U.S. Stocks Erased 100% Tariff Loss on Easing Trade Concerns

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week of May 2, U.S. stocks finished higher, with the S&P 500 Index(SPX) logging its second consecutive week of gains for the first time since January and closing Friday with its ninth straight session in positive territory. The technology-heavy Nasdaq Composite(COMP) rose 3.42%, supported by better-than-expected earnings reports from several large-cap tech companies.

Positive sentiment early in the week appeared to be driven by a continuation of the prior week’s optimism around de-escalating trade tensions, with President Donald Trump rolling back some of his initial tariffs on cars and auto parts and Commerce Secretary Howard Lutnick announcing that a major trade deal was nearing the finish line. Later in the week, the focus largely shifted to earnings as companies representing nearly 40% of the S&P 500 Index’s market cap reported first-quarter results, including four of the so-called Magnificent Seven names. Refer to below major indexes performance table for the week.

Major indexes monthly performance for April as below. It’s worth noting that the SPX has formed a large long-legged hammer candlestick formation in April on its monthly chart, which is a very bullish technical signal.

Key highlights for the week and next:

1.    Earnings growth: Positive for Q1, but outlook is unclear. Q1 earning season is underway, with about 70% of S&P 500 companies having reported earnings. Thus far, about 76% of companies have reported positive earnings surprises, above the 10-year average beat rate of 75%. Earnings growth for Q1 remains on track for 12.5% year over year, above the 11.5% expected at the end of last year. However, guidance for Q2 of earnings growth has weakened, as companies point to uncertainty around the consumer and the tariff and trade backdrop. 

2.    U.S. GDP growth turns negative, Q1 growth fell by -0.3% versus an expectation of -0.2%. This was driven largely by a surge in imports — the biggest in nearly five years — as companies purchased goods in anticipation of higher tariff rates. 

3.    Jobs market still healthy but could slow from here. The April nonfarm jobs reported released on May 2 indicated 177k jobs added, above the expected 138k. While March were revised lower by 43k. Unemployment remained steady at 4.2%, in line with expectation. 

4.    Fed rate cut has come down after solid jobs report for April. Markets are pricing in three Fed interest rate cuts instead of four, and the probability of a June rate cut has declined from 55% to about 33%, according to the CME FedWatch Tool. The FOMC meeting is scheduled on next Tuesday and Wednesday(May 6-7), expected the Fed rate to remain unchanged at 4.5%. 

SPX sectors in play

All but one of the 11 SPX sectors recorded weekly gains, with the Tech(XLK) and Financials(XLF) sectors led the gains. The energy sector(XLE) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The SPX index has continued upward move after its bullish breakout from a major downtrend line as highlighted in my last post. It’s worth highlighting SPX has formed a huge long-legged bullish hammer candlestick on its April monthly chart, which is a very bullish sign especially on the large time frame chart. Click below three indexes for their weekly charts and SPX monthly chart.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

SPX monthly chart

China/HK

Mainland China stock markets declined in a holiday-shortened week. The Shanghai Composite Index(SSE) retreated 0.49% while the blue chip CSI 300 was down 0.43%. In Hong Kong, the benchmark Hang Seng Index rose 2.38%. (refer to the above weekly performance table). Markets in mainland China are closed from May 1 until May 5 for the Labor Day holiday and will resume trading Tuesday, May 6.

Key highlights for the week and outlook for China/HK:

1.   On Friday, China said it was considering the possibility of holding trade talks with Washington, indicating a potential thaw in the U.S.-sparked trade war. “The U.S. has recently sent messages to China through relevant parties, hoping to start talks with China,” the Commerce Ministry said in a statement. “China is currently evaluating this.” The ministry’s comments followed reports that China has started to exempt some U.S. goods from tariffs covering roughly USD 40 billion worth of imports, Bloomberg reported. The list of exempted products, which include products such as drugs and industrial chemicals, has been circulating among traders and businesses over the past week but has not been officially confirmed, Bloomberg reported, citing unnamed individuals. 

2.    A pair of indicators gave the first official snapshot of China’s economy after the Trump administration raised total tariffs on most Chinese goods to 145% in April. The manufacturing PMI fell more than expected to 49 from 50.5 in March, according to the country’s statistics bureau, marking the worst contraction since December 2023. The nonmanufacturing measure of construction and services activity also missed expectations, declining to 50.4 in April from March’s three-month high of 50.8. 

3.   China set an economic growth target of around 5% this year, a goal that many analysts think will be hard to meet given the trade war. While a trade war with the U.S. would likely deliver a shock to Chinese exports and economic confidence, Beijing should have the financial capacity to reduce their impact and could roll out fiscal stimulus in stages as it assesses the economic costs of tariffs.

Refer to below .HSI stocks top 40 performance of the week.

Click below SSE and .HSI indexes for their weekly charts. 

SSE weekly chart

.HSI weekly chart

Singapore

The Straits Times Index (STI) added 0.56% to close at 3845.14 point this week, making its 3^rd consecutive weekly gains. Top weekly gainers including the Jardine family of stocks such as DFI, HKland and JMH, gained from 4.1% to 6.2%, continued their strong momentum after HKland’s recent announcement of asset sales and share buyback programme. Index heavyweights DBS and OCBC were also among top gainers. Refer to below table for STI index stocks weekly performance.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports. Please comment to claim copyright ownership of any material, and I will remove it if necessary.