Good morning,
Yesterday, under extraordinary pressure from the bond market, President Trump suspended his reciprocal tariffs for 90 days on all countries not named China. That led to a historic surge in the stock market. The epic rally in the S&P 500 Index (SPX) was among the top 10 percentage return days in the nearly century-long price history of the Index.
For orientation following yesterday’s vertigo, the SPX jumped +9.5% to close at 5457. That left the Index down -11% from its highs instead of the -19% maximum drawdown it closed at on Tuesday.
From a technical indicator perspective, yesterday’s surge, as big as it was, did little to mend all the damage caused in the past week. One day is not a trend, even days like yesterday. We’ll need some follow through in order to get more constructive.
Here is my immediate simple-minded concern: the suspension will not help uncertainty, and uncertainty alone can cause a recession. I believe it is going to take a lot more than a suspension to release the current grip the market has on a recession ahead.
Be well,
Mike