(Trade Station)—The stock market has been in suspended animation as investors wait for tariff news.
The S&P 500 fell 1.5 percent between Friday, April 11, and Thursday, April 17. It represented only a minor dip following the explosive rally a week before, with most of the prior advance remaining in effect.
Wall Street is frozen in anticipation of further developments in the ongoing trade wars. Attention seems to focus on two kinds of news.
First, the Trump Administration could comment on trade deals that would result in lower tariffs. Talks have occurred with countries including the U.K., Italy, Japan, the European Union and possibly China. Progress on these negotiations could potentially boost sentiment and make investors think logjams are easing. As a result, traders may closely monitor the social-media accounts of key White House officials.
Second, there could be headlines from legal actions challenging the tariffs. The State of California, the Liberty Justice Center and the New Civil Liberties Alliance have sued in three separate federal courts. (Other cases may also emerge.) Potential developments could include dismissals, injunctions or fast-tracked transfer to the U.S. Supreme Court. They could also be consolidated into a single case.
This environment could be difficult for traders because it’s not clear when news will hit, or what its source will be.
Trump vs Powell
Last week also featured conflict between the White House and Jerome Powell, who called President Trump’s tariffs “significantly larger than anticipated.” Speaking at the Economic Club of Chicago, the Federal Reserve Chair warned they could cause stickier inflation, higher interest rates and slower economic growth.
Trump responded the next day by calling for rate cuts and declaring “Powell’s termination cannot come fast enough!” White House economic adviser Kevin Hassett added on Friday that officials are considering ways to fire the central banker. Powell has said the president cannot remove him and he will complete his term, which ends in May 2026.
Further conflict between the Administration and Fed may create unpredictable risks for the market and traders.
Last week started on a positive note after Trump exempted imported electronics and smart phones from high tariffs. China still retaliated by instructing its companies to stop purchasing Boeing (BA) aircraft. Another potentially positive occurred on Thursday, when the Administration eased some fees on Chinese-build cargo ships.
Last week’s other headlines had little impact on the market. Initial jobless claims were lower than expected and retail sales surprised to the upside. (Some reports suggest tariff fears pulled retail demand forward, especially for vehicles.) Regional reports from the New York and Philadelphia Fed branches continued to show higher price pressures in the manufacturing sector.
Nvidia Hurts Chips
Semiconductor stocks fell last week after the U.S. government restricted sales of Nvidia’s (NVDA) H20 chips to China. (It was a surprise because H20s were designed to comply with Biden-era rules.) NVDA announced it would take a $5.5 billion charge as a result. It slid 8.5 percent, the sixth-biggest decline in the S&P 500, according to TradeStation data.
The news weighed on technology, making it the worst-performing sector last week.
Consumer discretionaries also fell amid broad selling in stocks like Amazon.com (AMZN), Starbucks (SBUX) and Tesla (TSLA).
UnitedHealth (UNH) had its biggest drop since 1998 after slashing its profit guidance. The health-insurance giant cited an unexpected jump in usage of medical services by Medicare Advantage plan members. Peers like Humana (HUM) and Molina Healthcare (MOH) also slid.
Global Payments (GPN) hit an eight-year low after agreeing to purchase payment processor Worldpay. Snap-on (SNA) missed earnings and revenue estimates, saying economic uncertainty hurt demand for its power tools.
Most of the leading sectors last week were safe-havens that perform better during times of economic weakness. Those include real estate, utilities and consumer staples. Energy stocks bounced as geopolitical tensions lifted crude oil. Gold miners also climbed as bullion crossed $3,300 per ounce for the first time ever.
Eli Lilly (LLY) jumped after announcing positive Phase 3 data for its orforglipron weight-loss drug. Dollar Tree (DLTR) gained amid optimism the discount retailer has prepared its supply chain for higher tariffs.
Charting the Market
The S&P 500 has stayed in a relatively tight range following its major rally on April 9. Chart watchers may see potential positives or negatives in the setup.
On the positive front, they might notice that the index has held more than half the gain from that historic session. (5,214 represents the 50 percent mark on the April 9 candle.) That may reflect a lack of selling pressure.
Bears, on the other hand, might notice that the index remains below its March lows around 5,500. Has old support become new resistance?
Second, last week saw a lower high and higher low. That kind of “inside candle” is a potential continuation pattern. Given that prices have been trending lower, that may indicate direction points to the downside.
Other potentially negative patterns may include:
Prices have mostly stayed below the 8-day exponential moving average, which is under the 21-day EMA.
The 50-day moving average recently had a “death cross” below the 200-day MA.
The stochastics slow oscillator’s leading line crossed under its smoothing signal line.
Regardless of the technicals, unpredictable news events surrounding tariffs could have a bigger impact on price action.
The Week Ahead
More than one-fifth of the S&P 500’s member companies report earnings this week. None of the economic reports are likely to have a big impact on sentiment.
Nothing very important is scheduled for today.
Companies like Halliburton (HAL), General Electric (GE) and Verizon Communications (VZ) announce results tomorrow morning. Tesla (TSLA) and Intuitive Surgical (ISRG) report in the afternoon. Fed officials Philip Jefferson and Adriana Kugler speak as well.
Wednesday features crude-oil inventories, new home sales and a speech by central banker Christopher Waller. Some of the big earnings include Ford Motor (F), Lam Research (LRCX), International Business Machines (IBM) and Boeing (BA).
Initial jobless claims and durable-goods orders are on Thursday, along with a speech by Fed policymaker Neel Kashkari. Alphabet (GOOGL), Intel (INTC), PepsiCo (PEP) and Merck (MRK) are some of the big names issuing results.
Friday brings revised consumer sentiment and earnings from companies including Schlumberger (SLB) and AbbVie (ABBV).