Market Pulse with Dan Sheehan

Good morning investors,

Wall Street starts the week with questions swirling around the Fed, trade tensions, and market momentum. Last week’s jobs report offered some breathing room, but tariff headlines and earnings rotation have kept sentiment jumpy. This week, the Fed decision on Wednesday looms large, and with equity markets rallying hard off April lows, positioning is suddenly crowded.

One giant of investing, Warren Buffett, announced he’ll step down as CEO of Berkshire Hathaway by year end. After six decades of compounding, capital discipline, and clarity, his legacy stands as the benchmark for long-term investing — and a quiet reminder of what patience and conviction can achieve.

Before the Bell

U.S. stock futures are pointing lower this morning as the market digests a busy weekend of headlines and braces for a central bank-heavy week. S&P 500 futures are down 0.8%, Nasdaq 100 futures are off nearly 0.9%, and Dow futures have fallen 0.6%. Oil prices have slumped to fresh 2021 lows after OPEC+ agreed to accelerate output, while gold is firmer as traders seek safety in a muddied macro picture.

Trade war rhetoric continues to escalate. President Trump’s latest volley — a 100% tariff on foreign-made films — has only heightened fears of broadening protectionism. Beijing has expressed tentative interest in resuming trade talks, but markets are growing weary of the headlines-versus-substance gap. Meanwhile, economic prints this week — from ISM Services today to jobless claims on Thursday — will be key in assessing whether the market’s recent rally is running ahead of fundamentals.

Market Framework: What’s Driving This Rally?

We’ve had some meaningful improvement in breadth and momentum. Cycles and seasonality suggest the market bottomed in April. That said, I don’t expect a clean V-shaped recovery. Momentum on the weekly chart remains soft, and on shorter timeframes, conditions are already nearing overbought. I think chop can continue in the near term before a decisive breakout resumes.

Technically, the 5730–5750 zone on the S&P 500 acts as major resistance. A rejection there could bring a pullback, especially with the Fed on deck. But unless the Fed surprises hawkishly, I don’t expect the market to give up more than 50% of the recent advance. Even with some weakness, the bigger picture remains constructive.

Markets are currently pricing less than a 50% chance of a June rate cut. But if Wednesday’s tone leans dovish, that probability could rise sharply. Beyond monetary policy, there are several potential catalysts that support further upside — progress on trade negotiations, ongoing AI-driven earnings strength, and a potential second-half tax reform package from the Trump administration. That last one, if it gains traction, could provide a strong boost to corporate sentiment and equity valuations.

In short, this isn’t a runaway bull, but it’s also not a dead-cat bounce. With technicals improving, liquidity stable, and the policy outlook still fluid, the setup remains biased to the upside. Tactical corrections are likely, but barring a macro shock, the path of least resistance remains higher.

Corporate Focus: Buffett Era Ends, Earnings Roll On

Berkshire Hathaway shares fell premarket after Warren Buffett confirmed he’ll step down as CEO at year end, handing the reins to Greg Abel. Operating profit dipped in Q1 due to wildfire-related insurance losses, but the firm’s cash stockpile swelled to a record $347.7 billion. Buffett said he’ll remain involved informally, but the transition marks the end of one of capitalism’s most storied tenures.

Elsewhere, Nvidia faces renewed political scrutiny as U.S. lawmakers seek to curb chip smuggling into China. A new bill would require AI chipmakers to verify post-sale usage — a shot directly at Nvidia’s export controls.

Shell is reportedly eyeing a bid for BP, though executives are said to be waiting for further share price weakness before moving. Energy M&A is picking up as majors look to consolidate scale amid falling oil prices.

Other notable headlines include Telefonica’s potential 5,000-job cut, United Airlines’ flight cancellations at Newark due to FAA staffing issues, and Alibaba facing renewed calls for delisting by U.S. lawmakers.

Fed in Focus: Between Mandates

The Fed kicks off its two-day meeting Tuesday with a decision due Wednesday. Policymakers are expected to keep rates steady, but the tone and press conference will be critical. April’s mixed data — soft GDP, firm jobs — puts the Fed between its dual mandates. Inflation remains sticky, but employment has yet to crack.

Markets have walked back expectations for a June cut — now just a 37% probability according to CME FedWatch. A more dovish tone could revive cut hopes, but clarity may not arrive until summer. For now, the Fed is likely to wait and watch.

President Trump, however, continues his campaign for easier policy, tweeting again Friday: “NO INFLATION, THE FED SHOULD LOWER ITS RATE!!!”

AI Trade Deal Catalyst?

AI remains a secular growth theme — but geopolitics may soon play a larger role in price action. Reports suggest AI chips could become a bargaining chip in resumed U.S.–China trade negotiations. If that materializes, it would not only represent a policy thaw, but also a tailwind for key names in the space.

AMD is flirting with the $100 resistance level. A clear deal announcement or relaxed export language could be the breakout catalyst, opening a path toward $104. Nvidia, meanwhile, is pressing up against the $115 level. A sustained move above could target $120, especially if the trade story reinforces demand clarity.

Chips aren’t just enabling AI — they’re now central to diplomacy. And that’s where opportunity and risk both live.

Analyst Recommendations

Final Thought

Buffett’s departure is more than symbolic. It’s a generational handover at a time when markets are digesting structural change — from AI to tariffs, from peak rates to potential cuts. But as always, volatility presents opportunity.

The rally off April’s lows wasn’t luck — it was setup. Breadth is improving, fundamentals are firming, and macro catalysts are aligning. Yes, we may chop sideways, especially with the Fed in play. But the foundation is in place. And as Buffett would say, “Be fearful when others are greedy, and greedy when others are fearful.” The fear may be fading.

Dan Sheehan

[email protected]

This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.