Tariffs on Hold and Tech to the Rescue
Signals vary: while the tech sector keeps the market afloat, trade tensions and declining oil production raise new concerns.
The market continues to walk a shaky tightrope. On one side, major tech companies are holding the line and propping up the Nasdaq with solid earnings and renewed expectations in artificial intelligence.
On the other, the trade agreement between the U.S. and China has an expiration date, oil is losing steam, and investors are beginning to adjust their global growth projections.
In this mixed-signal environment, the S&P 500 ended the week with a slight drop of 0.5%, the Dow Jones fell 0.9%, and the Nasdaq held up better, dipping just 0.3%, thanks to the strength of companies like Nvidia, Apple, and Microsoft.
Tech still leads the market
Tech giants were once again in the spotlight. Companies like Nvidia and Meta pushed the Nasdaq to new weekly highs, supported by strong financial results and bold projections in areas like AI and digital advertising.
The persistence of this sector is contrasted by the uncertainty facing more cyclical industries. While analysts welcome the progress, they also warn that such heavy concentration in a few stocks can create vulnerabilities if any of them disappoint.
Trade pause with China
The U.S. and China agreed to temporarily suspend certain tariffs for 90 days — a move aimed at easing tensions amid a fragile economic backdrop.
However, this truce is just that: temporary. Many analysts see it as a short-term political strategy with no guarantees of lasting change in the relationship between the two powers. If tariffs return forcefully, the impact on supply chains and production costs could hit the markets directly.
Oil loses momentum
A recent S&P Global Commodity Insights report suggests that U.S. oil production may slightly decline in 2025, something not seen since the start of the pandemic in 2020.
This drop would come amid a more conservative strategy by major oil firms, affected by slowing global growth and the growing push for cleaner energy sources.
Meanwhile, OPEC (Organization of the Petroleum Exporting Countries) continues to adjust its output levels in an effort to keep prices stable, though global demand is starting to show signs of weakening.
What’s next
This week will be key to understanding where the Fed might be headed. Data on inflation (CPI), retail sales, and industrial production will be released.
Any sign of cooling prices could strengthen expectations for a rate cut in the second half of the year. On the other hand, if inflation remains stubborn, the Fed is likely to stick to a cautious stance.
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Sources: Axios, Yahoo Finance, thesun.ie