Last week, markets traded softer despite a healthy start to the US corporate earnings season, with Wall Street banks reporting overall better-than-expected results. The sentiment continues to be driven by economic, trade, and geopolitical policies and announcements from President Trump.
Even though trade tensions have somewhat diminished, US equity indexes still managed to close the week 2 to 3% lower, after Trump criticized Federal Reserve Chairman Jerome Powell's leadership. The Fed chief gave a speech emphasizing that they will not act quickly to cut rates and will remain in a wait-and-see mode for future developments and impacts on inflation and economic growth.
Trump pressured for immediate rate cuts, while the administration confirmed that he is considering whether Powell can be removed. This brought even more uncertainty to the markets, with the Fed's independence remaining at the forefront over the long weekend.
Markets start the week in negative territory, with the S&P 500, Dow Jones, and Nasdaq all 2 to 3% lower, influenced by this potential Federal Reserve policy shift. Tesla and Alphabet, part of the "Magnificent Seven" tech stocks, are set to report earnings, and their results will be closely watched by investors, along with new trade war developments.
