Weekly Trader's Outlook

Stocks Surge on Trade Optimism

April 25, 2025 Nathan Peterson
Stocks rallied this week on hopes of trade de-escalation between the U.S. and China, though no official deals, or discussions, have been confirmed.

The Week That Was

If you read last week's blog you might recall that my forecast for this week was "bullish if a trade deal is announced, bearish if not." While we have yet to receive an announcement that the U.S. has officially inked a trade deal, there was a lot of back-and-forth rhetoric about U.S./China trade talks, and stocks rallied as if a deal was imminent. In sum, markets became hopeful of trade de-escalation following comments from U.S. Treasury Secretary Scott Bessent that tariff levels are unsustainable. President Donald Trump multiple times throughout the week said that trade talks with China have been taking place, yet China denied that any such discussions have taken place. Regardless, the S&P 500 is on track to be up ~4%, while the tech-heavy Nasdaq is on track to be up an impressive 6% on the week. While it's obvious that Wall Street is eager to have all of the lingering tariff and trade uncertainty resolved, it seems just as obvious that the trade negotiations are going to take some time to finalize.

Meanwhile, Q1 earnings reports continued to pour in this week and there were both bullish and bearish signals. On the bearish side, PepsiCo and Helen of Troy conveyed weakness in consumer spending and consumer products companies Procter & Gamble and Kimberly Clark said that tariffs will result in higher costs (and subsequent higher prices for their goods). On the bullish side, workflow software maker ServiceNow said demand for AI-related solutions remains robust, Google-parent Alphabet delivered strong results and semiconductor makers Texas Instruments and Lam Research also delivered solid results. Additionally, corporations appear to be more willing to provide forward guidance than expected, despite the uncertainty around trade and tariffs. Although it's still relatively early in Q1 earnings season, out of the 178 S&P 500 companies that have reported thus far, we've seen a cumulative 4% top line and 17.5% bottom line growth (year-over-year). Of course, both reported results and analyst forecasts need to be taken with a grain of salt given the lingering economic uncertainty associated with trade policy.

Outlook for Next Week

At the time of this writing (2:30 p.m. ET), stocks are mixed (DJI - 37, SPX + 31, COMP + 177, RUT - 7), but above the midpoints of the intraday range, so the bulls appear to be holding their ground to close out what has been a strong week of gains. Additionally, the SPX (5,521) is currently above key resistance at 5,500 (more on this in the "Technical Take" section below), so a close above this level would provide a more bullish technical set-up heading into next week. Lastly, the Cboe Volatility Index (VIX) is down to the lowest levels (25.11) since April 2nd, which reflects a more stable market sentiment around volatility expectations. Although I'm encouraged by the improvement in the technicals, I have mixed feelings heading into next week. Stocks are on track for a big up week (SPX +4%, COMP +6%), but we still don't have an official trade deal, and we don't know whether the U.S. is actually having discussions with China. I feel that expectations are high that we get some sort of U.S./China tariff de-escalation next week, so does that set us up for near-term profit taking if we don't? Outside trade, we've got several mega-cap tech earnings (MSFT, META, AAPL, AMZN) and the monthly jobs report next week, so several volatility-inducing catalysts are on deck. If we don't get any negative headlines on trade, I would have a full bullish bias heading into next week, but that's impossible to predict. If we don't get any trade headlines that would probably be net bullish for stocks, but I still think the potential for some relatively large up or down days remains. Therefore, my primary forecast for next week is "Volatile" with a secondary forecast of "Slightly Bullish." I'm only going with a slightly bullish outlook because we're near-term overbought on a technical basis (especially in tech) and expectations around trade appear elevated in my opinion. What could challenge my outlook? Obviously if the U.S. gets a trade deal with any country, or the U.S. and China unilaterally drop their tariffs, stocks could have another big week of gains. 

Other Potential Market-Moving Catalysts:

Economic:

- Monday (Apr. 28): no reports

- Tuesday (Apr. 29): Advanced International Trade in Goods, Advanced Retail Inventories, Advanced Wholesale Inventories, Consumer Confidence, FHFA Housing Price Index, S&P Case-Shiller Home Price Index

- Wednesday (Apr. 30): ADP Employment Change, Chicago PMI, EIA Crude Oil Inventories, Employment Cost Index, GDP Deflator, MBA Mortgage Applications Index, PCE Prices, Pending Home Sales, Personal Income, Personal Spending

- Thursday (May 1): Construction Spending, Continuing Claims, EIA Natural Gas Inventories, Initial Jobless Claims, ISM Manufacturing Index

- Friday (May 2): Nonfarm Payrolls, Unemployment Rate, Average Hourly Earnings, Average Workweek, Factory Orders

Earnings:

- Monday (Apr. 28): Roper Technologies Inc. (ROP), Domino's Pizza Inc. (DPZ), Welltower Inc. (WELL), Waste Management Inc. (WM), Cadence Design Systems Inc. (CDNS), NXP Semiconductors NV (NXPI), Nucor Corp. (NUE)

- Tuesday (Apr. 29): Coca-Cola Co. (KO), AstraZeneca PLC (AZN), S&P Global Inc. (SPGI), Pfizer Inc. (PFE), Honeywell International Inc. (HON), Visa Inc. (V), Booking Holdings Inc. (BKNG), Starbucks (SBUX), Mondelez International Inc. (MDLZ), Novartis AG (NVS)

- Wednesday (Apr. 30): Caterpillar Inc. (CAT), Automatic Data Processing Inc. (ADP), Yum! Brands (YUM), Microsoft Corp. (MSFT), Meta Platforms (META), Qualcomm Inc. (QCOM), KLA Corp. (KLAC), Equinix Inc. (EQIX), Aflac Inc. (AFL)

- Thursday (May 1): Eli Lilly & Co. (LLY), MasterCard Inc. (MA), McDonald's Corp. (MCD), CVS Health Corp. (CVS), Apple Inc. (AAPL), Amazon.com Inc. (AMZN), Amgen Inc. (AMGN), Strategy Inc. (MSTR), Airbnb Inc. (ABNB)

- Friday (May 2): Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), The Cigna Group (CI), Cboe Global Markets (CBOE), Eaton Corporation PLC (ETN)

Economic Data, Rates & the Fed:

Markets received a moderate dose of economic data this week, and it was a bit of a mixed bag. From a bullish perspective, S&P's Purchasing Managers' Index (PMI) readings were both above the 50 (expansionary) level and weekly Initial Claims continued its string of sub-230K readings, so for now the labor market appears firm. However, leading economic indicators were weak and consumer sentiment survey data remains depressed. Also, given the global trade uncertainty, much of the economic data that we get in the coming weeks may be impacted by "pull forward" demand to avoid the potential impact of tariffs, so the data should be taken with a grain of salt. Here's the breakdown from this week's reports:

S&P Global Services PMI: Slowed to 51.4 in April from 54.4 in the prior month and below the 52.5 expected.

S&P Global Manufacturing PMI: Ticked up to 50.7 in April from 50.2 in the prior month and above the 49.1 expected.

Leading Economic Indicators (LEI): -0.7% vs. -0.5% expected.

Mortgage Bankers Association (MBA) Mortgage Applications Index: Decreased 12.7% from the prior week.

New Home Sales: Jumped to 724K from 684K in the prior month and well above the 684K expected.

Existing Home Sales: Fell 5.9% in March from the prior month, representing the largest monthly drop since November of 2022 and the weakest March since 2009.

University of Michigan Consumer Sentiment: Declined 8.4% to 52.2 in April from 57.0 in the prior month, but the reading was above the 49.5 economists had expected. Current Economic Conditions decreased from 63.8 to 59.8 and the Index of Consumer Expectations declined to 47.3 from 52.6.

Initial Jobless Claims: Increased to 222K from 216K in the prior week, but below the 223K expected. Continuing Claims decreased 37K from last week.to 1.841M.

The Atlanta Fed's GDPNow "nowcast" for Q1 GDP was revised down to -2.5% yesterday day from -2.2% on April 17th.

Treasury yields appeared to be relatively stable this week versus the volatility seen the week of April 7th-11th. Compared to last Friday, two-year Treasury yields eased ~3 basis points (3.773% vs. 3.80%), 10-year yields dropped ~8 basis points (4.255% vs. 4.333%) and 30-year yields are down ~9 basis points (4.715% vs. 4.809%).

Expectations around potential rate cuts from the Federal Reserve are little changed this week. At this point, I believe the message from the Fed is that they need to wait on any rate cuts to monitor the potential impact of tariffs but are prepared to provide support should weakness in the labor market or volatility in the bond market manifest. Per Bloomberg, expectations for a 25-basis-point cut at the May FOMC meeting are currently 11% (same as last week), with the June Federal Open Market Committee (FOMC) meeting currently showing a 67% (down slightly from 70% last week). The next FOMC meeting is in two weeks (May 6th-7th).

Technical Take

S&P 500 Index (SPX + 16 to 5,500)

Over the past couple of weeks, I've referenced the S&P 500 (SPX) trading range that spans between the April 7th intraday low (4,835) and the March 13th low (~5,500), which shifted from support to resistance once we broke below it during April. At the time of this writing (12:55 p.m. ET), the SPX is trading right at 5,500 so it will be interesting to see where the index closes today. Should the index register a close above 5,500, and open above this level on Monday, I would consider that an incremental bullish technical development. However, if the SPX struggles later today and begins to roll back over that would reinforce 5,550 as near-term resistance and therefore considered near-term bearish. I don't have the luxury of seeing where the index will close today, and closes are very important for technicians, so my technical assessment is a bit binary this week.

Intermediate-term technical translation: moderately bullish with close above 5,500; moderately bearish with close below 5,500.

SPX flirting with potential resistance today around 5,500.

Source: ThinkorSwim trading platform

Past performance is no guarantee of future results.

Nasdaq 100 Index (NDX + 174 to 19,388)

The Nasdaq 100 index (NDX) was a relative outperformer this week (+6%), thanks to relatively benign earnings reports from tech bellwethers such as ServiceNow, Alphabet, Texas Instruments & Lam Research. The resurgence in tech stocks has put the NDX above both its downward trending channel and its March 13th low, which are bullish technical developments. Given this week's strong performance we are in the category of "near-term overbought," but otherwise the price action is encouraging for the bulls.    

Near-term technical translation: near-term slightly bearish, intermediate-term bullish

Nasdaq 100 exhibiting some relative strength this week; technicals improving as a result.

Source: ThinkorSwim trading platform

Past performance is no guarantee of future results.

Cryptocurrency News:

Earlier this week blank-check firm Cantor Equity Partners (CEP) announced a $3.6B crypto venture, in partnership with stablecoin issuer Tether, crypto exchange Bitfinex, and Japanese investment firm SoftBank, to bring bitcoin holding company Twenty One Capital to the public market via SPAC (special purpose acquisition company). Twenty One Capital was founded by Jack Mallers, Tether Holdings and SoftBank Group to offer investors a vehicle for direct exposure to Bitcoin, in addition to developing Bitcoin-native financial products and media.

Market Breadth:

The Bloomberg chart below shows the current percentage of members within the S&P 500 (SPX), Nasdaq Composite (CCMP), and Russell 2000 (RTY) that are trading above their respective 200-day Simple Moving Averages (SMA). In short, stocks had an up week and market breadth correspondingly expanded as a result. On a week-over-week basis, the SPX (white line) breadth moved up to 34.20% from 29.40%, the CCMP (blue line) ticked up to 25.08% from 18.94%, and the the RTY (red line) expanded to 21.39% versus 16.42%.

This week's rally in stocks assisted market breadth expansion.

Source: Bloomberg L.P.

Market breadth attempts to capture individual stock participation within an overall index, which can help convey underlying strength or weakness of a move or trend. Typically, broader participation suggests healthy investor sentiment and supportive technicals. There are many data points to help convey market breadth, such as advancing vs. declining issues, percentage of stocks within an index that are above or below a longer-term moving average, or new highs vs. new lows.

This Week's Notable 52-week Highs (24 today): Agnico-Eagle Mines Ltd. (AEM - $1.08 to $118.54), Beacon Roofing Supply Inc. (BECN + $0.01 to $124.10), First Capital Inc. (FCAP + $0.27 to $48.65), Philip Morris International Inc. (PM - $0.60 to $169.47), PriceSmart Inc. (PSMT - $2.18 to $99.53), Stride Inc. (LRN - $0.71 to $138.88)

This Week's Notable 52-week Lows (27 today): Boot Barn Holdings Inc. (BOOT + $0.11 to $102.29), Enphase Energy Inc. (ENPH + $0.11 to $45.86), Matson Inc. (MATX - $2.04 to $101.50), Masco Corp. (MAS - $0.11 to $60.18), Medpace Holdings Inc. (MEDP - $10.05 to $292.83), United Health Group Inc. (UNH - $12.05 to $412.20)

Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the Options Disclosure Document titled "Characteristics and Risks of Standardized Options" before considering any option transaction. Call Schwab at 1-800-435-4000 for a current copy. Supporting documentation for any claims or statistical information is available upon request.

Futures and futures options trading involves substantial risk and is not suitable for all investors. Please read the Risk Disclosure Statement for Futures and Options prior to trading futures products.

Investing involves risks, including loss of principal. Hedging and protective strategies generally involve additional costs and do not assure a profit or guarantee against loss.

The information here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The type of securities and investment strategies mentioned may not be suitable for everyone. Each investor needs to review a security transaction for his or her own particular situation. Data here is obtained from what are considered reliable sources; however, its accuracy, completeness or reliability cannot be guaranteed.

All references to subjects (securities, indexes, futures contracts, and options contracts) were derived based on screens conducted by the writer for certain anomalous activity such as volumes, volatility and other related market data. As needed for brevity, the writer may have applied discretion when choosing among screen outputs for inclusion. Such discretion may have been based on news reports or other considerations of public interest. The views or opinions are those of the writer, and are subject to change without notice. All referenced subjects were chosen for illustrative purposes only and should not be considered recommendations, offers to sell, or solicitations of offers to purchase.

Please note that this content was created as of the specific date indicated and reflects the author's views as of that date. It will be kept solely for historical purposes, and the author's opinions may change, without notice, in reaction to shifting market, economic, business, and other conditions.

This information does not constitute and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager.

Past performance is no guarantee of future results.

Cryptocurrency-related products carry a substantial level of risk and are not suitable for all investors. Investments in cryptocurrencies are relatively new, highly speculative, and may be subject to extreme price volatility, illiquidity, and increased risk of loss, including your entire investment in the fund. Spot markets on which cryptocurrencies trade are relatively new and largely unregulated, and therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments. Some cryptocurrency-related products use futures contracts to attempt to duplicate the performance of an investment in cryptocurrency, which may result in unpredictable pricing, higher transaction costs, and performance that fails to track the price of the reference cryptocurrency as intended. Please read more about risks of trading cryptocurrency futures here.

Schwab does not recommend the use of technical analysis as a sole means of investment research.

​Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Commodity-related products carry a high level of risk and are not suitable for all investors. Commodity-related products may be extremely volatile, may be illiquid, and can be significantly affected by underlying commodity prices, world events, import controls, worldwide competition, government regulations, and economic conditions.

All corporate names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes please see schwab.com/indexdefinitions.

0425-NU2A