Weekly Stock Market Update & SPY Technical Analysis
This week marks the end of an era…one that was led by a man named Jerome Powell, who served as the Chair of the Federal Reserve since 2018. Since then, Powell has been the most powerful man in the United States financial system, arguably in the world. The Federal Reserve sets monetary policy, controls interest rates, manages liquidity, and oversees the stability of the financial system. Every major asset class: stocks, bonds, real estate, and even crypto, has been directly influenced by the decisions made under his watch.
What Happens When Powell and Kevin Warsh Takes over is Gone:
While historically known as an “inflation hawk” (someone who prioritizes high interest rates to curb inflation), Warsh has recently pivoted toward a more dovish stance, advocating for lower interest rates. He argues that the U.S. is entering an AI-driven productivity boom. Warsh believes this technological surge allows the economy to grow rapidly without triggering inflation, thereby justifying lower borrowing costs even when the economy appears "hot."
Interest Rates and Balance Sheet Reduction:
Lower interest rates usually get investors excited, but they’re only part of the story. Another key lever is the Federal Reserve’s balance sheet, which has expanded to roughly $6.7 trillion following years of quantitative easing that began during the 2008 financial crisis. This has propped up markets and helped companies, especially tech, rally to outrageous multiples. Why?
Because when the Fed expands its balance sheet, it’s effectively injecting liquidity into the system by buying assets. That demand pushes bond prices higher and yields lower, forcing investors out on the risk curve in search of better returns. With safer assets offering less yield, capital flows into equities, compressing the equity risk premium and justifying higher valuations. But when the Fed reduces its balance sheet (quantitative tightening), it drains liquidity from the system. Instead of being a massive buyer, it steps back, putting upward pressure on yields. As yields rise, bonds become more attractive relative to equities, increasing the return investors demand to hold riskier assets.
That shift ripples through markets. Higher yields raise the discount rate used in valuation models, which lowers the present value of future cash flows, hitting long duration assets like high growth tech stocks the hardest.
All in all, what investors need to keep in mind is that the next main focus is not interest rates, it’s liquidity. If The Fed drain liquidity from the system, the entire playing field is about to change. We'll be updating this in real-time for our Hyper Stocks Pro members.
No official changes are happening until about mid-May, until then, let’s take it week by week…here’s this week’s focus:
- Consumer Confidence (Tue)
- FOMC Interest Rate Decision (Wed)
- Fed Chair Powell Press Conference (Wed)…major market mover
- Q1 GDP (Thu)
- PCE Index (Inflation data / Thu)
This week also includes earnings from major companies, such as: Google, Microsoft, Amazon, Meta, and Apple. These five companies collectively make up a massive portion of the S&P 500 , with total combined weight equaling 22-24% of the index. So it goes without saying, the importance of their earnings data is high.
We’ll be updating both key economic and earnings reports as they are released through the week and adjusting our positions / outlook accordingly for Hyper Stocks Pro members.
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SPY Technical Analysis:
Near term price action is typically driven by headlines and short-term reaction to reports, and after this weekend’s events (U.S.-Iran tensions + shooting at Correspondent’s dinner), we may see volatility to kick off the week, especially ahead of earnings and economic data. 698.00ish is the most important area of support for buyers to defend, a move and hold below can easily lead to a 678.00-682.00 retest, at which point, we’ll add aggressively to our watchlist positions.
Analysis by Q. Founder, Hyper Stocks
Focus: Equity Analysis | Macro Economics | Swing Strategy
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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.