US Weekly Report: Wall Street lifted out of “extreme fear” zone

Wall Street lifted out of “extreme fear” zone

Wall Street staged a solid recovery last week, with the Dow gaining 4.4%, the S&P 500 rising 6.2%, and the Nasdaq surging 7.7%. Easing concerns over Federal Reserve (Fed) independence and renewed hopes of trade talks helped lift sentiment. Still, major US indices remain below their respective 200-day moving average (MA) and close to 10% below their all-time high, which may still signal some reservations about a potential growth slowdown ahead. While the longer-term effects of tariffs remain a risk to monitor, sentiment has clearly improved, moving out of "extreme fear" territory for the first time in a month.

What to watch this week: US tech earnings, US non-farm payrolls

This week, attention will turn to several megacap tech earnings, particularly from Meta, Microsoft, Apple, and Amazon. So far, market participants have been more inclined to look past tariff risks for now, buoyed by positive US rhetoric that keeps hopes alive for potential tariff compromise. Focus will be on whether the results from upcoming Magnificent Seven stocks can help to sustain the recovery momentum in the broader index.

On the economic front, a series of US labour market data will also be in focus. March’s non-farm payrolls report was mixed, with 228,000 jobs added—well above expectations and February’s downwardly revised 117,000. However, the unemployment rate ticked up to 4.2%, slightly above forecasts, partly due to a higher participation rate. Thus far, the jobless rate has remained between 4.0% and 4.2% for nearly a year, consistent with Fed Chair Powell’s recent view that the labour market remains "broadly in balance."

Looking ahead, April’s payrolls are expected to rise by 129,000, with the unemployment rate holding steady at 4.2%. Market expectations for up to four rate cuts through 2025 suggest a degree of anticipated downside risks to growth, likely implying a stronger pickup in unemployment rate ahead. Any stronger-than-expected labour data could signal underlying resilience in the US economy to weather the impending impact of trade tariffs, which may help to ease recessionary concerns.

US 500: 200-day MA on watch ahead

The US 500 has broken above its 10 April high at the 5,493 level, signalling stronger buyer control and interrupting the recent pattern of lower highs and lower lows, at least for now. Its daily relative strength index (RSI) has also edged above the midline, after failing to do so on two previous occasions since March, further pointing to buyer momentum. On the upside, key resistance levels to watch include the 5,687 level in the near term, followed by its 200-day MA at the 5,800 level. A decisive reclaim of the 200-day MA would still be needed to confirm the establishment of a new bullish trend.

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 pick-up in risk appetite, as bearish sentiment eased following reduced concerns around the Fed’s independence and trade tensions. Growth sectors led the rally, fuelled by strong gains across the Magnificent Seven stocks. Tesla surged 25.6% over the week, while NVIDIA, Meta, and Amazon each rose more than 12%. Microsoft, Apple, and Alphabet also gained over 8%. In contrast, defensive sectors lagged, with consumer staples being the only sector to end the week in the red. Looking ahead, the focus will be on whether the rebound in growth stocks can sustain its momentum, with upcoming economic data in the spotlight to gauge the strength of underlying US economic resilience in the face of trade tariffs.

Source: Refinitiv

Source: Refinitiv

Source: Refinitiv
*Note: The data is from 22nd – 28th April 2025.

Source: Refinitiv
*Note: The data is from 22nd – 28th April 2025.

Source: Refinitiv
*Note: The data is from 22nd – 28th April 2025.