Market Narrative – Week Ahead: Neutral to Slightly Bearish Bias as Markets Digest Gains, Eye Trade Tensions and Jobs Data

Markets managed a solid rebound this past week, with the S&P 500 (SPX) rallying more than 1% after successfully bouncing off its 200-day simple moving average (SMA), reaffirming this technical level as near-term support. That strength validated a broadly constructive technical view, though the index ultimately failed to establish a new high—suggesting ongoing consolidation within a well-defined range.

Weekly Market outlook (June... Jun 1 · The Investor’s Edge: Spr... 10:34   ​

Macro Backdrop: Trade and Rates in Focus

While technicals were supportive, macro headlines shaped much of the narrative. Early optimism came as President Trump agreed to extend EU trade negotiations, backtracking from last week’s tariff threats. However, that constructive tone faded by Friday after Trump accused China of violating their trade truce. Although he offered few specifics, U.S. Trade Representative Jamieson Greer later cited non-tariff barriers that China has allegedly failed to remove. The market reaction was relatively muted—perhaps a sign of fatigue toward trade-related volatility—but the risk of re-escalation remains a key overhang.

Complicating the trade outlook further, the U.S. Court of International Trade ruled that Trump's reciprocal tariffs represent an "improper abdication of legislative power" and are unconstitutional. While the Court of Appeals granted a stay pending further review, the ruling adds legal uncertainty around the future of U.S. trade policy.

Rates and Inflation: Constructive for Equities

Treasury yields eased modestly across the curve last week, offering relief to equity markets. The 10-year yield pulled back ~10 bps to 4.40%, while the 2-year and 30-year yields saw similar declines. The retreat was largely driven by Friday’s cooler-than-expected PCE inflation report, which showed headline and core inflation ticking lower on a year-over-year basis. Importantly, the report helped bolster expectations for Fed rate cuts later this year—Bloomberg data shows the market now pricing in 2.17 cuts in 2025, up from 1.92 the week prior.

Economic data was broadly constructive, with standout strength in personal income (+0.8%) and consumer confidence (98.0, up sharply from 86.0). That said, there were pockets of weakness: Chicago PMI dropped to 40.5, and initial jobless claims rose to a one-month high.

Technical Picture: SPX Consolidating Gains

Technically, the S&P 500 remains in a digestion phase. After rebounding from its 200-day SMA (~5,785), the index has yet to break above recent highs (~5,965). This places the SPX in a neutral range, with 5,965 acting as resistance and 5,785 as near-term support. A decisive move above or below this zone will likely define directional conviction heading into mid-June.

The Dow Jones Industrial Average (DJI), meanwhile, continues to struggle below its 200-day SMA and remains in a tentative technical state. Until the Dow reclaims that level with conviction, the broader market tone remains mixed.

Looking Ahead: Jobs Report and Market Catalysts

The coming week lacks major scheduled catalysts, with earnings season winding down and the next Fed meeting (June 11–12) still a week away. That leaves Friday’s Nonfarm Payrolls report as the key economic event. Given the recent uptick in jobless claims and the potential for labor market cooling, risks around the report appear skewed toward disappointment (e.g., low job creation or a rising unemployment rate).

In terms of earnings, notable names reporting include CrowdStrike (CRWD), Broadcom (AVGO), Lululemon (LULU), and Dollar General (DG). While important on a single-stock basis, it’s unlikely these will move the broader indices significantly unless results materially diverge from expectations.

Market Breadth and Sentiment

Market breadth showed modest improvement last week. The percentage of S&P 500 constituents above their 200-day SMA ticked up to 50%, while the Nasdaq and Russell 2000 also saw incremental gains in participation. This suggests underlying strength, but it’s not yet a resounding endorsement of broad-based risk appetite.

Cryptocurrency and Alternative Assets

Outside traditional markets, crypto headlines also grabbed attention. Trump Media & Technology Group (DJT) announced plans to raise $2.5B to purchase Bitcoin, citing the digital asset as an “apex instrument of financial freedom.” While this represents a niche development, it reinforces growing interest in Bitcoin as a corporate treasury asset and adds an unexpected twist to the intersection of politics, media, and crypto.

Bottom Line:

Markets are entering the week in a consolidative phase, with technicals neutral and catalysts limited. While cooling inflation and lower yields support the bullish case, uncertainties around trade policy and Friday’s jobs report inject caution into the outlook.

Outlook: Neutral to Slightly Bearish

• Key Risks: Trade re-escalation, weak labor data
• Key Support/Resistance: SPX 5,785 / 5,965
• Catalysts to Watch: Friday’s Nonfarm Payrolls, continued trade rhetoric, and bond market moves

Unless a new narrative emerges—either bullish (rate cut momentum) or bearish (tariff escalation or labor market deterioration)—a sideways market remains the base case.

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