TLDR
- Federal Reserve expected to maintain interest rates at 4.25%-4.5% on Wednesday despite Trump’s calls for cuts
- Key earnings reports coming from Palantir, AMD, Ford, Disney, and Uber
- S&P 500 has bounced back from losses caused by Trump’s tariff announcements
- Fed weighs economic slowdown concerns against potential inflation from tariffs
- Market data suggests investors expect three 25-basis point rate cuts before year-end
The financial world turns its attention to the Federal Reserve’s interest rate decision and a packed week of corporate earnings reports. As markets continue to recover from volatility sparked by President Trump’s tariff policies, these events could set the tone for coming weeks.
The Federal Reserve is expected to keep its benchmark interest rate steady at 4.25%-4.5% when it announces its decision on Wednesday. This comes as President Trump has ramped up pressure on the central bank to cut rates.
The pressure has raised questions about Fed independence, with Trump previously suggesting he might try to remove Chair Jerome Powell from his position. Trump later appeared to back away from these comments.
Despite political pressure, the Fed has maintained it needs more economic data before adjusting rates. Market indicators from the CME Group’s FedWatch tool show investors aren’t expecting a cut at this meeting.
Recent economic reports have been mixed. March inflation came in line with expectations but remains above the Fed’s target. The April jobs report showed stronger-than-expected hiring, with U.S. employers adding 177,000 jobs.
Futures markets point to expectations for potential rate cuts beginning as early as June. LSEG data shows traders pricing in at least three 25-basis point cuts by December, though Friday’s strong jobs report reduced odds of immediate action.
Earnings Season Continues
Monday begins with Ford’s earnings report as the automaker grapples with the impact of Trump’s automobile tariffs. Data analytics firm Palantir also reports after Monday’s market close, with investors looking for insights on AI software demand.
Advanced Micro Devices will share results Tuesday while navigating challenges from tightening restrictions on technology exports to China. AMD has previously estimated these restrictions could cost around $800 million.
Wednesday brings a wave of high-profile reports including ride-sharing giant Uber, pharmaceutical company Novo Nordisk, and entertainment conglomerate Disney. Disney’s earnings follow a stronger-than-expected previous quarter, even as the company reportedly cut about 6% of its news and cable TV workforce.
Other notable reports this week come from cryptocurrency exchange Coinbase, e-commerce platform Shopify, brewer Anheuser-Busch InBev, energy companies ConocoPhillips and Occidental Petroleum, food delivery service DoorDash, online car retailer Carvana, and gaming company Electronic Arts.
Markets Recover From Tariff Shock
The S&P 500 has staged an impressive recovery, erasing losses triggered by President Trump’s “Liberation Day” tariff announcement on April 2. After gaining on Friday, the index was up 0.3% since the tariff news that had caused some of the market’s most volatile swings in 50 years.
The benchmark index has posted nine straight sessions of gains, its longest winning streak since 2004. However, it remains 7.5% below its February record high. Last month, the index had fallen nearly 20% from that peak.
Corporate earnings have generally topped expectations this season. With about two-thirds of S&P 500 companies having reported, businesses are posting earnings 7% above expectations versus a long-term average of 4.3%, according to LSEG IBES data.
Trade developments continue to influence market sentiment. Investors credit the market rebound partly to optimism that trade tensions are easing. On April 9, Trump paused heavy import duties on many countries for 90 days to allow for negotiations, a move that boosted stocks.
Investors will also monitor key economic data this week, including trade balance figures Tuesday and initial jobless claims Thursday. Wednesday’s consumer credit report will help economists assess consumer health amid weakening confidence, while Thursday’s wholesale inventories data could provide insight on supply chain conditions.
The Fed’s communication blackout ends Friday with an event featuring several Fed officials, including Governors Lisa Cook and Christopher Waller. Former Fed Governor Kevin Warsh, a Trump adviser who has criticized the central bank and is rumored to be a potential Powell successor, will also speak at the event.
