Good morning,
Happy Friday. This week began largely as expected following the holiday-weekend headlines around new tariffs tied to potential U.S. control of Greenland. On Tuesday, the S&P 500 Index fell just over 2%, alongside declines across all major U.S. equity indexes—the largest one-day drop since last April’s tariff tantrum.
By the end of Tuesday, there was a familiar sense of déjà vu: a policy announcement that appeared to go too far, followed by a retreat. With a holiday-shortened week ahead, it looked like it might be a long slog waiting for the retreat. Instead, Wednesday delivered a surprise from the White House. In under 24 hours, President Trump built an exit ramp with a midday “no-tariff” announcement plus a “framework for agreement with NATO” for the future – hmm. Markets responded accordingly, spending Wednesday and Thursday retracing most of Tuesday’s losses and ending just shy of where they closed last week.
On the macro front, the week’s data were constructive. U.S. PCE inflation remained contained and in line with expectations. Q3 real GDP and corporate profits were revised higher, and jobless claims continue to run at subdued levels—all consistent with a steady, growing economy in a controlled inflationary environment.
Futures are modestly lower this morning, pressured by weak manufacturing news from Intel, which is down roughly 13% pre-market. If markets were to close here, it would mark the second down week in a row for the S&P 500, a first since June. However, the declines would be fractional. There remains a sense of drift rather than conviction in this market.
For a bull market as mature as this one, there are still few clear signs of exhaustion. The market continues to lean higher, interrupted primarily by bouts of volatility driven by U.S. policy surprises (to put it kindly).
Have a good weekend,
Mike