Market Movers: Trade, Inflation, and Sentiment

Fresh news and strategies for traders. SPY Trader episode #1174. Hey there, Spy Traders! It's your pal, Penny Pincher, here, bright and early at 6 am on Monday, May 19th, 2025, Pacific time. Let's dive into what's moving the markets today. First up, the market's been on a bit of a rollercoaster! Last week ended with the Dow down a smidge, about 0.38%, while the NASDAQ jumped up 1.65% and the S&P 500 rose 0.89%. Overall, we've seen a nice recovery lately, especially with those trade tension breezes finally calming down. The S&P 500 is up 1.3% and the US midcaps are up 2.4% since the start of the year! Three out of the last four weeks have been winners, which is always good news. Now, onto the juicy details. Trade is a big one! Remember those trade war headaches? Well, the U.S. and China seem to be playing nice for now, with a temporary tariff reduction. The U.S. is cutting tariffs on most Chinese imports to 30% from a whopping 145%, and China is doing the same for U.S. goods, dropping theirs to 10% from 125%. Fingers crossed this lasts! Inflation is also a key player. The consumer price index, or CPI, rose a bit in April, but the yearly increase was the smallest since February 2021. The producer price index, or PPI, actually dropped, which was a surprise. Keep an eye on these numbers, folks, because they tell us a lot about where the economy is heading. Consumer sentiment, though, isn't looking so rosy. People are feeling a bit down, with the University of Michigan's sentiment index hitting its lowest since 2022. Seems like those inflation worries are getting to folks. In company news, UnitedHealth Group had a bit of a bounce after that selloff due to the DOJ investigation. And Tesla, well, Tesla's shares got a nice boost. Always exciting with them! Okay, Penny's Insights time! The big picture? The U.S. economy might be slowing down. First quarter GDP contracted a bit. We also expect inflation to rise a little later down the line. The Fed is expected to hold steady on interest rates for now. With all this in mind, I'd say, stick with the plan and keep your eyes open. So, what's Penny Pincher recommending today? Diversification is your best friend. With all the ups and downs, don't put all your eggs in one basket! I'm still recommending overweighting stocks over bonds. Focus on those U.S. large and midcap stocks. As for sectors, consider defensive plays like Healthcare and Utilities. They tend to hold up well when things get bumpy. But be careful with Energy stocks for now. And, of course, keep a close watch on those trade policy headlines! Remember, there are risks out there. Recession is a worry. Rising inflation could shake things up. And trade wars could always flare up again. So, stay informed, do your own research, and maybe chat with a financial advisor before making any big moves. That's all for today, folks! Happy trading, and remember, a penny saved is a penny earned!