Source: Parth Sanghvi
Market Performance Overview
The S&P 500 was able to break a four-week losing streak with a slight gain on Friday. However, the market continues to experience high levels of volatility, largely due to the ongoing uncertainty surrounding trade policy and the recent Federal Reserve policy update.
As trading came to a close on Friday, the Dow Jones Industrial Average had risen by 31 points (equivalent to a 0.1% increase), the S&P 500 Index was up by 0.04%, and the NASDAQ Composite had seen a 0.5% rise.
Key Market Drivers
1. Trump Signals Flexibility on Reciprocal Tariffs
On Friday, President Donald Trump announced that his administration would be showing “flexibility” in regards to reciprocal tariffs, which are scheduled to take effect on April 2. This announcement comes after weeks of uncertainty over U.S. trade policy, with inconsistent rhetoric from the White House causing unease among investors.
Following the European Union’s (EU) decision to delay retaliatory tariffs on U.S. whiskey, there is a glimmer of hope that diplomatic talks could help to ease tensions between Washington and Brussels. However, the ongoing uncertainty surrounding tariffs leaves the market vulnerable to further volatility.
2. Mixed Signals from the Federal Reserve
As expected, the Federal Reserve decided to leave interest rates unchanged this week. However, its updated economic projections sent mixed signals to investors: on one hand, they maintained expectations of 50 basis points in rate cuts this year, while on the other, they raised inflation forecasts, which could limit the Fed’s ability to cut rates.
Adding another layer of complexity to its decision-making, the Fed expressed uncertainty over the inflationary impact of tariffs. With inflation projected to stay above 2%, traders remain skeptical about how aggressively the Fed will ease policy in 2025.
3. FedEx Stock Plunges on Profit Warning
FedEx (NYSE:FDX) shares dropped by over 6% after the company cut its annual profit and revenue forecast. This was attributed to weak U.S. industrial activity and lower-than-expected demand for its services. FedEx’s warning accentuates the broader economic uncertainty and slowing corporate earnings growth, reinforcing concerns about the resilience of the U.S. economy.
Market Outlook: Monitoring Key Indicators
To track the market’s response to trade and Fed policy, investors should monitor technical indicators such as the Relative Strength Index (RSI) for identifying overbought/oversold conditions, Moving Averages (50-day & 200-day) for gauging market trends, and the Volatility Index (VIX) for measuring investor sentiment.
For real-time market data, investors can leverage FMP APIs, including the S&P 500 Historical Data API for tracking index trends and price movements, and the Economic Calendar API for staying updated on key economic events like Fed decisions and tariffs.
Final Thoughts
Despite breaking its losing streak, the S&P 500 remains in a fragile state, with trade uncertainties and shifts in Fed policy keeping investors on edge. As we approach the April 2 tariff deadlines and earnings season, volatility is likely to persist.
Key Watchpoints for Next Week
In the coming week, investors should keep a close eye on Fed officials’ speeches and inflation data, updates on U.S.-EU trade negotiations, and corporate earnings guidance, particularly in the industrial and tech sectors.