President Donald Trump’s recent shift on trade tensions and his stance on Federal Reserve Chair Jerome Powell have boosted market confidence, leading to a rally in stocks. The administration’s reassuring comments helped restore investor confidence, with the 10-year yield falling and the dollar moving closer to a key psychological level. Analysts note that while markets may remain volatile, the sharp rebound, despite the lack of formal trade agreements, is a positive sign.
Trump’s pivot indicates that the administration is focusing on the market. However, the outlook for stocks could deteriorate if incoming economic data turns out to be negative. U.S. President Donald Trump smiled as he signed energy-related executive orders at the White House in Washington, D.C., on April 8, 2025.
After spending half a month in one of the most volatile markets in years, the S&P 500 has rebounded, recovering half of its steep decline triggered by concerns about tariffs. The market’s snapback of more than 10% from its closing low and up 14% from the panic-induced trough on April 7 came on the heels of extreme bearish sentiment and oversold technical conditions. The swift recovery has generated notable technical signals, which bode well for the market’s performance over the next six to 12 months.
These include strong market breadth and a series of huge daily gains. Among the encouraging indicators is the Zweig Breadth Thrust, which occurs when the market experiences a clustering of extremely positive breadth days following an oversold condition. Despite these promising indicators, caution is still warranted.
The historical sample sizes for these signals are relatively small and often include periods of short-term volatility and losses before positive long-term outcomes. Market sentiment remains cautious, with institutional investors showing negative positioning and fast-money speculators reentering following the recent surge. The ongoing tariff saga has increased recession probabilities, forcing businesses to reassess their hiring and investment strategies.
Trump’s trade shift impacts market
Investors are closely watching to see if deteriorating “soft” economic data translates into “hard” evidence in employment, spending, and production figures. The market’s rebound off its lows shows resilience but also underscores the complexity of navigating current economic and policy headwinds.
While various technical indicators suggest potential for continued recovery, the path forward is riddled with challenges, from market sentiment to macroeconomic uncertainties. President Donald Trump’s unprecedented tariffs, particularly on China, and recent attacks on Federal Reserve Chair Jerome Powell caused alarm among some of his top advisers and America’s most prominent CEOs. They warned of financial chaos and empty store shelves.
Top administration officials were relieved by Trump’s statement on Powell. They had been unnerved by the heated rhetoric and wary of a prolonged legal battle if Trump attempted to unseat the Fed chair. The Dow closed higher by 420 points, or 1.07%.
The broader S&P 500 gained 1.67%, and the tech-heavy Nasdaq Composite rose 2.5%. White House press secretary Karoline Leavitt stated on Fox News that there will be “no unilateral reduction in tariffs against China.” Trump told reporters that his administration will get a “fair deal” with China on trade, adding broadly that negotiations with other countries “are going very well.
Trump’s notable shift in tone toward Powell and China came a day after he met privately with the CEOs of four major U.S. retail companies. They conveyed concerns about the rising economic fallout from Trump’s tariff policy and the uncertainty it has created for financial markets.
CEOs of Walmart, Target, and Home Depot delivered a blunt message about supply chain disruptions and their effects on consumers. Treasury Secretary Scott Bessent, who has emerged as a calming voice for financial markets, played a key role in arranging the meeting of CEOs. This was part of an effort to show Trump how serious the economic challenges facing the administration had become.
Doug McMillon, the CEO of Walmart, told Trump that the trade war with China had already started to disrupt the supply chain and would only intensify by summer. The dynamic between Trump’s economic team, the Fed, and the retail sector remains critical as the administration navigates the impacts of tariffs and trade policies.
