Market Update Into May 25th: Fed Turns Hawkish

4 mins read

Markets pushed higher last week despite a wave of macro headwinds. The FOMC minutes hit, and the odds of a rate hike this year jumped; Kevin Warsh was officially sworn in as the new Fed Chair, and consumer sentiment cratered. $NVDA posted a record quarter but ended the week roughly flat in a classic sell-the-news reaction to the blowout print. U.S.-Iran peace talks kept traders on edge throughout, with oil swinging hard on every headline before ultimately closing the week lower. By week’s end, semiconductors, tech, and software led all sectors as risk-on sentiment held. In other news:

Looking ahead, this week is a short one with markets closed Monday for Memorial Day, but it’s still packed. Wednesday after the close brings a software and semi trifecta with $MRVL, $CRM, and $SNOW all reporting on the same night. We also get PCE and the second revision of Q1 GDP later in the week. With markets still trending higher, let’s see how the charts are setting up.

Weekly Analysis

SPY (SPDR S&P 500)

$SPY ended the week near all-time highs at $745.64 (+0.88%), extending the bull run off the March lows. The Fast K of the Triple Stochastic RSI has printed 100, a historically bullish signal on the weekly timeframe, and now sits in week 6 of its above-midpoint streak against a 10-week average. The Slow K just crossed above the midpoint two weeks ago while the Slowest sits 42 weeks into an average 86-week bull run, with all three layers aligned and pointing higher.

QQQ (Invesco QQQ Trust)

$QQQ closed the week at $717.54 (+1.22%), outpacing $SPY as tech and semis led the charge. The Fast K of the Triple Stochastic RSI spiked to 100 and sits in week 6 of its above-midpoint streak, same setup as SPY, but the stronger weekly close gives QQQ the edge. With the Slow K just crossing above the midpoint and the Slowest only 42 weeks into an average 108-week bull run, QQQ has more historical runway than SPY at this stage of the cycle.

IWM (iShares Russell 2000)

$IWM closed the week at $285.12 (+2.71%), the biggest mover of the three indexes, but the Triple Stochastic RSI tells a more cautious story. The Slow K has stretched to 45 weeks above the midpoint, already past its 36-week average, signaling small-caps are extended on the intermediate timeframe. With the Slowest K 40 weeks into a 57-week average bull run and rate hike odds rising, IWM is the most stretched of the three indexes at this stage of the cycle.

Earnings

Notable Results

HAS (Hasbro)

EPS: $1.47 vs $1.13 est
REV: $1.00B vs $966.85M est

KEYS (Keysight Technologies)

EPS: $2.87 vs $2.26 est
REV: $1.72B vs $1.71B est

TGT (Target)

EPS: $1.71 vs $1.35 est
REV: $25.44B vs $24.34B est

ROST (Ross Stores)

EPS: $2.02 vs $1.68 est
REV: $6.01B vs $5.57B est

WDAY (Workday)

EPS: $2.66 vs $2.25 est
REV: $2.54B vs $2.52B est

CAVA (Cava Group)

EPS: $0.20 vs $0.17 est
REV: $438.27M vs $418.72M est

ZM (Zoom Video)

EPS: $1.55 vs $1.32 est
REV: $1.24B vs $1.22B est

DECK (Deckers Outdoor)

EPS: $0.96 vs $0.83 est
REV: $1.12B vs $1.08B est

DE (Deere & Company)

EPS: $6.55 vs $5.76 est
REV: $13.37B vs $11.48B est

RL (Ralph Lauren)

EPS: $2.80 vs $2.54 est
REV: $1.98B vs $1.85B est

WSM (Williams-Sonoma)

EPS: $1.93 vs $1.79 est
REV: $1.81B vs $1.80B est

ADI (Analog Devices)

EPS: $3.09 vs $2.90 est
REV: $3.62B vs $3.51B est

NVDA (NVIDIA)

EPS: $1.87 vs $1.76 est
REV: $81.62B vs $79.04B est

BJ (BJ’s Wholesale)

EPS: $1.10 vs $1.04 est
REV: $5.53B vs $5.38B est

TOL (Toll Brothers)

EPS: $2.72 vs $2.58 est
REV: $2.53B vs $2.42B est

INTU (Intuit)

EPS: $12.80 vs $12.28 est
REV: $8.56B vs $8.53B est

BIDU (Baidu)

EPS: $1.75 vs $1.69 est
REV: $4.65B vs $4.66B est

LOW (Lowe’s)

EPS: $3.03 vs $2.96 est
REV: $23.08B vs $22.86B est

HD (Home Depot)

EPS: $3.43 vs $3.41 est
REV: $41.77B vs $41.54B est

WMT (Walmart)

EPS: $0.66 vs $0.66 est
REV: $177.75B vs $174.75B est

What’s Happening Now

SPY S&P 500
As Warsh officially replaces Powell as the new Fed chair this week, the S&P 500 has historically averaged strong first-year gains across different economic backdrops. From Volcker’s inflation inferno to Yellen’s ZIRP inheritance, the only red SPX outlier was Greenspan who entered just before Black Monday. Today, however, Warsh inherits a unprecedented environment with a recently-spiking 10Y yield, historic debt-to-GDP, and surging energy prices… Plus extreme political pressure to lower rates.

RGTI Rigetti
Quantum stocks have surged after the U.S. government’s $2B CHIPS Act initiative to “secure the nation’s global quantum leadership.” RGTI led the sector, rising more than 40% this week, after signing a $100M Letter of Intent to pursue R&D in the highly-speculative, yet fast-developing industry. Meanwhile, legacy computing firm IBM captured the lion’s share of the new administration’s funding with a $1B award to build the first quantum foundry in the country.

NVDA Nvidia
Even among the so-called Magnificent Seven, Q1 earnings show Nvidia is in a league of its own with 85% YoY revenue growth. Meanwhile, TSLA trails the pack at a relatively low 15% YoY growth rate amid slowing EV sales, elusive self-driving timelines, and ramping automaker competition. As Musk’s other juggernaut gears up for a potential $2 trillion valuation, SpaceX would similarly pale in earnings comparisons with negative net income and only $18.7 billion revenue in 2025.

Believe it or not, this is just a fraction of what happened in the markets last week. For a full rundown delivered straight to your inbox every weekend, sign up for The Official Trendspider Newsletter!