The S&P 500 (Index: SPX) continued its upward momentum on the strength of progress toward multiple trade deals in the past week. Combined with strong indications the Trump administration will ultimately set tariffs on goods imported into the U.S. at lower levels than initially announced on 2 April 2025, the index rose nearly 5.3% to end the week at 5,958.38.

That puts the S&P 500 within three percent of its all-time record high close of 6,144.15 set on 19 February 2025. Not uncoincidentally just before the AI-bubble began to deflate just two days later.

Speaking of which, the AI-bubble is showing signs of reflating. A good part of the rise of the index comes as several of its biggest component firms announced major investments from middle-Eastern nations during President Trump's trip to that region during the past week. Most notably, AI-chipmaker Nvidia (Nasdaq: NVDA) jumped 10% in value over where it closed the previous week.

The deals being announced during President Trump's deal-making trip are driving stock prices because it represents a significant export market for the index' big tech firms. The middle-eastern nations are energy-rich, which has become an important consideration for siting power-hungry AI data centers.

All the dealmaking allowed the S&P 500 to continue its upward trajectory of recent weeks. The latest update of the alternative futures chart shows the index continues to track along within the redzone forecast range we modified earlier this month to capture the apparent changes in market regime that have taken place since 9 April 2025.

We don't know how long the current market regime that started on 28 April 2025 might last. We think we're still within the cluster of volatility that makes changes in market regime likely. At least until it ends and the dividend futures-based model's multiplier goes back to being mostly constant.

For signs of such a change, we'll rely on the context provided by the random onset of new information that investors absorb as they make real time investment decisions. Here are the past week's market-moving headlines:

Monday, 12 May 2025

• Signs and portents for the U.S. economy:
  • U.S. and China agree to slash tariffs for 90 days
    • What have China and the United States agreed to in Geneva?
  • Oil prices settle up at 2-week high as US, China ease tariffs
  • Trump executive order demands pharma industry price cuts
• Fed minions say inflation risk is lower with tariff pause, still won't commit to cutting US interest rates:
  • Fed officials say China-US tariff reprieve lowers risks
  • U.S.-China tariff delay gives Fed fresh reason to sit tight on rates
  • Exclusive: Fed’s Hammack wants clear data before moving on rates, not much data by June
• Bigger trouble, tariff relief developing in China:
  • China's factory-gate deflation deepens
  • China's March shipments of foreign-branded cellphones drop almost 50%
  • China's official media welcome US tariff deal, others sceptical
• JapanGov calls for end to tariffs with US, BOJ minions talking about interest rate hikes in Japan:
  • Japan PM Ishiba reiterates call to eliminate all tariffs with US
  • Some in BOJ saw scope to resume rate hikes, March summary shows
• Wall Street equity indexes close higher after US-China tariff truce
  • Dow jumps more than 1100 points, Nasdaq soars 4% on U.S.-China trade deal
  • Coinbase to join S&P 500 index, shares surge 9% after hours

Tuesday, 13 May 2025

• Signs and portents for the U.S. economy:
  • US inflation falls to 2.3% in April as tariff effect looms
    • CPI Weak Again: Egg Prices Fall By the Most Since 1984
  • Tradeflation Stays Out of April CPI Report
  • Boeing deliveries nearly double in April
    • China lifts Boeing delivery ban as tariff war cools, Bloomberg News reports
• Fed minions working harder to find excuses to not cut U.S. interest rates:
  • Fed to stay patient amid cooling trade war and inflation
    • Trump calls on Fed to cut rates, saying prices of 'practically everything' are down
    • April CPI: The Case For A Cut Gets Stronger
• BOJ minions will keep hiking Japan's interest rates:
  • BOJ upbeat on wages despite US tariffs, sees scope to resume rate hikes
• ECB minions will keep stimulating Eurozone economy the way they've been doing stimulus, with more rate cuts:
  • ECB to stand by past stimulus policies in strategy review
  • ECB's Villeroy sees room for additional rate cut by summer
• S&P 500, Nasdaq end higher on soft inflation data, trade optimism
  • Wall Street closes with YTD gains for the first time since February-end
    • S&P 500 wipes out 2025 losses as stocks extend rally
    • A look at the S&P 500's wild ride since 'Liberation Day'

Wednesday, 14 May 2025

• Signs and portents for the U.S. economy:
  • Oil falls after US crude inventories rise
  • US smartphone shipments rose 30% in March due to tariff concerns, report says
  • US cattle producers have started rebuilding herds, or will soon, Tyson Foods CEO says
• Fed minions keep chanting mantra of tariffs causing inflation despite lack of evidence to date:
  • Fed's Jefferson: Expect economy to slow, future inflation uncertain due to tariffs
  • Trump tariffs have little impact on prices so far, defying grim forecasts
  • Fed's Goolsbee: Data still noisy as Fed waits to understand tariff impacts
• Bigger growth developing in China:
  • US slashes 'de minimis' tariff on small China parcels to as low as 30%
  • Exporters ‘shocked and elated’ as China trade cranks back into gear
• BOJ minions get inflation data to support plan to hike Japan's interest rates:
  • Japan's wholesale inflation hits 4%, keeps BOJ under pressure
• Wall Street manages to extend rally, moves further into the green for the year
  • S&P 500 barely gains, investors focus on trade, wait for data

Thursday, 15 May 2025

• Signs and portents for the U.S. economy:
  • Oil prices drop on US-Iran progress; global shares gain in choppy trade
  • US producer prices unexpectedly fall in April
  • Trump: India has offered US a trade deal with no tariffs
• Fed minions say US economy is doing well and that they need to think about what they're doing with monetary policy:
  • Fed's Barr says economy on solid footing, trade dispute clouds outlook
  • Fed's Powell: Strategy around both jobs and inflation needs to be reconsidered
• Bigger trouble developing for Eurozone:
  • Euro zone growth downgraded but employment holding up
• Wall Street ends mixed, but the benchmark S&P 500 extends rally to four straight days
  • Wall Street ends mixed; Cisco rallies while UnitedHealth tumbles
    • UnitedHealth under criminal probe for possible Medicare fraud, WSJ reports
  • Gold prices fall to over one-month low as trade optimism rises

Friday, 16 May 2025

• Signs and portents for the U.S. economy:
  • Oil heads for weekly gain but remains under supply hike pressure
  • Trump says U.S. will set tariff rates for most nations within weeks
    • Trump says U.S. officials will send letters within weeks over trade
  • Conservatives block Trump’s big tax breaks bill in a stunning setback
    • Trump’s ‘beautiful’ bill spans 1,116 pages. Here’s what’s inside it
• Fed minions find out there are too many Fed minions:
  • Federal Reserve to slash staff by 10% over several years
• Bigger trouble developing in China:
  • China-US air freight tumbles on 'de minimis' tariff; airlines adjust routes
• Bigger trouble developing in Japan:
  • Japan's economy shrinks more than expected as US tariff hit loom
  • Japan's April core inflation likely sped up to fastest pace in two years: Reuters poll
• BOJ minions starting to think hiking interest rates might not be smart:
  • Dovish BOJ policymaker urges pause in rate hikes on US tariff uncertainty
  • Japan's fiscal woes put BOJ bond taper plans to test
• ECB minions maybe rethinking their enthusiasm for rate cuts and transparency:
  • ECB may be nearing end of rate cuts but trade war is a risk, policymaker says
  • ECB's Lane queries value of publishing economic scenarios
• Wall Street set for weekly gains on trade deal, weak data curbs enthusiasm
  • S&P 500 gains 5% on the week, as U.S. stocks rally despite inflation data, record low sentiment

The CME Group's FedWatch Tool now projects the Fed will avoid cutting the Federal Funds Rate until the conclusion of its 17 September (2025-Q3) meeting, twelve weeks later than what it projected a week earlier. After that, the FedWatch Tool forecasts the Fed will reduce U.S. interest rates a quarter point at a time at six week intervals, coming after it meets on 10 December (2025-Q4) and 18 March (2026-Q1).

The Atlanta Fed's GDPNow tool boosted its projection of real GDP growth in the U.S. during the current quarter of 2025-Q2 from +1.1% to +2.3%. This estimate is near the upper end of the so-called "Blue Chip consensus" range, where the overall average expected real GDP growth rate for the quarter is about 0.8%.

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