The U.S. stock market experienced a choppy week as investors grappled with fluctuating news and economic indicators. Markets opened on Tuesday with news that European tariffs were on hold, leading traders to coin the term “TACO Trade,” short for “Trump Always Chickens Out.” However, tariff news resurfaced midweek as courts issued conflicting rulings on the use of the International Emergency Economic Powers Act. This back-and-forth contributed to market volatility, with quick trades becoming profitable but long-term decisions seeming risky.
On Friday, stocks were largely flat to down, with the CBOE VIX index declining to 18.57, indicating relatively muted volatility. The dollar appreciated while gold and crude oil prices fell. Over the past five days, stocks rose approximately 1%, driven primarily by gains on Tuesday.
Bonds, gold, and crude oil also saw gains this week. Despite Friday’s downturn, the broader market picture for the week showed some positive signs, with a decent breadth of winners across various sectors. For every gainer, there were two losers, indicating a mixed yet somewhat optimistic market scenario.
Mixed economic signals stir markets
A key indicator of market sentiment can be gleaned from bond prices, which saw an increase this week, suggesting confidence in the long-term economic outlook of the US. Both the 10-year and 30-year US Treasury bonds experienced strong demand.
However, some caution flags were raised by hedge-fund manager Doug Kass and JP Morgan CEO Jamie Dimon, who both observed a rise in credit default swap pricing for US debt, hinting at potential concern about the nation’s fiscal health. Looking ahead, notable earnings reports next week include Broadcom on Thursday and GameStop on Friday. In terms of economic data, investors will be eyeing ISM and PMI reports as well as jobless numbers.
On Friday morning, stocks opened lower following a tweet from the president accusing China of violating agreements, contributing to weak market breadth with 80% of S&P 500 stocks in decline. However, some stocks like Costco saw positive movement, rising 3% after reporting earnings that exceeded expectations. Similarly, Palantir’s stock remained a favorite among investors and continued to perform well.
As the market navigates through a series of economic and geopolitical events, it remains volatile yet filled with opportunities for traders and investors attuned to quick market shifts. The coming week will offer more data and corporate performance reports, providing additional context for future market movements.
