The S&P 500 (Index: SPX) lost almost 1.7% in the Good Friday holiday-shortened trading week. The index closed out the week at 5,282.70.

Considerable attention was directed to the U.S. Federal Reserve during the week. With the outlook for dividends having diminished over the past month as the effects of reduced earnings from a slowing economy weighing on it, the timing of when the Fed will resume cutting interest rates has taken on greater importance for investors.

Unfortunately for investors, the Fed sent a strong message they have no plans to cut the Federal Funds rate when it meets next month.

Although Federal Reserve officials pushed back against building pressure to cut U.S. interest rates sooner rather than later, investors now expect them to deliver more rate cuts in the rest of 2025 than they did a week earlier. The CME Group's FedWatch Tool projects the Fed will still hold off in resuming its cuts of the Federal Funds Rate until the conclusion of its 18 June (2025-Q2) meeting, at which time it will reduce this interest rate by 0.25%. Afterward, the FedWatch Tool anticipates the Fed will reduce U.S. interest rates three more times before the end of 2025, one more reduction than forecast a week earlier. The FedWatch Tool foresees 0.25% cuts in the Federal Funds Rate on 30 July (2025-Q3), 29 October (2025-Q4), and 10 December (2025-Q4).

In terms of driving the S&P 500, the Fed's signal it won't cut rates until it meets near the end of the current quarter in June kept investors focused on 2025-Q2 in setting current day stock prices. The latest update of the alternative futures chart shows the trajectory of the S&P 500 dropping into the upper redzone forecast range we added last week.

We're still seeing more-than-typical volatility in stock prices, which we expect to continue in the weeks ahead.

We also expect any changing expectations of what the Fed will do with interest rates will impact the S&P 500's trajectory. Speaking of which, here are the week's market-moving headlines, which are rather dominated by the current attention on the Fed and what it will do.

Monday, 14 April 2025

• Signs and portents for the U.S. economy:
  • Trump spares smartphones, computers, other electronics from China tariffs
    • Tariffs on imported semiconductor chips coming soon, Trump says
  • Oil rises on tariff exemptions and Chinese imports rebound
    • OPEC cuts 2025 global oil demand growth forecast, citing US tariffs
• Fed minions communicate they are a bunch of namby-pambies who don't know which way to go:
  • Fed's Bostic: Bold moves 'in any direction' wouldn't be prudent
  • Waller: Tariffs a major shock, with wide array of possible outcomes
  • Fed's Harker does not comment on economic, monetary policy outlook
• Bigger trouble, less stimulus developing in Canada:
  • Rising Canada recession risk to trigger at least two more rate cuts this year: Reuters poll
    • Bank of Canada is more likely to halt interest rate cuts after tariff pause
• China cranked up exports ahead of U.S. tariffs, acting to prop up stock prices:
  • China's March exports jump in temporary boost as Trump 2.0 heaps pressure
  • Chinese exchanges restrict daily stock sales as trade war with US escalates, sources say
• Bigger trouble developing in Eurozone:
  • As economy stalls, Germany struggles to get consumers spending
• Nasdaq, S&P, and Dow closed higher as Trump temporarily shields tech sector from tariffs
  • Wall Street ends higher with Apple shares as investors assess tariff exemptions
    • Apple takes top spot for first-quarter smartphone sales, data shows

Tuesday, 15 April 2025

• Signs and portents for the U.S. economy:
  • Oil prices dip after IEA cuts demand growth outlook
    • Oil price drop turns up heat on emerging market crude exporters
  • China orders airlines to suspend Boeing jet deliveries amid trade war, Bloomberg News reports
  • Trump trade war dries up sorghum sales to China but US farmers plan to plant more
  • US issues export licensing requirements for Nvidia, AMD chips to China
• Bigger trouble, stimulus developing in China:
  • At China's largest trade fair, exporters say US markets are 'frozen'
    • Chinese exporters on Rednote ask local consumers to buy goods meant for US
  • China unexpectedly anoints new trade negotiator amid US tariff war
  • China's customs administration encourages companies to expand in diverse markets
  • China's murky bankruptcies expose hazards for foreign investors
• BOJ minions standing by to bail out Japan's economy from tariff hits:
  • BOJ's Ueda says central bank may need to respond if US tariffs hurt economy, Sankei reports
    • Japan manufacturers turn cautious about business outlook due to Trump tariffs: Reuters poll
• Nasdaq, S&P, and Dow inch higher as traders continue to play 'guess-the-tariffs'

Wednesday, 16 April 2025

• Signs and portents for the U.S. economy:
  • Oil up 2% to a 2-week high as new US sanctions target Iran's exports
  • US Retail Sales Soared Most In 2 Years In March As Auto-Spending Spiked Ahead Of Tariffs
  • US 30-year mortgage rate jumped last week to 2-month high
  • US manufacturing output slows in March; tariffs cloud hangs over factories
• Chief Fed minion says Fed thinks tariffs will cause inflation, slow US economic growth, will keep Fed in wait and see mode before cutting US interest rates:
  • Tariffs could create tension between Fed's dual mandate goals, Fed Chair Jerome Powell says
  • Powell says Fed remains in wait-and-see mode; markets processing policy shifts
• Other Fed minions say to expect small rate cuts, but only if tariffs are kept small and not anytime soon:
  • Fed's Hammack sees steady monetary policy as central bank seeks more data
    • Fed's 'modestly restrictive' policy stance apt for taming inflation, Hammack says
  • Fed could cut rates later this year under 'smaller tariff' scenario, Fed Governor Waller says
  • Fed's Schmid says patience needed to see how tariffs play out
• Bigger trouble, stimulus developing in China:
  • China's Q1 GDP grows 5.4% y/y, beating expectations
• Nasdaq slumps 3%, Dow sheds 700 points on tech rout, hawkish Powell
  • Indexes drop as Fed's Powell says growth appears to be slowing; Nvidia tumbles
    • Gold's lustre undimmed, prices hit records above $3,300/oz

Thursday, 17 April 2025

• Signs and portents for the U.S. economy:
  • Oil set for weekly rise after new Iran sanctions
  • Google holds illegal monopolies in ad tech, US judge finds
• Chief Fed minion accused of being too slow to respond to slowing US economic growth, another Fed minion says they see no reason to change monetary policy:
  • Trump slams Fed Chair Powell over delay in lowering interest rates, pushes for ouster
    • Trump amps up feud with Fed over rates, accuses Powell of 'playing politics'
    • Trump says Fed chair Powell's termination can't 'come fast enough!'
    • Trump has discussed firing Fed's Powell with Warsh, eyed as possible successor, WSJ says
  • Fed's Williams sees no looming need to change monetary policy - Fox Business
• BOJ minions worried about potential impact of U.S. tariffs on Japan's economy:
  • BOJ warns US tariff uncertainty may hurt confidence, economy
• ECB minions cut Eurozone interest rate for seventh time:
  • ECB cuts rates again to help economy weather erratic U.S. trade policy
    • ECB cuts rates as tariffs to hits already weak growth
    • VIEW ECB cuts rates again to buffer economy from U.S. tariff hit
  • Lagarde's statement after ECB policy meeting
• Wall Street ends mixed, closes out holiday-shortened week in the red
  • S&P 500 ends up as Eli Lilly jumps and UnitedHealth plummets
    • Lilly weight-loss pill works as well as Ozempic, shares surge
    • UnitedHealth plunges 23% and its fall sent ripples across the ETF landscape
  • Gold starts coming back to Switzerland from US after exclusion from Trump's tariffs

The raw Atlanta Fed's GDPNow tool's projection of what real GDP growth will be in 2025-Q1 improved to -2.2% from its -2.4% estimate a week earlier, which is misleading. The GDPNow tool's alternate model forecast, which corrects for the unusual surge in gold imports during the quarter that's badly skewing the GDPNow tool's raw projection, improved from an estimate of -0.3% growth to -0.1% growth. Which is to say it's predicting the U.S. economy stalled during the first quarter of 2025, but not anywhere near as badly as the raw reading indicates. On a final note, we'll observe a recession forecasting model based on the level of the Federal Funds Rate and the U.S. Treasury yield curve signaled a recession was likely to start during this period more than a year ago.

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