Trump’s First 100 Days (The Second Go-Round)

Market Commentary – April 28, 2025

This week marks President Trump’s first 100 Days of his second presidency.

Whether or not you’re a fan of his policies, you can agree that this has been a period in American history that will never be forgotten. Liberation Day on April 2 resulted in one of the fastest and sharpest declines in the equity market. It felt like a mini crash. But we did get capitulation (i.e., excessive selling that marks a bottom), and the market has since rallied sharply, up15% off the low. Year-to-date, however, the S&P 500 is still down 6% with the Nasdaq 100 down 7.5%. Interest rates on the 10-year Treasury yield did spike higher as stress and selling hit this market as well – but rates have since eased and are again falling. We believe tariffs are now priced into the markets, but volatility is likely to remain until we have a finalization of tariffs.

Earnings Strong So Far

We are in earnings season for 1Q25 – which predated the tariff/trade war disruption. So far, the reported earnings are coming in fairly solid – indicating that the U.S. economy was in a strong position as we entered Liberation Day. According to FactSet, as of last Friday, companies are reporting solid results with 36% of the S&P 500 companies reporting. Of these companies, 73% have reported actual earnings above estimates, which is below the 5-year average of 77% and below the 10-year average of 75%. In aggregate, companies are reporting earnings that are 10.0% above estimates, which is above the 5-year average of 8.8% and above the 10-year average of 6.9%. (Note: we’re citing historical averages that reflect actual results from all 500 companies, not from just the percentage of companies that have reported at this point in time.) So, the earnings season has been strong out of the gate, but this is a heavy week of earnings reports with many of the big Technology companies reporting.

S&P 500 Overbought Short-Term With Buy Signal Intermediate Term

The sharp 15% rally in the equity market has resulted in the 14-day stochastic moving into overbought territory, but not indicating a sell signal. Price momentum is still bullish. The 14-week stochastic is on a buy signal. This indicates the S&P 500 can still test resistance near 5500-5600. However, we expect a test of the low of 4835, and our sense is that the test will be modest. Look for a test level near 5200-5000. We remain buyers on pullbacks as the secular bull market remains intact.