Weekly Stock Market Update & SPY Technical Analysis
Market volatility cooled last week, with the VIX (Volatility Index) now trading nearly 50% below its highs from earlier in April. Although tariffs continue to fuel uncertainty, it appears that the initial shock may have subsided for Wall Street. Investors are now shifting their focus toward quarterly earnings and upcoming updates from the Trump administration regarding trade discussions, which the administration claims are going “very well.”
In reality, no matter how rattled markets may get in the short term, the primary long-term drivers of the stock market remain interest rates and corporate earnings. Federal Reserve Chairman Jerome Powell’s speech last week reiterated the Fed's commitment to fighting inflation, noting that ongoing tariffs could hinder progress and potentially reverse the recent cooling trend in prices. Markets didn’t take kindly to Powell’s comments—stocks slipped, and volatility briefly picked up. In response, President Trump criticized Powell, asserting that he is unfit to lead the Fed and calling for immediate interest rate cuts. While Trump lacks the authority to directly remove Powell, he has been vocal about pushing for a leadership change.
Trump’s concern is valid in some respects: elevated interest rates are dampening both consumer and business spending power. However, cutting rates too soon could reignite inflationary pressures and undo the progress made over the last two years. Rather than taking sides, let’s examine the facts. The most recent CPI inflation reading came in at 2.4%, marking the third consecutive month of price declines. This is a significant improvement from the peak of 9.1% in 2022 and brings inflation closer to the Fed’s 2% target. With inflation cooling and economic growth slowing, there’s a reasonable argument to be made for at least one rate cut in the near future.
Keeping rates elevated for too long could unnecessarily burden the economy. High borrowing costs are straining household budgets, driving up mortgage rates, loan interest, and credit card payments. At this point, the market is clearly signaling its desire for rate relief. However, whether the Fed will heed that call remains to be seen. All eyes are now on the upcoming FOMC meeting in early May, which could provide critical guidance on the direction of monetary policy.
This week, the spotlight is on earnings season, which continues in full swing. Major names like Tesla, IBM, Boeing, and Google are set to report. So far, results have been mixed, with several companies citing tariff-related uncertainty during their earnings calls. Markets tend to dislike ambiguity, and if this theme continues, we could see more sideways movement until greater clarity is provided on both trade policy and interest rate direction.
SPY Technical Analysis
Direction on SPY has unclear last week, with prices swinging from highs of 544.00 to kick off the week and as low as 520.00 at one point. Buyers and sellers were both trying to gain direction, but uncertainty and random updates from the Trump administration made it difficult to maintain either side. It would be foolish to try to guess where the index goes this week, especially with many large cap stock earnings lined-up. We will provide daily updates and monitor markets closely for any pivotal updates or directional changes. Wanna join us for daily updates and stock trade set-up? Click here.