Market Pulse with Dan Sheehan

Good morning investors,

The S&P 500 and Nasdaq each rose 0.6% as the Dow climbed 0.8% Tuesday, marking six straight days of gains for the broader indexes. But despite the uptick, Wall Street remains cautious — wary of geopolitical noise and tariff shocks, and waiting on the next big earnings data to confirm or challenge the rally.

The mood in markets remains one of restrained optimism. Volatility is down, but conviction is light. We're now into the heart of earnings season with the most influential names in tech preparing to report. Add to that a cocktail of macro catalysts — including today's GDP and inflation readings — and we could be on the cusp of a market inflection point. In recent sessions, investors have rewarded resilience, not brilliance. That dynamic could continue, especially if the Big Four tech giants provide reassurance that the broader growth engine hasn’t stalled. Caution lingers, but expectations are low — and that sets the stage for upside surprises.

Pre-Market Futures

Markets are steady but subdued this morning as investors brace for a blast of data and major tech earnings. With Microsoft and Meta reporting after the bell, and a deluge of economic data due before the open — including GDP and PCE — the next 48 hours could set the tone for May.

S&P 500 futures are down 0.2% Nasdaq 100 futures are off 0.3% Dow Jones futures are up 0.1% (55 points)

Oil continues to slide and gold softens slightly as the dollar firms, reflecting global risk-off sentiment. Bond yields are flat.

Corporate Earnings Focus: Big Tech in the Spotlight

Microsoft reports Q3 earnings this afternoon, with investors focused squarely on Azure cloud growth and AI monetization through Copilot. Wall Street expects EPS of $3.22 on revenue of $68.4 billion. A slowdown in Azure growth from 40% to around 30% could test sentiment, though software remains a haven amid volatility. Jefferies and Wedbush both see Microsoft as “derisked,” but even a modest miss or cautious guide could sting. Investors are also eager to hear any update on Copilot adoption, and whether it is translating into sustained enterprise spend.

Meta Platforms is also due today, with expectations of $5.22 EPS and $41.35 billion in revenue. Advertising remains the engine, with Instagram and WhatsApp leading user growth. Meta’s valuation has pulled back, and its strong margins and AI innovation (including this week’s Llama-powered API launch) offer upside. The company’s Reels monetization, AI-assisted ad targeting, and broader Family of Apps performance will be scrutinized. However, regulatory pressure is rising on both sides of the Atlantic, with antitrust trials and EU fines adding noise.

Amazon reports Thursday, with focus split between AWS and core retail margin performance. Analysts expect EPS of $1.35 on revenue of $142.5 billion. Investors will be watching for signs that AWS growth remains steady despite broader cost pressures, and whether logistics improvements are sustaining North American margin momentum. Tariffs loom large: Amazon’s visibility into global supply chains makes it a bellwether for trade-related headwinds.

Apple, also reporting Thursday, faces a more delicate narrative. iPhone sales have softened, particularly in China, and hardware demand appears subdued. But services growth — notably iCloud, Apple Music, and App Store revenues — remains strong, and may offset some of the shortfall. AI expectations are mounting ahead of WWDC in June. Investors want evidence that Apple still has a growth story to tell.

Together, these four companies make up over 30% of the Nasdaq 100 and 19% of the S&P 500. What they say — and how they trade — will steer the broader market.

Macro Focus: US and Eurozone GDP

In the U.S., first-quarter GDP is expected to show near-stagnation — or even a contraction — as the full impact of Trump’s aggressive tariffs hits home. Consensus estimates had sat at 0.3% growth, but yesterday’s record goods import data forced downgrades. Goldman Sachs now expects a 0.8% contraction, while the Atlanta Fed projects a 1.5% drop. The trade shock has dented confidence and raised recession fears, even as headline data remains mixed. Airlines have pulled 2025 forecasts and consumer confidence sits at five-year lows. The economy grew 2.4% in Q4 — the sharp contrast will not go unnoticed.

While some economists warn of skew from non-monetary gold flows, the broader picture is clear — trade is dragging, sentiment is fraying, and policy uncertainty is mounting.

Across the Atlantic, Eurozone GDP surprised to the upside, growing 0.4% in Q1 — double economist expectations. Germany grew 0.2%, France 0.1%, and Southern Europe led the way: Spain and Lithuania up 0.6%, Italy 0.3%, and Ireland a volatile but massive 3.2%. Despite the boost, economists warn growth could slow as U.S. tariffs on European goods begin to bite. Inflation is nearing target, but economic sentiment has fallen to its lowest since December. The ECB is expected to cut again in June, with policymakers highlighting U.S. tariffs as a looming headwind for the bloc’s fragile expansion.

Tariff Watch & Political Headlines

President Trump hinted Tuesday that trade negotiations with India are progressing well and a deal could soon be struck. The market interpreted this as a sign that some tariff relief may be in sight, but caution remains warranted.

Trump also lashed out at Amazon after reports surfaced that it may show tariff-related cost breakdowns to consumers. The firm quickly backtracked. It’s a clear warning to other corporates that transparency around tariffs could come with political consequences.

Elsewhere, relief measures for automakers are taking shape, with a new executive order confirming that vehicles assembled domestically won’t face stacked tariffs on parts and materials. GM and Ford both welcomed the change.

Analyst Recommendations

Final Thought

I continue to believe that a lot of bad news is already priced in. Tariffs, regulatory uncertainty, and cautious guidance have made investors defensive. But as we saw with Tesla last week, “less bad than feared” can be enough to trigger sharp relief rallies.

If the Big Four — Microsoft, Meta, Amazon and Apple — deliver stable results and cautious but constructive guidance, markets could bounce further. It won’t take fireworks. Just clarity. And right now, that’s in short supply.

It’s a similar dynamic with today’s GDP print. Expectations are already depressed. If the number is flat or slightly better than feared, it may fuel a modest upside move, particularly if tech earnings come in strong. If the print is worse than expected, we’ll likely hear louder recession calls — but investors are already looking past the economic data and toward Big Tech’s results. A soft number could trigger a slight pullback, but I expect any major market reaction will be driven by earnings, not macro.

With the S&P 500 now only 0.9% down on the month after flirting with bear territory, the path of least resistance may surprise to the upside — if earnings hold up.

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.