Earnings season is winding down, with nearly 90% of the S&P 500 having reported. Results have generally exceeded expectations, with limited changes to forward guidance, as customer and client behavior remains stable for now. However, caution is warranted, as the potential negative impacts from tariffs may take months to materialize, given that many of these measures were only implemented in April. Any strength in this earnings season might simply reflect demand pull-forward as companies raced to beat tariff deadlines, which could set up a more challenging environment in the quarters ahead.
On the trade front, the U.S. secured a minor victory last week with the announcement of a trade deal framework with the U.K. While this fell short of the pre-announcement hype of a “historic breakthrough” — particularly given that the U.S. already runs a trade surplus with the U.K. — it does establish a baseline for ongoing negotiations. The critical discussions with China could prove far more impactful, as U.S. Treasury Secretary Scott Bessent is meeting with Chinese officials this week. Given the market’s sensitivity to even modest trade headlines, any progress or setbacks here could quickly introduce volatility and set the tone for the broader market.
Investors should also pay close attention to this week’s economic data. Last week, the Federal Reserve held rates steady as expected, with Fed Chair Powell noting that the current tariff landscape presents a unique challenge to the Fed’s dual mandate of maximizing employment and maintaining stable prices. While the Fed’s preferred inflation gauge, Personal Consumption Expenditures (PCE), has shown moderation, this week’s Consumer Price Index (CPI) and Producer Price Index (PPI) releases will be closely watched. Any upside surprises could stoke fears of a more aggressive Fed, potentially spooking markets.
Monday
Tuesday
Consumer Price Index
Earnings: JD
Wednesday
Earnings: CSCO
Thursday
Producer Price Index
Earnings: WMT BABA AMAT
Friday
Tracking This Week
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AMD (NASDAQ:AMD) managed to hold the line after a lackluster earnings report last week, maintaining investor confidence despite high expectations. The stock had already been trading near 52-week lows, which likely tempered the downside reaction. With respectable results behind it and potential catalysts ahead — including trade deal progress and possible relaxation of chip export restrictions — there is room for a bounce or at least a solid support area in the near term.
Costco Wholesale (NASDAQ:COST) posted a solid 7% year-over-year increase in April store sales, despite the tariff headwinds. This momentum, coupled with potential tariff relief, could drive the stock to new highs, but keep an eye out for the bearish technical pattern that is forming. A break above this resistance level would likely boost investor confidence, potentially setting up a run higher if market sentiment turns positive.
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