Market Dip: Trade Jitters & Earnings Buzz

Fresh news and strategies for traders. SPY Trader episode #1146. Hey there, Spy Traders! It's your pal, Penny Pincher, here, broadcasting live at 6 pm on Tuesday, May 6th, 2025, Pacific time. Let's dive into today's market scoop. First off, the U.S. equity markets took a bit of a tumble today, ending a nice winning streak. The S&P 500 is down 0.8%, the Nasdaq 100 lost 0.9%, and the Dow Jones Industrial Average dropped a hefty 389 points. It looks like the S&P 500's nineday winning streak is over. Yeartodate, the US500 is down 3.98%. It's currently trading at an 8% discount to fair value, but that doesn't really account for the volatility we saw in early April due to all the trade chatter. Now, only two sectors managed to stay in the green today: utilities and energy. Energy is bouncing back because oil prices are up. Healthcare is struggling a bit, especially the biopharma companies. Tech and communication stocks had a good run recently, and so did materials and financials. But according to Schwab's data, their clients were selling off everything except energy in April, with the biggest selloffs in tech, consumer staples, and consumer discretionary. Okay, let's talk news. Everyone's waiting to see what happens with these trade deals. U.S. policymakers are hinting at stuff, but nothing concrete yet. And President Trump's flipflopping on trade isn't helping calm anyone's nerves. Speaking of trade, tariffs are still a big worry. Ford, for example, pulled its 2025 guidance because they're expecting tariffs to cost them $1.5 billion! Earnings season is still rolling along. About 78% of S&P 500 companies have reported, and around 76% of those beat expectations. S&P 500 earnings are looking like they'll grow over 12%. But, future earnings estimates are being cut because companies are bracing for higher costs thanks to those tariffs. On the economic front, the U.S. trade deficit hit a record high in March. Preliminary data shows that the U.S. economy shrank in the first quarter for the first time since 2022. Initial jobless claims also ticked up a bit. The Federal Reserve is expected to keep interest rates steady at its next meeting. GDP shrank by 0.3 percent in the first quarter. Inflation has cooled off a bit, but those higher tariffs are likely to cause it to heat up again. Unemployment is steady at 4.2%. Consumer spending is up, but only a little. All these changes in U.S. trade policy are shaking things up globally. As for company news, Microsoft and Meta crushed earnings expectations. We're waiting on Apple and Amazon to report. Clorox is down premarket because their earnings missed estimates, and they lowered their sales forecast. Palantir Technologies also dropped 12% after their results disappointed investors. Ford, despite solid sales and earnings in Q1, pulled its 2025 guidance due to those pesky tariffs. So, what should we do with all this info? Well, given the market's recent rebound and current valuations, it might be a good time to lock in some profits and move back to a marketweight stance. Wider earnings growth should lead to more balanced performance across all sectors, so it's a good time to diversify. And with all this uncertainty, think about defensive strategies. Energy and utilities are looking strong, so maybe focus there. Consumer defensive might also be worth a look, but maybe skip Costco and Walmart for now. Keep a close eye on those trade negotiations and policy changes, as they're having a big impact. And pay attention to GDP, inflation, and unemployment data, as those will drive the market and the Fed's decisions. The Federal Reserve might cut interest rates which could help the market later this year. Why did the stock analyst bring a ladder to work? Because they heard the market was going up! Just remember, I'm Penny Pincher, and I'm not a financial advisor. This is just my take on things. Always talk to a real financial professional before making any investment decisions. Happy trading, everyone!