I had a very mixed reaction when I heard Trump telling WalMart to “Eat the Tariffs”.
The economist in me was upset that Trump refuses to acknowledge that in the short run tariffs are absolutely inflationary and truly a tax on US citizens.
The American in me was amused by the incredible moxy in trying to bully the world’s largest retailer.
All that aside, the market outlook is not as dour as it once was. But we are probably running out of steam on this recent bull run.
This seeming pause allows us to focus today’s commentary on what comes next.
Market Outlook
We have enjoyed a tremendous bounce from the recent bottom. Now we are gladly much closer to the all time highs of 6,147 than we are to the April low of 4,835 for the S&P 500 (SPY).
The reason is fairly obvious. That being the brazen and falsely named “reciprocal tariffs” were nothing more than a negotiating ploy to get more reasonable trade terms with other nations. First came the UK shortly followed by China.
In the simplest terms, the market will stay bullish if we get more of the same in coming days. That should include deals with other major partners like Mexico, Canada and leading nations in Europe.
On the other hand, stocks will turn sour if the opposite happens with a war of words in the headlines.
And yes, mixed news = mixed results for stocks.
Pulling back to the big picture, things are looking more and more just like the trade discussions in 2018/2019 that ended amicably. After a noticeable correction, things smoothed out with the US economy still on the growth path and the stock market right along with it in the plus column.
The best news to share on the recent advance is that there is good market breadth. Not just the mega caps pulling ahead and everyone else WAY behind. As this chart shows it’s a healthy mix of results across all the market cap groups:
I think it is wise to remain cautiously optimistic at this time. Meaning that the saying “Bull market til proven otherwise” has served us well in not panicking at the darkest hour of this year’s correction. And that should be the phrase that pays going forward.
The key is being aware of what could make things turn south (disruption with tariffs or noticeable weakening of GDP or employment) and then reacting quickly as it would spell meaningful market downside.
Hopefully that won’t be necessary...but just like a Boyscout, it’s good to be prepared.
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SPY shares were trading at $592.61 per share on Tuesday afternoon, down $2.24 (-0.38%). Year-to-date, SPY has gained 1.42%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.
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