Market Has Volatile Week With Tariffs on Center Stage

The market had a volatile week as inflation and tariffs took center stage. Despite hot CPI and PPI reports, market players didn’t panic. Tariff news was not nearly as bad as expected, and then weak retail sales on Friday gave bonds a boost and drove interest rates back down to where they were to start the week.

There are some indications that inflation is ticking up, but economic strength and less concern about tariffs are preventing it from becoming a problem. The market expects maybe one Fed rate cut in the fall, but that isn’t a concern if the economy keeps chugging along.

Another issue that helped the market this week was that investors were worried and skeptical. Bearishness was at the highest level in the past years, and it turned out to be a pretty good contrary indicator. When the market didn’t collapse as feared, it started to climb a wall of worry, with buyers inching in out of fear that they might miss out.

Donald Trump continues to deliver a deluge of executive orders and shake up virtually every aspect of the government, but the market appears pleased with the activity despite the outrage of Trump’s political opponents.

This has not been an easy market to trade due to the elevated volatility, but there have been some very good earnings reports that are stirring up speculative traders. There was a long list of names moving up more than 10% even though the indices were close to flat on negative breadth.

We still have quite a few small-cap earnings reports to come, but there isn’t much economic news due next week. The biggest problem the market faces is extended technical conditions in quite a few stocks, but there appears to be pretty good underlying support.

I expect more focus on stock picking next week, but continued volatility will make it difficult.

Have a good evening. I’ll see you tomorrow.

At the time of publication, DePorre had no positions in any securities mentioned.