Overview:
On Monday, May 5, the S&P 500 snapped its nine-session winning streak, the longest run in 20 years, after U.S. President Donald Trump announced a new tariff of 100% on movies produced outside the U.S. The news triggered market volatility as investors weighed the potential impact of the tariffs on the economy, with concerns heightened ahead of the Federal Reserve’s monetary policy decision later in the week.
Despite this setback, Treasury Secretary Scott Bessent reassured markets that the combination of Trump’s tariffs, tax cuts, and deregulation efforts would ultimately benefit long-term U.S. investment. However, concerns remain over the lack of progress on trade deals, which could be causing economic damage.
Fear & Greed Index:
Cautious – The market has shown resilience in the face of tariff uncertainties, but the lack of concrete trade deals and ongoing volatility is making investors uneasy.
Key Indices (Closed Prices):
- Dow Jones Industrial Average: -0.24% at 41,218.83
- S&P 500: -0.64% at 5,650.38
- Nasdaq Composite: -0.74% at 17,844.24
Sector Performance:
- Winners:
- Consumer Discretionary: Skechers surged 24.3% after agreeing to be taken private in a $9.4 billion deal by 3G Capital.
- Losers:
- Energy: The energy sector was the worst performer, down 2%, as OPEC+ announced accelerated output hikes amid concerns over supply and uncertain demand.
- Technology & Media: Movie and television production stocks, such as Netflix and Amazon, fell sharply after Trump’s tariff announcement. Netflix dropped 1.9%, ending its 11-session winning streak.
Key Movers:
- Netflix (NFLX): Fell 1.9% after Trump’s tariff announcement, ending an 11-session winning streak.
- Amazon (AMZN): Dropped 1.9%, reflecting broader media sector concerns.
- Skechers (SKX): Gained 24.3% after agreeing to be taken private by 3G Capital.
- Tyson Foods (TSN): Tumbled 7.7% after missing quarterly revenue expectations.
Economic Data:
- ISM Services Sector: The services sector picked up growth in April, but a sharp rise in input prices pointed to inflationary pressures, largely driven by tariffs.
- Tariffs & Inflation: The data revealed that tariffs are causing inflation to rise, especially in the cost of materials and services.
- Trade Uncertainty: The announcement of new tariffs by President Trump, particularly the 100% tariff on foreign-produced movies, added to concerns about the potential negative impact of ongoing trade disputes with China.
Outlook:
Markets are in a holding pattern as investors await the Federal Reserve’s policy announcement on Wednesday, with many expecting the central bank to keep interest rates unchanged. The market is also pricing in potential rate cuts in 2025, with the first easing likely at the Fed’s July meeting. Ongoing concerns about tariffs and trade negotiations could keep the market volatile in the short term, with corporate profitability under scrutiny.
