Market Pulse with Dan Sheehan

Good Morning Investors,

When the market changes, we need to change with it. We cannot make investment decisions based on how we think the world is, or how we wish it would be. We have to invest based on how it actually is. And things have changed.

Trump is backtracking. He saw the market reaction to his “reciprocal tariffs” and has decided to pivot toward market accommodation rather than risk pushing the economy over the edge. The VIX has collapsed from 60 back under 25. The S&P 500, which at one point was down -13.6% for April, has now clawed back to just -1.3% month-to-date. Three strong weeks of action now look to have carved out a macro bottom.

As tariff fears dissipate, sidelined investors are likely to wonder why they’re still on the sidelines. We could be surprised at how quickly sentiment flips back positive. With all-time highs only 11.2% away, the psychology of fear-of-missing-out (FOMO) could return fast. A higher low has formed, we’re two strong closes above the 20-day moving average, and the backdrop remains supportive for a hard bounce. I continue to position confidently for the second half of 2025, balancing choppiness through earnings season with tactical tax loss harvesting and rotation into quality names.

PREMARKET SNAPSHOT

Stock futures are edging slightly lower this morning, reflecting a market pausing to reassess after a powerful three-week rally. Dow futures are off 78 points (-0.2%), S&P 500 futures are down 0.2%, and Nasdaq 100 futures are also slightly weaker.

Bond yields remain steady, with the 10-year Treasury holding near 4.45%. The dollar firmed slightly overnight amid cautious sentiment in Asia. Oil prices dipped on concerns of oversupply from OPEC+ despite broader optimism on global growth stabilization. Gold is weaker as risk appetite remains resilient.

The tariff narrative has cooled, but focus now shifts squarely to fundamentals: corporate earnings, inflation trends, and early Q2 growth signals.

RECAPPING LAST WEEK

Markets staged an impressive recovery last week. The S&P 500 rose 4.5%, the Dow gained 2.5%, and the Nasdaq Composite surged 6.6%. Trump's comments walking back tariff escalation and reaffirming Powell's position at the Fed lit a fire under risk assets.

It’s worth noting: this rally unfolded despite lukewarm economic data and only tentative signs of a trade thaw. That suggests sentiment was so negative that relief alone was enough to spark buying.

Still, strategists warn the tariff issue isn't resolved — it’s merely paused. Market participants will need to watch carefully for any renewed escalation headlines.

THIS WEEK: ECONOMIC EVENTS IN FOCUS

This week will set the tone for whether April’s rebound can carry forward into May.

The first highlight comes Wednesday with the advance estimate of Q1 GDP. Expectations are subdued: economists forecast just +0.1% annualized growth, a sharp slowdown from 2.4% in Q4 2024. A confirmation of such weak growth would underline how tariffs and tighter financial conditions earlier in the year dented momentum.

Also on Wednesday, the Fed’s preferred inflation gauge — the Core Personal Consumption Expenditures (PCE) Index — is released. Economists expect +2.5% year-over-year growth, a welcome cooling from +2.8% previously. A softer print would give the Fed further breathing room to stay patient on rates, something equity markets would cheer.

Labor data will round out the week. Friday’s nonfarm payrolls report is expected to show 133,000 new jobs added, versus 228,000 in March. The unemployment rate is forecast to hold steady at 4.2%. Average hourly earnings are expected to grow at +0.3% month-over-month. In short: signs of slowing but still resilient labor market conditions.

A backdrop of slowing growth, easing inflation, and stable employment could reinforce a "goldilocks" narrative — not too hot to force more tightening, not too cold to trigger recession fears.

BIG TECH EARNINGS TAKE CENTRE STAGE

The spotlight this week is firmly on Big Tech, with Microsoft, Meta, Apple, and Amazon all reporting.

Wednesday After the Bell:

Thursday After the Bell:

Expectations across the sector have come down sharply after April’s pullback. That sets the stage for potential upside surprises — or at least relief rallies — even if the numbers aren't perfect. Tesla’s recent rebound and Alphabet’s strong post-earnings rally show that investors are willing to reward "better than feared" results.

Beyond Big Tech, over 180 S&P 500 companies report this week, representing a wide cross-section of industries. Early trends show 73% of companies beating expectations so far — a solid outcome given how battered sentiment had become.

STOCKS TO WATCH TODAY

ANALYSTS' RECOMMENDATIONS

STRATEGIC OUTLOOK

I maintain a constructive stance for the second half of 2025. The violent unwinding of early-April pessimism has created a platform for recovery. The market is climbing the classic "wall of worry" — tariffs, rates, growth fears — and unless economic data collapses, equities have room to extend gains.

Key technical levels to watch: S&P 500 needs to clear 5,500 to trigger a proper trend reversal. Nasdaq leadership via Big Tech earnings will be critical.

Stay disciplined. Stay invested. Tactical flexibility will be important through earnings, but the medium-term setup is improving.

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Please feel free to reach out to me on LinkedIn or by email if you would like help navigating this market environment or have any planning-related questions.

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.