This Market Isn’t Fixed—It’s Just Floating on Hope
You’ve seen this bounce before. Big dip, fast recovery, then reality hits. The S&P 500 just brushed up against its 200-day moving average—one of those levels where things usually stall out. And sure enough, that’s exactly what’s happening now.
After punching back above its 50-day, the market started to lose steam right where you’d expect. That doesn’t mean a full breakdown is guaranteed—but it does mean you shouldn’t be surprised if we drift back down to retest that 50-day in the coming sessions.
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Especially with the Fed and the White House both locked in a standoff.
The Fed: No Cut, No Comfort
Today’s Fed meeting isn’t about what they do—it’s about what they say. Rates aren’t going anywhere yet, but if the Fed doesn’t strongly hint at a June rate cut, that’s a problem for the market. You’re not the only one expecting a soft landing—so is Wall Street—and that landing depends on the Fed stepping in to soften the blow from tariffs, slowing growth, and rising consumer stress.
Powell doesn’t have to promise a cut. But if he even sounds hesitant, the market could see that as the Fed walking away. That’s how sharp pullbacks start.
Tariffs: This Isn’t Just a Bluff
You’ve heard the number—145% tariffs on Chinese goods. Sounds extreme. That’s because it is. But the market isn’t pricing in the full threat. Right now, it’s assuming a watered-down version, maybe something closer to 50%. That still makes it the biggest consumer tax hike since the 1960s.
Think about that. Even at half-strength, these tariffs could shave 2 to 3 percentage points off U.S. GDP. That’s enough to tip the balance from “slowdown” to “recession.”
And if you’re counting on the Fed to rescue stocks after that kind of damage? That’s a late trade.
Even “Safe” Stocks Are in the Crosshairs
Netflix took a hit this week after Trump floated tariffs on foreign films. One day was enough to send shares sliding. The message? Nothing is truly tariff-proof anymore. If Hollywood has to find a way to make movies in America with sky-high employee costs (compared to other countries), then even streaming services aren’t safe. What is?
Q1 Earnings Were the Warm-Up
Last quarter looked solid on the surface. But that was before the tariff hammer dropped. Q2 is likely to tell a different story. Companies aren’t just worried about margin pressure—they’re pulling guidance. Ford scrapped its 2025 outlook altogether, blaming a $2.5 billion tariff hit. And that’s just the start.
The only thing holding demand together right now is you—and other consumers—front-loading purchases ahead of expected price hikes. That isn’t sustainable. When that surge fades, so could the market.
So… Is the Selling Over? Don’t Bet on It Yet
Maybe this is just a pause. Maybe Powell delivers a dovish surprise. But right now, the setup looks fragile. You’ve got:
- A Fed that isn’t ready to cut,
- A president doubling down on tariffs,
- Earnings momentum that’s probably already peaked,
- And technical resistance that just held on the S&P 500.
Until something gives—rates, tariffs, or both—this market may need to go lower before it finds support.
And if that triggers a shift in policy? That could be your next rally. But you’ll have to make it through the storm first.
