The S&P 500 and NASDAQ 100 have posted five consecutive days of gains, with both indexes trading above their 50-day and 200-day moving averages. While a short-term pullback would not be surprising, especially with resistance just 3% below all-time highs, the broader trend appears constructive.
Recent headwinds, notably the DeepSeek incident (1/27) and the tariff tensions (4/3), introduced significant uncertainty. However, the market seems to have absorbed the negative news, and those former headwinds now appear to be turning into tailwinds driving momentum higher.
One point of caution: Moody’s downgraded U.S. debt after Friday’s close, citing concerns over growing debt levels and projections that interest payments may reach 30% of revenue by 2025. This downgrade could catalyze short-term de-risking. Still, I believe the market has an underlying desire to move higher.
Junk bonds are sending a strong “risk-on” signal. They are trading above their rising 50-day moving average and are at all-time highs. Uptrending junk bonds suggest minimal credit market stress and a low likelihood of an impending recession.
Globally, markets breathed a sigh of relief as the U.S. and China agreed to a 90-day pause in their tariff dispute. This cooling-off period may remove some of the emotion from the trade negotiations and allow space for a fair and sustainable agreement to be reached.
Meanwhile, gold and Treasury bonds remain in short-term downtrends, reflecting weakness in the U.S. dollar. Futures markets are currently pricing in 2–3 rate cuts by the end of 2025, with the first likely to occur at the Fed’s September meeting. The market would likely welcome lower interest rates as they support economic growth and corporate profitability.
I remain fully invested, anticipating a continuation of the uptrend that DeepSeek and tariff-related volatility temporarily disrupted.
Grace and peace!
Watch List: AER, APH, AWI, AXON, BTSG, CASH, CHEF, CHWY, CRDO, CRS, CTAS, CVLT, CVNA, CW, CYBR, FICO, GEV, GWRE, HEI, LB, NFG, NWG, OSIS, PLTR, PWR, VIRT, WAY.
God opposes the proud but gives grace to the humble. John 4:6
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Dexter Lyons, Portfolio Manager
337-983-0676, ChristianMoneyBlog.net
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