Concerns Rise Again Over Fiscal Deficit and Trade Policy, but Fed Hints at Rate Cuts Offer Relief

• The S&P 500 fell -0.04%, the Dow stayed flat, and the Nasdaq rose slightly by +0.15%.

Stocks dropped early due to concerns over the Trump tax bill and growing deficits.

However, they bounced back after a dovish speech from Fed’s Waller.

• Waller said: If tariffs stay around 10%, the Fed might cut rates in the second half of this year.

Strong Economic Data:

• Jobless claims dropped to 227,000 — a one-month low.

• S&P Manufacturing PMI rose to 52.3 — much higher than expected.

• Bitcoin hit a new all-time high. Coinbase jumped 5%.

Earnings Highlights:

• $AAP surged +58%, $URBN +22%, $SNOW +13%.

• Health insurance stocks fell hard. $HUM dropped -7%.

• Semiconductors weakened. $ADI and $NXPI led the drop.

Bond Market:

• The 10-year U.S. yield fell to 4.543%.

• Eurozone bond yields also fell.

Markets are again betting on global rate cuts.

This Week’s Focus:

• G7 Finance Ministers’ Meeting

• New moves on trade policy

• U.S. new home sales data (expected to decline)

Q1 Earnings Wrap-up:

• Over 77% of S&P companies beat expectations.

• Full-year profit growth forecast holds at +9.4%.

Conclusions:

U.S. stocks are moving sideways near highs, but there are still strong sector opportunities.

After short-term pullbacks, the market is likely to keep climbing.

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