US Weekly Report: Renewed tariff concerns halt stock rally

Renewed tariff concerns halt stock rally

US stocks snapped a nine-day winning streak as renewed tariff rhetoric overshadowed strong economic data ahead of the Federal Reserve (Fed) meeting. President Trump’s threat of new tariffs—including a 100% levy on foreign films and potential duties on pharmaceuticals “in the next two weeks”—and his lack of engagement with China’s President Xi have cast doubt on further de-escalation, which puts the recent US stock rally on pause.

With major US indices still trading below their key respective 200-day moving average (MA), overcoming this key trendline may be necessary to confirm a trend reversal. With most megacap tech earnings now behind us, market sentiment is likely to shift back to trade risks this week, especially as the clock is ticking down on Trump 90-day tariff pause while a concrete trade deal with partners is still out of sight.

What to watch this week: US Federal Open Market Committee (FOMC) meeting

With most of the Magnificent Seven stocks having reported, the earnings season may start to lose steam in the coming week. Still, attention will shift to the likes of Palantir, AMD, Disney, and Coinbase, which could help sustain sentiment and extend the earnings momentum.

The key event on this week’s calendar is the US FOMC meeting. The Fed has kept its policy rate steady at 4.25% – 4.50% throughout Q1, citing solid economic growth, a stable labour market, and persistent inflation. Its latest dot plot continued to signal two 25 basis point (bp) cuts in 2025. However, fresh uncertainties from US reciprocal tariffs have stoked inflation fears and raised growth concerns—posing challenges to both sides of the Fed’s dual mandate. This will likely reinforce the Fed’s cautious, wait-and-see stance moving forward.

At the upcoming meeting, the Fed is widely expected to keep rates unchanged while acknowledging ongoing risks from tariffs and signs of labour market softness. With no new economic projections or dot plot scheduled, market sentiment will be highly sensitive to the Fed Chair’s policy messaging. Markets are currently pricing in a 30% probability of a June rate cut and are leaning towards three 25 bp rate cut by year-end.

US 500: Key resistance confluence in focus

After rebounding nearly 18% from its April 2025 low, the S&P 500 now trades just 3% below its 200-day MA—a key trendline it failed to reclaim in March. This puts the 5,750 – 5,800 zone in sharp focus, as it marks a confluence of resistance: the 100-day and 200-day MAs align here with the daily Ichimoku Cloud. On the weekly chart, the relative strength index (RSI) has returned to the midline, signalling a potential technical reset from previously oversold conditions. Any failure to break above this midline could mirror the dynamics seen in the 2018 and 2022 bear markets, where strong rebounds proved to be temporary rallies within a broader downtrend.

Key levels:

• R2: 5,800
• R1: 5,687
• S1: 5,500
• S2: 5,100

US 500 Cash chart:

Source: IG charts

Sector performance

Sector performance over the past week reflected a continued pick-up in risk appetite, supported by resilient corporate earnings that have offered somewhat of a diversion from prevailing tariff risks. So far, 74% of S&P 500 companies have reported results, with 73% beating earnings expectations—extending the trend of outperformance seen in recent quarters. Cyclical sectors, particularly industrials and technology, led gains, while healthcare and energy lagged. Among the Magnificent Seven, performance was mixed: NVIDIA (+4.7%), Microsoft (+11.5%), Meta (+9.0%), and Alphabet (+2.2%) posted gains, while Apple (-5.4%), Amazon (-0.7%), and Tesla (-2.0%) declined. Looking ahead, with most earnings now behind us, market focus is likely to shift back toward the resilience of the US economy and ongoing tariff risks, especially as the 90-day tariff pause window continues to narrow.

Source: Refinitiv

Source: Refinitiv

Source: Refinitiv
*Note: The data is from 29th April – 5th May 2025.

Source: Refinitiv
*Note: The data is from 29th April – 5th May 2025.

Source: Refinitiv
*Note: The data is from 29th April – 5th May 2025.