[Chart courtesy of MarketWatch.com]

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An early stumble interrupted April’s comeback rally as bad news about the U.S. economy pulled the markets down.

First-quarter GDP declined by 0.3%, a sharp reversal from the 2.4% increase in the fourth quarter. The Commerce Department report also showed a slowdown in consumer spending and a decline in government spending, the latter being a result of DOGE cuts.

A separate private payroll report from ADP signaled a slowdown in that sector, with private payrolls in April growing by only 62,000, well below the estimated 120,000. This dampened bullish sentiment, which had pulled the S&P 500 out of an 11% tailspin, leaving the index down only around 1% for the month.

In the end, the Dow, and the S&P 500 managed to crawl back out of their early hole to close slightly in the green, helped by a last-hour melt-up. It was a choppy end to a choppy month, described by ZH as a 16% peak-to-trough drawdown followed by an 18% rally in the last few weeks.

Growth and inflation data surprised to the downside, pushing the much-feared stagflation scenario to the back burner, at least for now. The most shorted stocks dumped after the opening but were squeezed higher as dip buyers stepped in.

With weak macro data, it came as no surprise that rate-cut expectations surged while bond yields slipped. The dollar dropped over 4% during April, its worst performance since November 2022.

Gold moved in the opposite direction, gaining almost 6%, marking its fourth straight monthly rise, while Bitcoin rallied 14% for the month, its best performance since November, according to ZH.

It seems we are back to “bad news is good news,” as far as stocks are concerned, with bonds, crude oil, dropping U.S. inflation, and copper pointing to a recession, while rate-cut expectations are jumping higher along with equities.

[Chart courtesy of MarketWatch.com]

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The major indexes opened flat and remained close to their initial levels in early trading, as Wall Street awaited updates on trade deal negotiations.

While the Treasury Secretary mentioned productive discussions with Japan and hinted at a potential “framework” agreement with India, the absence of details regarding China put pressure on the markets.

General Motors saw a decline despite reporting better-than-expected profits, as the automaker announced it was reassessing future guidance and suspending additional share buybacks due to uncertainties surrounding levies and rising global tensions.

Big Tech will be in the spotlight tomorrow and Thursday, with Meta, Microsoft, Apple, and Amazon set to report their quarterly results.

Of the more than 36% of S&P 500 companies that have reported so far this season, approximately 73% have exceeded expectations, according to FactSet. This is slightly below the 5-year average of 77%.

Despite market volatility, bullish sentiment emerged midday, leading to a rebound and another positive close for the major indexes. The theme of the day was “bad news is good news,” as weak macroeconomic data increased expectations for rate cuts.

Bond yields fell again, the dollar remained stable, but gold slipped while successfully defending its $3,300 level. Bitcoin edged higher, maintaining its $95k level, and continued to see significant inflows into its ETFs.

Have traders and investors recognized this chart, which seems to indicate that Bitcoin’s next major advance is imminent?

[Chart courtesy of MarketWatch.com]

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The major indexes remained relatively unchanged in early trading, ahead of this week’s announcements of big tech earnings and economic data, as well as the latest developments in the trade saga.

There is still no clarity on any potential agreement with China, although Treasury Secretary Bessent noted progress on other proposals, suggesting that a deal with India might be “one of the first” to come.

The tug-of-war continues, with Trump stating last week that discussions with China were underway, which was vehemently denied by Chinese officials.

We are now approaching the busiest period of the first-quarter earnings season, during which more than 180 S&P 500 companies will release their reports.

April has been a volatile month for the indexes. The S&P 500 briefly entered bear market territory on April 7 but has since made a recovery. However, the index has yet to break through key resistance levels, leading some technical analysts to speculate that we might reverse and test the lows again.

This is a real possibility, as markets typically experience a lot of back-and-forth and testing of resistance levels—both on the downside and the upside—before stabilizing.

Today, stocks were saved by aggressive option buying in the last hour, which pulled the S&P 500 to a green close, although the Nasdaq did not follow suit.

Most shorted stocks were squeezed, and bond yields retreated, providing further support. The dollar took a beating, which gave gold a reason to rally strongly, with the precious metal reaching $3,360 again.

Bitcoin touched $95.5k in overnight trading, swung wildly during the day session, but ultimately lost a fraction.

While the S&P 500 is still down for April, it is within striking distance of wiping out that deficit before the month ends.

ETF Tracker StatSheet          

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STOCKS AND BONDS SHOW STRONG WEEKLY PERFORMANCE DESPITE CHOPPY SESSION

[Chart courtesy of MarketWatch.com]

1. Moving the market

Equities initially slipped but later recovered as traders weighed mixed earnings from major tech companies and the latest developments in the trade war.

Google parent Alphabet, part of the Mag7 stock basket, exceeded first-quarter earnings expectations, causing its stock to jump 2%. In contrast, Intel fell 7% after issuing disappointing guidance.

Bullish sentiment was further impacted by Trump’s comments in Time magazine, where he stated that he would consider it a “total victory” if the U.S. had high tariffs of 20% to 50% on foreign countries a year from now.

He also announced that many trade deals would be finalized in the next three to four weeks. However, there were no updates on China, which revealed that there were no ongoing discussions on tariffs, dampening market enthusiasm.

ZH described today’s session as choppy, range-bound, and quiet. Despite this, stocks and bonds showed strong performance for the week.

The dollar managed modest gains after two weeks of decline. Bond yields were lower this week, and gold experienced only its third down week of the year after reaching the $3,500 level, a pullback that was expected.

Bitcoin had a great week, touching $95,000 for the first time since February and breaking above key technical levels.

As I have repeatedly pointed out, Bitcoin appears to be in a bull run following global liquidity with a three-month lag.

Will it catch up with gold’s year-to-date performance?