After weeks of turmoil, the S&P 500’s remarkable seven-day surge into month-end has turned heads across global markets. Defying expectations, the index clawed back all its earlier losses triggered by President Trump’s dramatic ‘Liberation Day’ policy bombshell. With technology giants and small caps riding the wave, the late-April rally has left investors asking where the next opportunity lies as a wall of retail money continues flooding the market.
The S&P 500’s relentless push higher, fuelled by a jaw-dropping $40 billion of inflows into US exchange-traded funds in April, highlights the sheer force of retail investor appetite. Despite political turbulence shaking the White House, equity markets have powered through sentiment swings, reasserting their strength in the face of uncertainty. Even as President Trump’s first 100 days have gone down as the weakest market performance since Nixon’s rocky start in 1973, the recent rally signals that many still view this as a dip worth buying.
The so-called VIX, Wall Street’s best-known gauge of market fear, may remain elevated, but the tightening of credit spreads and fall in risk indicators suggests investors are becoming increasingly comfortable adding risk. Recent policy walk-backs from the President on tariffs and monetary policy have further soothed nerves, giving equity markets the green light to advance.
American automakers gained breathing space this week after securing partial exemptions on imported components, helping ease concerns over supply chain disruptions. At the same time, a breakthrough agreement with Ukraine will give US firms privileged access to lucrative aluminium, graphite, and natural gas projects. This landmark deal has the potential to unlock significant investment opportunities in critical materials essential for the energy transition and advanced manufacturing sectors.
However, the outlook is not without caution. Betting markets have raised the likelihood of a US recession in 2025 to over 60%, turning market focus squarely towards macroeconomic data and corporate earnings. Last week’s payrolls report delivered an encouraging sign, with 177,000 new jobs added and unemployment holding steady at 4.2%, suggesting the labour market remains resilient despite tariff pressures.
Earnings forecasts for the S&P 500 have been dialled back to around 8% growth for 2025, down from earlier 12% expectations. Yet, corporate America continues to deliver solid results. Technology leaders Microsoft and Amazon reassured investors this week with strong operational performance and sustained investment in artificial intelligence, reinforcing their dominance in the hyperscale computing space.
Meanwhile, some cracks are emerging in consumer-facing businesses. Amazon sellers have reported raising prices by nearly 30% on around 1,000 products to counter tariff impacts, with some third-party sellers choosing to skip Prime Day 2025 altogether. This move risks lower sales volumes, reduced advertising revenues, and a slimmer product offering during one of the most critical sales periods of the year.
Logistics heavyweight UPS also delivered a sobering update, announcing plans to cut 20,000 jobs and close over 70 facilities as it braces for a dramatic reduction in package volumes from Amazon, its largest client. The move highlights broader challenges across the e-commerce ecosystem as rising costs and shifting consumer behaviour weigh on margins.
Gold prices slipped again as investors embraced riskier assets. As equities rally, the appeal of non-yielding assets like gold typically fades, and recent selling activity by Chinese investors and hedge funds has added to the pressure on the precious metal.
As May unfolds, investors are watching closely to see if the traditional ‘sell in May and go away’ pattern plays out. Historical data may suggest caution, but the S&P’s track record of posting gains in nine of the last ten Mays provides little support for the seasonal bears. With market momentum showing no signs of slowing, the next few weeks could prove pivotal in setting the tone for the rest of the year.
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