[Chart courtesy of MarketWatch.com]

1. Moving the market

Equities opened lower as early optimism faded, with all three major indexes dipping into negative territory. The temporary suspension of the U.S.–China tariff dispute faded from focus, offering little support.

By the close, only the Dow and S&P 500 managed to claw back into positive territory, while the Nasdaq remained in the red.

Investor sentiment remains cautiously optimistic. Recession fears have started to ease, helping lift markets, but a range of uncertainties continues to form a “wall of worry.”

The key question now is whether the current rally can broaden and sustain its momentum through the summer—or if it’s nearing exhaustion and vulnerable to a correction.

The tech sector has led the charge this week (excluding today), with standout performances from Nvidia and Tesla—both up over 14%. Meta, Amazon, and Alphabet have also posted solid gains.

On the economic front, April’s Producer Price Index (PPI) surprised to the downside, falling 0.5% month-over-month versus expectations of a 0.3% increase.

Retail sales rose 0.1%, in line with forecasts. Despite the positive inflation data, Fed Chair Jerome Powell cautioned that inflation could remain volatile.

Interestingly, the inflation surprise index dropped to its lowest level since 2020, fueling gains across a wide range of assets—including stocks (excluding the Nasdaq), bonds, gold, bitcoin, and crude oil.

Meanwhile, global uncertainty remains elevated, with the World Uncertainty Index still at record highs, as noted by ZeroHedge.

Can equities break through this glass ceiling—or is a pullback looming?

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[Chart courtesy of MarketWatch.com]

1. Moving the market

Equities were mixed in early trading but gained some ground as bullish sentiment persisted.

The tech sector continued to lead, with Nvidia rising over 2% following news that Saudi Arabia purchased 18,000 of its highly rated AI chips. Fellow chipmaker AMD surged more than 7% due to a $6 billion buyback.

The S&P 500 finally reached positive territory for the year, despite previously being more than 20% below its record high set in February. With the easing of tariff wars and the reduction of levies, particularly between the U.S. and China, traders have shifted from bonds to equities, driving the S&P 500 above its widely followed 200-day moving average.

Whether this rebound has the momentum to push the indexes higher remains uncertain. Has this epic surge come too far too fast?

Despite positive headlines from the Middle East, attributed to Trump’s deal-making skills, market follow-through was weak, with only the Nasdaq closing solidly in the green.

Uncertainty persisted as bond yields continued their upward trend, with the 10-year yield topping 4.5% and the 30-year yield approaching 5%, as rate-cut expectations diminished.

Gold dropped again, losing its $3,200 level, and settling at one-month lows, while the dollar fluctuated to close unchanged. Crude oil drifted lower, as did Bitcoin, though the cryptocurrency found support at the $103k level.

More potentially market-moving data is due out tomorrow, including Retail Sales and the Producer Price Index (PPI).

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[Chart courtesy of MarketWatch.com]

1. Moving the market

Equities surged at the opening following news that the U.S. and China agreed to temporarily slash tariffs after weekend negotiations in Switzerland.

Treasury Secretary Bessent described the talks as “very productive,” with both parties agreeing to cut reciprocal tariffs by 115% for nine days. Specifically, this means the U.S. will reduce Chinese tariffs to 30%, while China will lower tariffs on U.S. imports to 10%.

Bessent expects to meet again with the Chinese representative in the coming weeks to finalize a more comprehensive agreement.

Traders breathed a sigh of relief, and the markets responded with exuberance, pushing the S&P 500 back above its 200-day moving average (DMA) and slightly into positive territory for the year. Despite some uncertainty being alleviated, market volatility may persist until a final trade agreement is reached.

Today’s massive rally also pushed our domestic Trend Tracking Indicator (TTI) back above its trend line, though this is just the first attempt, and the sustainability of this move remains to be seen.

We saw the second-largest short squeeze of the year, as rate-cut expectations plummeted along with recession odds. Bond yields rose as traders shifted towards equities, favoring the dollar, and causing gold to drop, although the precious metal found support at the $3,200 level.

Crude oil maintained its overnight gains, while Bitcoin surged to nearly $106k overnight before retreating to $102k during the day session.

Bitcoin remains aligned with global liquidity (with a three-month lag), and some traders are now forecasting a price point above $150k by July.

Will these predictions prove accurate?

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