At the time of this writing (2:10 p.m. ET), stocks are near the highs of the session (DJI + 584, SPX + 91, COMP + 322, RUT + 49), buoyed by a Wall Street report that China was inquiring into what fentanyl changes the U.S. is wanting from trade negotiations. It appears that trade negotiations are continuing to move toward some type of resolution, albeit at a gradual pace.
Will they move fast enough to avoid any economic repercussions? Markets are behaving as if that will be the case, but we'll continue to monitor the hard data in the coming weeks. Next week investors will hear from Powell at the May Federal Open Market Committee (FOMC) meeting, though I'm not sure that his message will deviate from what he conveyed back in mid-April (patient stance, monitoring potential inflationary impact of tariffs, along with stability in labor market).
Earnings will also be in the spotlight next week, especially since there aren't a lot of economic reports on deck. We'll hear from several AI-centric companies, starting with AI-darling Palantir on Monday after the bell. Perhaps the recent bullish momentum around AI can persist if the results/guidance are supportive of that, but this may set the Nasdaq 100 up for a potential test of overhead resistance at the 200-day SMA (more on this in the "Technical Take" section below).
And speaking of technicals, similar to last week, stocks are near-term overbought, but that doesn't mean they can't continue to move higher. Given today's price action, I wouldn't be surprised to see bullish momentum continue in the early part of the week, but I'm a little concerned that we may be setting up for a "sell on the news" reaction following Wednesday's FOMC wrap-up. Therefore, my forecast for next week is "Slightly Bullish" for the first half of the week and "Slightly Bearish" for the back half of the week .
What could challenge my outlook? The most obvious unknown is any trade/tariff headlines, which could either be in the constructive or destructive category. Other Potential Market-Moving Catalysts: Economic: – Monday (5/5): ISM Services -Tuesday (5/6): Trade Balance -Wednesday (5/7): Consumer Credit, EIA Crude Oil Inventories, FOMC rate Decision, MBA Mortgage Applications Index -Thursday (5/8): Continuing Claims, EIA Natural Gas Inventories, Initial Jobless Claims, Productivity-Preliminary, Unit Labor Costs, Wholesale Inventories -Friday (5/9): -no reports- Earnings: -Monday (5/5): Ares Management Corp. (ARES), Cummins Inc. (CMI), BioNTech SE (BNTX), Tyson Foods (TSN), Palantir Technologies Inc. (PLTR), Vertex Pharmaceuticals (VRTX), Williams Companies Inc. (WMB), Realty Income Corp. (O), Clorox Co. (CLX) -Tuesday (5/6): Duke Energy Corp. (DUK), TransDigm Group Inc. (TDG), Constellation Energy Corp. (CEG), Marriott International Inc. (MAR), Datadog Inc. (DDOG), Advanced Micro Devices (AMD), Arista Networks (ANET), Energy Transfer (ET), Coupang Inc (CPNG), Electronic Arts Inc. (EA) -Wednesday (5/7): Uber Technologies (UBER), Walt Disney Co. (DIS), Shopify Inc. (SHOP), Arm Holdings PLC (ARM), Applovin Corp. (APP), DoorDash Inc. (DASH), Fortinet Inc. (FTNT), Carvana Co. (CVNA) -Thursday (5/8): ConocoPhillips (COP), Cheniere Energy Inc. (LNG), Sempra (SRE), McKesson Corp. (MCK), Coinbase Global Inc. (COIN), Cloudflare Inc. (NET)
