Weekly Stock Market Update & SPY Technical Analysis
This might be one of the most exciting, but nerve-wracking weeks for the stock market this year. The U.S. and Iran appear to be moving toward a historic peace framework, oil is already cooling off, and investors are quickly trying to price in what a lower geopolitical risk premium could mean for inflation, rates, and risk assets.
At the same time, Kevin Warsh is preparing for his first FOMC meeting as Fed Chair, which adds another major variable to the market. Lower oil prices could help ease inflation fears, but the Fed still needs to prove it’s confident enough to eventually loosen policy. That makes this week extremely important…peace talks could give the market a reason to rally, but Warsh’s tone could either confirm that momentum or completely reset expectations. We’ll find out and update it in real time this Wednesday during the meeting and press conference.
Interest Rates & Balance Sheet Implications
Kevin Warsh was appointed by Trump, which has been a divisive development for markets because investors are trying to figure out whether his Fed will prioritize lower interest rates, a smaller balance sheet, or both.
On the surface, Warsh is viewed as more open to rate cuts than Powell, especially because Trump has been openly pushing for lower rates. But the problem is that Warsh is not stepping into an easy environment. Inflation is still running above the Fed’s target, the labor market has remained stronger than expected, and recent energy price volatility has made the case for immediate rate cuts harder to justify. Because of that, Wall Street largely expects the Fed to hold rates steady at his first meeting rather than immediately shift dovish.
Warsh’s biggest impact may come through the Fed’s balance sheet. He has argued for shrinking the Fed’s massive bond portfolio, which could tighten liquidity even if rates eventually come down. That’s the tricky part for markets…rate cuts are usually bullish, but faster balance sheet reduction can pressure stocks by pushing yields higher and pulling liquidity out of the system. So investors won’t just watch what Warsh does with rates (like they always have with Powell) they’ll watch how aggressive he sounds on liquidity.
What that Means for the Hyper Stocks Portfolio
This isn’t anything new. We’ve been preparing for this exact reposition for months, leaning into companies and stocks that have strong balance sheets and that will remain largely resilient through balance sheet reduction or moderately high interest rates. We’ve discussed this before…investors have enjoyed a decade of high liquidity in the market, which gave rise to speculative assets and rallies, but if Warsh pulls liquidity, it’ll be a different environment to play in.
Moreover, the market is also starting to consider small and mid-cap companies again, especially after the One Big Beautiful Act preserved several business-friendly tax benefits, including bonus depreciation, R&D expensing, and interest expense deductions.
This matters because smaller companies are usually more sensitive to borrowing costs, taxes, and domestic economic growth. If rates eventually move lower while tax policy remains supportive, small and mid caps could become one of the more attractive areas of the market after years of underperformance. That means money will expand further than just large cap tech, this improves market breadth, but also mean we have to be picky with our set-ups and perhaps consider stocks / ETFs in other areas of the market (we’re already doing this in Hyper Stocks Pro).
Economic Calendar
- Industrial Production (Mon) - this matters for our industrial holdings
- Housing Starts (Tue) - this matters for our latest real estate construction holdings
- U.S. Retail Sales (Wed)
- FOMC Interest Rate Decision / Fed Chairman Warsh press conference (Wed) - critical event 🚨
- Stock Market Holiday (Fri) - Juneteenth
We’ll be covering all these economic updates and the implications of them in our daily morning updates for Hyper Stocks Pro member
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.