Stock Market Update Wednesday May 7, 2025

Stock Market Update Wednesday May 7, 2025 Stocks closed higher on Wednesday following the Federal Reserve's decision to maintain steady interest rates, aligning with market expectations, while noting balanced risks to economic growth and inflation. Equities experienced late-day volatility, though it remained moderate, with the full market reaction expected Thursday as investors digest the news overnight. The S&P 500 ($SPX) gained 0.4%, the Nasdaq 100 ($QQQ) rose 0.4%, and the Russell 2000 ($IWM) edged up 0.3%. Bond yields dipped slightly post-Fed statement, with the 10-year Treasury yield settling at 4.28%. Gold and oil prices saw minor retreats. Alphabet ($GOOGL) declined sharply, falling 7.3% to $151.38, driven by speculation that Apple's AI advancements could disrupt traditional search engines. Conversely, Nvidia ($NVDA) surged 3.1% to $117.06 in late trading, fueled by reports of potential easing of semiconductor restrictions, which may have skewed perceptions of the market's Fed response.

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The FOMC press conference came across as relatively dovish, a welcomed shift from the aggressively hawkish stance seen in August 2022, when Fed Chair Powell dampened market sentiment by warning of “pain ahead.” In contrast, the current tone suggests a more measured policy trajectory, providing some relief to risk assets. The $SPY's late-day rally appeared to closely track former President Trump's remarks on reversing global semiconductor restrictions, amid ongoing debates over AI regulatory measures. This movement coincided with NVDA's 2.90% surge, reflecting heightened market optimism in the tech sector. Yesterday, Treasury Secretary Scott Bessent testified before Congress, stating that no discussions with China had taken place. However, later in the evening, it was announced that Secretary Bessent and U.S. Trade Representative Jamieson Greer will hold bilateral meetings in Geneva this weekend with Chinese Vice Premier He Lifeng — a key member of the Politburo and China’s top economic policymaker. This development signals a constructive shift in U.S.-China trade relations and may serve as a foundation for potential de-escalation. Prediction markets are responding accordingly. Polymarket has revised the implied probability of a near-term U.S.-China trade deal from approximately 14% yesterday to nearly 26% today. While still below the 50% threshold, the directional momentum is encouraging. Adding to this optimistic backdrop, China announced a fresh domestic stimulus package upon the opening of Asian markets. Analysts suggest this move could strengthen Beijing’s bargaining position ahead of the Geneva talks. Additionally, the injection of stimulus contributes to a more accommodative global liquidity environment — a structural tailwind for risk assets like Bitcoin, which typically benefit from easing monetary conditions.

Bottom Line:

ETFs we track continue bullish consolidation, expected to persist into next week.

Tuesday, April 29, 2025, we have IWM & RSP ETFs; the two are the most important indexes to give buy signals. Now, we have all five major indexes with buy signals generated from our proprietary algorithm. Monday, April 28, 2025, we had a buy signal generated from our proprietary algorithm for the Dow Jones ETF DIA on the daily chart. The market structure continues to improve, breadth thrusts confirm internal strength, and technical conditions suggest that while short-term upside could be capped, the path of least resistance remains higher. Technical Outlook: SPY, QQQ, and DIA have daily buy signals. Sector ETFs (XLK, AIQ, SMH, XLY) have triggered buy signals. VIX has a daily sell signal (bullish for equities), as do Bitcoin and Apple. W.D. Gann Cycle Pivot Date for the S&P 500 (SPX) on Saturday, April 5, 2025. Historically, these cycle dates often coincide with significant inflection points in price action. While the market will be closed on Saturday, we will be watching for a potential pivot either into Friday’s close or by Monday’s session. Weekly sell signals persist across all five major indexes.