empty
17.04.2025 11:32 AM
US market: Powell expresses concerns about economy. Marker drops

This image is no longer relevant

S&P 500

Report for 17.04

US market: Powell warns of economic slowdown. stocks drop

Major US indices on Wednesday: Dow -1.7%, NASDAQ -3.1%, S&P 500 -2.2%. The S&P 500 closed at 5,275, with a range of 5100–5800.

Key point:

The head of the US Federal Reserve gave a major economic address on Wednesday—his first since markets were rocked by President Trump's sweeping tariff announcement covering all US foreign trade and the subsequent market swings triggered by his unpredictability.

Powell warned that the US economy was likely to face both rising inflation and slowing growth at the same time. It is a combination that poses one of the most difficult scenarios for any central bank, including the Fed. He said the Fed may face some very tough decisions in the coming months.

However, Powell also stated that he believes the bond and equity markets are functioning well and that fluctuations in asset prices reflect investors adjusting to the new environment.

Ultimately, Powell said the Fed is currently in a comfortable position and will follow a wait-and-see approach. In other words, no policy changes should be expected in the near term unless the economic outlook changes dramatically.

Trading summary for Wednesday, April 16:

Stocks dropped sharply on heavy selling, causing all major indices to tumble.

The S&P 500 fell 2.2%, the Nasdaq Composite lost 3.1%, and the Dow Jones Industrial Average dropped 1.7%.

Negative sentiment persisted throughout the session following NVIDIA's (NVDA 104.49, -7.71, -6.9%) announcement that it expects to incur up to $5.5 billion in costs in Q1 due to export restrictions to China.

AMD (AMD 88.29, -7.00, -7.4%) also forecast an $800 million hit from tariffs.

Selling intensified in the afternoon following Powell's comments at a Chicago event, where he said he does not expect the Fed to make progress on its dual mandate this year and made it clear there would be no Fed put to support the market.

Wednesday morning's economic data also contributed to the bearish tone despite a solid retail sales report.

Retail sales for March rose 1.4% on a monthly basis (consensus: 1.3%) after a 0.2% increase in February.

Ex-auto sales increased 0.5% on a monthly basis (consensus: 0.2%) after February's upward revision to 0.7% (from 0.3%).

The negative takeaway is that last month's strong numbers may reflect front-loaded demand ahead of tariffs and may not be sustained.

Mega caps and semiconductor stocks led the decline amid ongoing tariff uncertainty and associated growth concerns. The Vanguard Mega Cap Growth ETF (MGK) dropped 3.3%, while the PHLX Semiconductor Index (SOX) fell 4.1%. The technology sector recorded the steepest loss by a wide margin, declining 3.9%. The next-worst performers were the consumer discretionary sector (-2.7%) and communication services (-2.5%).

Year-to-date:

Dow Jones Industrial Average: -6.8%

S&P 500: -10.3%

S&P Midcap 400: -12.8%

Nasdaq Composite: -15.6%

Russell 2000: -16.4%

Economic data summary:

MBA weekly mortgage applications index: -8.5%; previous: 20.0%

March retail sales: 1.4% (consensus: 1.3%); previous: 0.2%

March retail sales ex-auto: 0.5% (consensus: 0.2%); previous revised from 0.3% to 0.7%

The complex element, and the key takeaway from the report, is that the strength in sales was largely driven by frontloading ahead of tariff measures, meaning the momentum may not be sustained.

The counterpoint here is that food services and drinking places sales rose 1.8% in March after a 0.8% drop in February.

March industrial production: -0.3% (consensus: -0.3%); previous revised from 0.7% to 0.8%

March capacity utilization: 77.8% (consensus: 77.9%); previous: 78.2%

The key takeaway from this report is that the sharp decline in utilities output overshadowed gains in manufacturing and mining output, making the overall decrease less concerning than it appears.

February business inventories: 0.2% (consensus: 0.3%); previous: 0.3%

NAHB Housing Market Index for April: 40 (consensus: 39); previous: 39

Thursday's economic calendar includes:

8:30 ET: March housing starts (consensus: 1.418 million; previous: 1.501 million),

Building permits (consensus: 1.455 million; previous: 1.456 million),

Weekly initial jobless claims (consensus: 225,000; previous: 223,000),

Continuing claims (previous: 1.850 million),

Philadelphia Fed April Survey (consensus: 10.0; previous: 12.5)

10:30 ET: Weekly natural gas inventories (previous: +57 billion cubic feet)

Energy: Brent crude at $66.20. Oil rose noticeably by about $1.50 over the day, likely due to easing concerns about a sharp global economic slowdown.

Gold is holding near new highs around $3,320 and is showing little pullback—gold should be held, and additional buying is possible on a significant daily-scale correction.

On Thursday, the ECB will announce its rate decision. Economists expect a 0.25% cut.

Conclusion:

Attention should be paid to the strong US retail sales report. Despite many believing the spike was simply frontloaded before Trump's tariffs as Powell admitted yesterday, even the Fed did not expect such aggressive increases.

Therefore, the US economy retains its main strength as consumer optimism remains intact.

Thus, at least toward the year's highs, a renewed rally is still on the table.

We continue to hold positions bought on dips. Some modest buying at current levels is also acceptable.

More analysis from Mikhail Makarov is on the way.

https://www.instaforthtex.com/ru/forex_analysis/?x=mmakarov

https://www.instadividends.com/ru/forex_analysis/?x=mmakarov

Jozef Kovach,
Analytical expert of InstaTrade
© 2007-2025

Recommended Stories

Navigating dollar surge and tech turmoil: key entry points for traders

Volatility has returned to financial markets. The dollar staged a sharp rally, driving down the yen, euro, and Swiss franc, but beneath the surface lies a web of unsettling signals

Аlena Ivannitskaya 11:44 2025-05-28 UTC+2

Update on US stock market on May 28

S&P500 US stock market is showing buoyant growth Snapshot of major US stock indices on Tuesday: Dow Jones: +1.8% NASDAQ: +2.5% S&P 500: +2.1% S&P 500 at 5,921

Jozef Kovach 10:38 2025-05-28 UTC+2

Stock Market on May 28th: S&P 500 and NASDAQ Continue Their Rapid Rally

Following the most recent regular session, U.S. stock indices closed with strong gains. The S&P 500 rose by 2.00%, while the Nasdaq 100 added 2.47%. The Dow Jones Industrial Average

Jakub Novak 09:43 2025-05-28 UTC+2

S&P 500 Forecast for May 28, 2025

The U.S. stock index, the S&P 500, has completed the correction that began on May 20. A sign of its completion is the price breakout above the inner boundary

Laurie Bailey 05:08 2025-05-28 UTC+2

Domestic Demand and Attractive Prices

The wave structure on the 24-hour chart for the #SPX instrument is generally easy to interpret. The global five-wave pattern doesn't even fit within the terminal window at the smallest

Chin Zhao 11:56 2025-05-27 UTC+2

Stock Market Update for May 27th: S&P 500 and NASDAQ Still Have Growth Potential

Following the most recent regular session, U.S. stock indices closed lower. The S&P 500 fell by 0.67%, while the Nasdaq 100 lost 1.00%. The industrial Dow Jones dropped by 0.61%

Jakub Novak 11:08 2025-05-27 UTC+2

Update on US stock market on May 27. Market picking up steam

S&P500 Snapshot of key US stock indices on Monday: Dow: -0%, NASDAQ: -0%, S&P 500: -0%, S&P 500 at 5802, with a trading range of 5400–6200. On Monday, US index

Jozef Kovach 10:40 2025-05-27 UTC+2

Trump changes his rhetoric, USD loses ground

The world is changing faster than the markets can blink. The dollar is rapidly losing ground amid a pause in the US-EU trade war. Nvidia is being forced

Аlena Ivannitskaya 13:05 2025-05-26 UTC+2

Stock Market Outlook for May 26th: S&P 500 and NASDAQ Return to Growth

During the previous regular session, U.S. stock indices closed lower. The S&P 500 fell by 0.67%, the Nasdaq 100 lost 1.00%, and the Dow Jones Industrial Average declined by 0.61%.However

Jakub Novak 11:50 2025-05-26 UTC+2

Update on US stock market on May 26

S&P500 US stock market turning higher Snapshot of major US stock indices on Friday: Dow -0.6%, NASDAQ -1%, S&P 500 -0.7%, S&P 500 at 5,802, range 5,400–6,200. Importantly, on Monday

Jozef Kovach 10:35 2025-05-26 UTC+2
Can't speak right now?
Ask your question in the chat.
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaTrade anyway.

We are sorry for any inconvenience caused by this message.