Market Watch: S&P 500 Snaps Winning Streak as Fed Meeting Begins and Tariff Concerns Linger
Major Indexes Pull Back as Investors Eye Fed Meeting
The stock market retreated on Tuesday, May 6, 2025, as investors turned cautious ahead of the Federal Reserve’s policy meeting and continued to monitor developments on the tariff front. The S&P 500 is extending its decline after snapping its impressive nine-day winning streak on Monday—its longest rally since 2004.
As of midday trading, the S&P 500 was down 0.2%, while the Dow Jones Industrial Average slipped 26 points. The tech-heavy Nasdaq Composite showed more significant weakness, falling 0.35%.
Tariff Uncertainty Weighs on Market Sentiment
Trade tensions continue to be a primary concern for investors, with uncertainty surrounding President Trump’s “reciprocal” tariffs announced in early April. Treasury Secretary Scott Bessent told CNBC on Monday that “we’re very close to some deals,” echoing President Trump’s comments that agreements could come as early as this week.
Adding to market anxiety, President Trump recently announced a 100% tariff on foreign-made movies, raising concerns about escalating trade tensions and potential retaliatory measures from trading partners.
Despite reports that India has proposed zero tariffs on certain goods, no official trade deals between the U.S. and its trading partners have yet been announced, leaving investors in a state of cautious anticipation.
All Eyes on the Federal Reserve
The Federal Reserve’s two-day policy meeting begins today, with the announcement on interest rates expected Wednesday afternoon. This marks the Fed’s first policy meeting since President Trump’s tariff announcements in early April.
While fed funds futures trading suggests just a 2.7% chance of the central bank cutting rates, investors will be closely monitoring Fed Chair Jerome Powell’s comments on his economic outlook, particularly regarding inflation and growth amid shifting monetary policies.
Megan Horneman, chief investment officer at Verdence Capital Advisors, noted: “We could see temporary disruptions from a supply-chain perspective and a slowdown in growth if not a short and shallow recession. It may also temporarily impact inflation and keep the Federal Reserve in a difficult position on flexibility with interest rates.”
Tech Giants and the “Magnificent Seven”
The “Magnificent Seven” stocks—Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), Meta (META), Tesla (TSLA), and Nvidia (NVDA)—are facing substantial pressure amid tariff concerns and supply chain disruptions.
Despite recent market volatility, Big Tech has shown resilience in earnings season. Excluding Nvidia, which reports later this month, earnings from the other six members of the “Magnificent Seven” surpassed consensus estimates by 16%, according to data from Bank of America—significantly outperforming the more modest 4% beat from the rest of the S&P 500.
Investors will be particularly focused on Nvidia’s upcoming earnings report, as the company recently warned that its first-quarter results will take a hit of up to $5.5 billion after the U.S. government tightened restrictions on chip sales to China. Nvidia shares have fallen nearly 19% since the start of the year.
Earnings in Focus
Several notable companies reported earnings after Monday’s market close, with mixed results:
– Palantir Technologies (PLTR) shares dropped nearly 7% despite reporting first-quarter earnings that met Wall Street’s expectations, with adjusted earnings of 13 cents per share and revenue of $884 million, which topped the $863 million forecast.
– Vertex Pharmaceuticals (VRTX) stock declined 2% on disappointing quarterly results, with adjusted earnings of $4.06 per share falling below the $4.32 per share analyst forecast.
– Mattel (MAT) shares declined 2.5% after management paused its 2025 full-year guidance due to tariff uncertainty.
Today’s earnings calendar features numerous reports, with over 600 companies scheduled to release results.
Looking Ahead: Economic Data and Market Outlook
Investors are awaiting the latest U.S. inflation data due next week, which is expected to influence the Federal Reserve’s future interest rate decisions. Economists predict that headline inflation will rise by 0.3% in November, reaching 2.7% over the prior 12 months.
Monday’s data from the Institute for Supply Management showed stronger-than-anticipated service sector activity in April, though concerns around tariffs lingered.
As market participants navigate potential economic headwinds and policy uncertainties, the combination of tariff concerns, Fed policy decisions, and corporate earnings will likely continue to drive market sentiment in the coming days and weeks.
