not much room for disappointment. If earnings miss or the Fed dials up the hawkish tone again, the market could get knocked back quickly.
Still, the setup for the week is constructive. Investors are watching carefully, but there’s a sense that the worst-case scenarios—for now—are off the table. That gives the market a little room to breathe and maybe even extend the recent gains. Let’s see if it can hold up under the weight of fresh data.