S&P 500 and NASDAQ Edge Lower After Rally
The S&P 500 slipped 0.28% and the NASDAQ dropped 0.48% after a six-day run of gains. Investors are reassessing the sustainability of the recent rally as trade and earnings concerns resurface.
Moody's Downgrade and Trade Tensions Weigh on Sentiment
Markets are digesting Moody's downgrade of U.S. sovereign debt and the uncertainty around U.S.-China tariffs. While recent agreements eased some fears, high tariff rates and unclear policy direction keep risk appetite in check.
Tariff Risks Pressure Consumer and Tech Stocks
Retailers like Walmart warned of price hikes due to tariffs, prompting presidential backlash and investor caution. Tech stocks lagged, with the sector sensitive to higher borrowing costs and global supply chain disruptions.
Market Breadth Still Positive, but Valuations Stretched
Last week, 76% of S&P 500 stocks traded above their 50-day moving average, showing broad participation. However, the S&P's forward P/E ratio remains above 22, making the market vulnerable to downward revisions in earnings expectations.
Fed Rate Cut Hopes Fade
Odds of a near-term Fed rate cut have diminished, with markets now expecting the earliest move in July or later. Higher-for-longer rates are adding to caution, especially in rate-sensitive sectors.
