Retail Divided Over Market Trajectory After S&P 500 Snaps 4-Week Losing Streak: Trump’s Policies Viewed As Major Pushback

The new week will likely test the market’s resiliency as private sector activity readings and the February personal income and spending report are due.

The S&P 500 Index reversed course last week, although volatility characterized trading. The upside catalysts were mainly the Federal Reserve’s rate decision, which aligned with expectations, and a modest rebound in retail sales for February.

The index ended the week up 0.50%, a reversal from the weekly declines posted for the four preceding weeks. The downturn began in mid-February as President Donald Trump announced tariffs on goods imported from the U.S. and Canada and slapped additional tariffs on Chinese imports.

Reciprocal tariffs on other countries will go into effect on April 2. On Friday, Trump signaled flexibility on the implementation, although he seems to be opposed to the idea of exceptions. 

Tech stocks, especially the biggest ones, suffered the worst declines. At one point last week, all Magnificent Seven stocks were lower for the year before Meta Platforms, Inc. (META) broke away and crept back into positive territory.

The Roundhill Magnificent Seven ETF (MAGS), an exchange-traded fund (ETF) that tracks the Magnificent Seven stocks, is down 13% this year. The iShares Russell 2000 ETF (IWM), which tracks the Russell 2000 Index, is down a more modest 7.6%.

The new week will likely test the market’s resiliency as private sector activity readings and the February personal income and spending report are due. The latter report comprises the core personal consumption expenditure index, often called the Fed’s favorite inflation gauge.

Investors will likely also pay attention to the University of Michigan’s preliminary consumer sentiment reading for March, which is due on Friday.

An ongoing Stocktwits poll asking users about their market outlook has received responses from 2,500. The market bottom was called by 36% of the respondents, while an equal proportion held an opposite view, stating that ‘lower lows’ are coming. 

In stock market parlance, ‘lower lows,’ refers to the chart printing a pattern in which each low point is lower than the previous one. This indicates a potential downtrend or a bearish move.

A sizable percentage (27%) said it is too early to tell.

Notwithstanding the weakness in the near term, the stock market is on an extended bull run that began in October 2022 when inflationary pressure began to thaw.

Bearish watchers blamed Trump and his policies for the predicament, with one user suggesting the SPDR S&P 500 ETF Trust (SPY) could pull back to the $450 level and the Invesco QQQ Trust (QQQ), an ETF that tracks the Nasdaq 100 Index, drop toward the $300 level.

The SPY ETF ended Friday’s session up 0.03% at $563.98 and the QQQ ETF gained 0.33% to $480.44. These ETFs are down about 3.5% and 6%, respectively, this year. 

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