Market Movers: Trade Winds & Cooling Inflation

The SPY Trader

Fresh news and strategies for traders. SPY Trader episode #1206. Hey everyone, it's your pal Wally Pip here, and welcome to Spy Trader! It's 6 am on Saturday, May 31st, 2025, Pacific time, and let's dive into what's moving the markets. Buckle up, buttercups, because it's been a wild ride! First up, the S&P 500 and Nasdaq had a stellar month, posting their best monthly gains since November 2023. The S&P jumped 6.2% and the Nasdaq a whopping 9.6%. Even the Dow had its best month since January, climbing 3.9%. But hold your horses, we saw some selling pressure towards the end of the week. On Friday, the S&P 500 barely budged, the Nasdaq dipped about 0.3%, while the Dow eked out a tiny gain of 0.1%. What's been causing all this commotion? Well, trade tensions with China are a biggie, and we're also keeping a close eye on inflation data. Speaking of sectors, real estate and tech have been shining stars, while energy and basic materials have been lagging behind. Semiconductor stocks like Nvidia and AMD took a hit because of those USChina trade worries. Telecommunications looked good recently, and hardware technology did not. Now, let's break down the headlines. President Trump is saying China has violated its tariff agreement, and there are reports about expanding tech curbs on Chinese firms. It's like a soap opera, folks! And speaking of tariffs, the courts are all over the place, adding even more uncertainty. On the bright side, the Personal Consumption Expenditures (PCE) index showed inflation is cooling down, which is music to the Fed's ears. Consumer sentiment is also up, with inflation expectations going down. But don't get too comfy, because some folks think inflation could creep up to 3.5% by Q2 2026, so the Fed is likely to keep interest rates steady. The US economy is expected to slow down next year, with some forecasts saying growth could be as low as 0.1%. There's even a 40% chance of a recession in the next 12 months. Yikes! Consumer spending is still growing, but it's expected to slow down, and job growth might decelerate too. Companywise, Nvidia is still crushing it with its AI chips, even with those pesky trade restrictions in China. But the stock's been bouncing around like a kangaroo on a trampoline because of those trade worries. Cooper Companies took a tumble after lowering its growth outlook, while Costco wowed everyone with betterthanexpected results. Ulta Beauty also had a great quarter, and Gap, not so much. So, what's a savvy investor to do? Diversify, diversify, diversify! Spread your investments across different asset classes and sectors to cushion the blow if one area takes a dive. Focus on companies with solid balance sheets and strong earnings growth. Keep a hawk eye on trade developments and economic data. Some experts are even saying 2025 might be a 'pause' year for the S&P 500, with singledigit gains and lots of ups and downs. Warren Buffett's advice? Adapt to reality, know your risk tolerance, and stick with companies that have strong financials. And remember, don't put all your eggs in one basket! This is just my two cents, folks, so always chat with a qualified financial advisor before making any big moves. Stay safe out there, and I'll catch you on the next Spy Trader!