Markets (and Apple) Stabilize... But Elevated Volatility Isn't Going Anywhere
Even with speculation about the potential for trade deals, there is still concern about the spike in interest rates and the weak dollar.
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After some historic swings in both directions early in the week, the action stabilized on Friday. Bonds bounced back, sending interest rates lower, the dollar was down but off its early lows, and fear of the repercussions of a trade war with China subsided a bit.
One thing that helped the indexes quite a bit was talk that Apple AAPL might be exempt from tariffs. Apple has been the poster boy for stocks that will be hurt by tariffs, but it jumped back up 4% and led the Magnificent Seven MAGS to a gain of about 2%.
Overall, market breadth was robust, with 7,250 gainers to about 2,500 losers. All indexes were green, with the Nasdaq Composite leading by 2%.
The day started with growing worries about the impact of a trade war with China, but as the day progressed, there was speculation about the potential that trade deals with other countries would be announced next week and that maybe there would be some dialog with China. The issue now is making deals with about 70 countries, and there appears to be willingness on both sides.
There is still concern about the spike in interest rates this week and the weak dollar, however. Even if trade deals are made, there is likely to be some inflationary impact from the 10% minimum tariffs. Weaker-than-expected CPI and PPI reports were ignored because of inflationary fears and also due to worries about slowing growth.
Overall, the S&P 500 ended the week with a gain of 5.7%, which is its best performance since November 2023, but volatility is likely to stay very high, and the headline news risk will stay elevated.
Have a great weekend. I’ll see you on Monday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
