A Historic Change is Coming to the Stock Market
One of the most important changes in the past decade is happening this week one the market as Jerome Powell’s Fed Chair term ends and Kevin Warsh (if confirmed) takes office. Kevin Warsh is Trump’s nominee to become Fed Chair, which has many divided on whether or not he’ll be acting in favor of Fed independence or not. Trump has historically been vocal about Powell, arguing that he is not leading The Fed well and that he showed lower interest rates to as low as 1%. This exact thing is what has some worried…if Kevin Warsh doesn’t stand ground against Trump, he may lower rates, even when the economy doesn’t warrant the decision.
Lower interest rates are generally great for the economy. They boost spending, borrowing, encourage hiring, and more. The stock market generally celebrates this, as we’ve seen since The Fed started cutting rates in late 2024. Stocks generally rally in anticipation of a rate cut, and now we’re seeing that exact scenario play out as investors bet on more rate cuts from Warsh.
Here’s where it gets tricky…
While lower rates do increase chances of an economic boom, they also pressure prices higher. Inflation is already a growing issue, with many Americans struggling to make ends meet. A recent report showed that consumer sentiment is an all time low, which is a disconnect from the stock market’s all time high. This is where we have to get real…we all love stocks going up, and chances are they will continue for 12-24 months, but reality eventually does sink in.
We’ll enjoy the AI boom and capitalize on the rally for now, however we’re already positioning in certain stocks that are undervalued now, but will boom later when the tech stocks’ momentum settles.
Trump-Xi Summet
President Trump is scheduled to travel to Beijing to meet with President Xi on May14-15th. This trip, which was originally delayed due to the ongoing U.S. conflict with Iran, will focus on trade, the Iran war, and Taiwan. Trump is taking a team of CEOs with him, including Nvidia’s Jensen Huang, Apple’s Tim Cook, Exxon’s Darren Woods, Boeing’s Kelly Ortberg, Qualcomm’s Cristiano Amon, Blackstone’s Steve Schwarzman, Citigroup’s Jane Fraser, and Visa’s Ryan Mclnerney. Some accepted, some are still pending. But those who go might see a movement in their stock if they can strike deals…this could be big news. We’ll cover developments.
What Happened on the Stock Market Last Week
The labor market was the biggest focus last week, which pleasantly surprised investors as reports showed a better than expected hiring environment. Private payrolls increased by 109,000 in April, exceeding the 84,000 expectations. While the U.S. unemployment rate remained unchanged at 4.3%, despite fears that AI is causing mass layoffs. Though the biggest industries to gain was the healthcare industry, followed by transportation & warehousing.
This week’s critical reports and events:
- Consumer Price Index / Inflation Report (Tue)
- Produce Price Index (Wed)
- U.S. Retail Sales (Thu)
- Business Inventories (Thu)
- Industrial Production (Fri)
We’ll be highlighting any important changes in these reports throughout the week in our daily morning analysis for Hyper Stocks Pro members.
SPY Technical Analysis & Key Levels
It’s tempting to bet against a market when it rides so high and vertical, but never underestimate greed and the power of Wall Street. We remain strongly bullish for now, but also aware that certain stocks are definitely overbought…this is why our watchlists include “dormant” and undervalued names to position to in anticipation of the eventual capital rotation. Certain industries may pullback, which can cause volatility in an index like the S&P 500, but assuming a full market crash is a bit farfetched. If a pullback does happen, we’re focused on buying the dip on QUALITY names.
Analysis by Q. Founder, Hyper Stocks
Focus: Equity Analysis | Macro Economics | Swing Strategy
📈 Explore: Weekly Watchlists & Pro Alerts
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of capital. Always conduct your own research or consult with a licensed financial advisor before making investment decisions.
Hyper Stocks and its contributors may hold positions in some of the securities or assets mentioned above. These positions are subject to change without notice. Any opinions expressed reflect current views at the time of writing and are not guarantees of future performance. Past performance does not guarantee future results.