Why This Week’s Minor Stock Market Gains Are Very Good News
U.S. stocks are still up despite a downgrade of the U.S. credit rating, and that upward trend is due to a pause on tariffs.
Quick overview
- The stock market experienced small gains on Monday, with the Dow Jones up 0.32% and the S&P 500 and Nasdaq increasing by 0.09% and 0.02%, respectively.
- Despite a downgrade of the U.S. credit rating by Moody's, the market showed resilience, indicating strong economic fundamentals.
- The S&P 500 achieved a six-day winning streak, with expectations of continued positive momentum due to a pause in tariffs and potential interest rate cuts.
- While mortgage rates spiked, the overall sentiment remains optimistic for the stock market's performance in the coming week.
We saw small gains on Monday as the week’s trading started off for the stock market, with the Dow Jones adding 0.32%, and the S&P 500 and Nasdaq Composite both increasing by 0.09% and 0.02%, respectively.
As the stock market ticked upward this week, it demonstrated that the market could make major gains after the China-U.S. trade deal and not lose much of those gains shortly afterward. The fact that there was no significant retreat for the stock market after substantial gains early last week shows incredible economic strength. This indicates that the market did not rise too quickly and too high, even though its bullish trend was one of the biggest all year.
The market lost some of its momentum, though, due to Moody’s downgrading the United States’ credit rating. Now, three major credit reporting agencies have downgraded the country’s credit rating, and that reflects poorly on where they expect the economy to be in the future.
Market Expected to Climb
There is good news to be found across the stock markets. The S&P 500 achieved a six-day winning streak on Monday and should continue that Tuesday as well. Several members of the Federal Reserve are expected to speak today, and they may have good news to report about interest rate cuts. Now that the worst of the tariffs have been put on pause, there is more breathing room for an interest rate cut to happen.
All three major stock market indices were trending up by the end of trading Monday, but they could dip early Tuesday as mortgage rates spiked 7%. However, the boost provided by the trade deal with China and the pause on tariffs should continue to carry the stock market to a winning week regardless.
Trump’s tariff changes have put tremendous pressure on the stock market over the past few months, compounded by reciprocal tariffs imposed by China and other countries. Now that those have been placed on a 90-day hiatus, the stock market is behaving very positively, and we do expect that upward movement to continue for now.
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