Market Insights

Investors are flocking back to classic growth stocks as tariff worries fade and earnings arrive.

The S&P 500 rose 4.6 percent between Thursday, April 17, and Friday, April 25. It was the second gain in the last three weeks. Large-cap growth sectors like technology, consumer discretionary and communications led the advance.

There was a flurry of headlines, but one key theme seemed to emerge: The White House wants to reduce some of the anxiety created by its Liberation Day tariffs on April 2. Treasury Secretary Scott Bessent spoke of a “big deal” with China and President Donald Trump said duties would “come down substantially.” There was also talk of exempting automakers from some tariffs. China removed tariffs on some U.S. goods and Japanese officials discussed importing more American corn.

Two other political stories boosted sentiment. First, President Trump backpedaled on speculation he might try to dismiss Federal Reserve Chair Jerome Powell. That relieved investors already worried about the bond market and U.S. credibility.

Second, Tesla (TSLA) CEO Elon Musk said he will “significantly” reduce the time he spends on the Department of Government Efficiency, or DOGE. That could potentially have the double benefits of:

• Giving him more time to focus on TSLA’s business.
• Reducing his involvement in activities some customers may find controversial.

The announcement helped give TSLA its best week since the election in early November.

Cloud Comeback

Last week saw a sharp rebound in stocks associated with AI and cloud computing.

ServiceNow (NOW) had its biggest weekly gain ever after beating earnings estimates and raising its guidance for subscription revenue. NOW is a bellwether for technology because its workflow platform is widely used by enterprises investing in AI and cloud computing.

Microchip Technology (MCHP) had its biggest rally since the pandemic. While no specific headline seemed to drive the move, the provider of hardware like switches and controllers is closely tied to AI and datacenters. Amphenol (APH), which serves similar markets, also jumped after beating estimates.

Speaking of AI and datacenters, executives at Amazon.com (AMZN) and Nvidia (NVDA) dismissed worries about slower investment. (That’s according to a Thursday report from CNBC.)

Palantir Technologies (PLTR) jumped despite a lack of news. Still, the data-intelligence and AI stock broke a potentially important resistance level.

Technology was the strongest sector overall, powered by gains in both semiconductors and software. Consumer discretionaries benefited from rebounds in TSLA and AMZN. Strong quarterly results from Alphabet (GOOGL) helped support communications.

The Toll of Tariffs

The stock market may have shown optimism last week about tariffs being eased, but several reports suggested the trade duties are already taking a toll on the economy.

The Fed’s Beige Book survey of economic conditions noted “tariff-related concerns,” adding that businesses face higher costs. CBS News reported that Walmart (WMT) and Target (TGT) warned the Trump Administration of product shortages from its trade policies.

Separately, CNBC reported that online prices climbed 29 percent because of the tariffs. It cited research firm SmartScout.

At least 12 states also took action in the U.S. Court of International Trade, arguing the duties are illegal. The lawsuit followed a similar case by California.

Sell America?

Last week saw money shifting away from safe-haven assets, reflecting confidence that tariff risks will fade.

Gold miners dropped more than 5 percent. That represents a big change from recent weeks, when they were virtually the only group to advance.

Consumer staples, utilities and real-estate investment trusts were the worst performing major sectors. Those three are traditionally viewed as risk-off safety plays.

The U.S. dollar bounced after four negative weeks. U.S. Treasury prices also climbed. Both of those points suggest coordinated drops in U.S. assets — the “sell America trade” — may have stopped. (Tariffs and political attacks on the Fed had triggered the negative move.)

Brighter Sentiment

Most of the S&P 500’s bog decliners last week, like Fiserv (FI) and Northrup Grumman (NOC), dropped after announcing quarterly results.

Last week didn’t have much important economic data. In one interesting note, the University of Michigan revised its April consumer sentiment report higher. It was the first positive revision of the year.

Initial jobless claims inched higher but remain low by historical standards. In a separate note, energy stocks lagged after Reuters reported that OPEC+ may increase crude oil production in June.

S&P 500, daily chart, with select patterns and indicators.

Charting the Market

The S&P 500 showed several patterns that may signal a more positive turn.

First, it closed above 5,500 for the first time since the tariffs were announced on April 2. Higher weekly lows may also be interpreted as a bullish ascending triangle.

Second, prices held support at the area 5,100 where they bounced in August and on April 10. Such a higher low may represent a break in the recent downtrend.

Third, MACD is also rising and the 21-day exponential moving average turned higher. Those patterns may reflect a more bullish short-term direction.

Next, the index made a lower low and higher high versus the previous week. That kind of bullish outside candle is a potentially positive reversal pattern.

The Week Ahead

This week is busy with key economic data and earnings reports. More than one-fifth of the S&P 500 announces quarterly results.

Nothing important is scheduled for today.

Tomorrow brings the JOLTs job openings report for March and earnings from General Motors (GM), Starbucks (SBUX), Seagate Technology (STX), Visa (V) and United Parcel Service (UPS).

Wednesday is a very active day, with the initial reading of first-quarter gross domestic product (GDP) and the March personal consumptions expenditures (PCE) inflation report. ADP’s private-sector payrolls report hits 15 minutes earlier. Microsoft (MSFT), Meta Platforms (META), Qualcomm (QCOM) and Caterpillar (CAT) are some of the big earnings reports.

Thursday features initial jobless claims and the Institute for Supply Management’s manufacturing index. Noteworthy companies issuing results include Apple (AAPL), Amazon.com (AMZN), Amgen (AMGN), MasterCard (MA) and Airbnb (ABNB).

Non-farm payrolls are on Friday morning, along with earnings from Exxon Mobil (XOM) and Chevron (CVX).