The de-escalation in tariffs over the past two weeks suggests that the April lows may mark a likely bottom in the latest market correction. That was less clear a few weeks ago, when it seemed like trade tensions were escalating daily, leading to a sharp 19% pullback in the S&P 500.
Regardless of political affiliation, if we’ve learned anything from President Trump’s first term, it’s that he tends to throw out big numbers and then settle for what was likely his intended target all along. No one knows exactly how trade talks will play out in the short term, but I do believe they will eventually be resolved.
It’s also reassuring to see that the so-called “Trump put” still appears to be in play. Maybe it’s not solely triggered by a decline in the equity markets, but if liquidity dries up in the fixed income market, we will likely get positive headlines coming out of the Oval Office.
The labor market remains resilient for now, but if that begins to shift, I believe the Fed will be ready to step in. Of course, those aren’t the only reasons to remain optimistic about future stock returns. The hard economic data continues to hold up well, and earnings have shown solid strength this quarter.
That said, we should keep an eye on weak survey data to see if it begins to affect the hard data. The major averages are looking overbought in the short term, but after some consolidation, I think we could see renewed upward momentum.
What are your thoughts?
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth may not develop as predicted