A Strong Start to a New Presidential Term

Despite a slight dip in trading on Friday due to weakness in the chipmaker sector, the S&P 500 has climbed almost 2% this week, continuing a bullish trend that has made it one of the best starts to a presidential term since Ronald Reagan took office in 1985.

Factors Contributing to the Rally

President Donald Trump's rhetoric on policies to stimulate the economy and lower taxes, along with his apparent softening stance toward tariffs on China, have boosted investor confidence. Additionally, the dollar has weakened and the MOVE Index of expected Treasury volatility has hit its lowest level since mid-December.

Key Market Movements

* S&P 500: -0.4%
* Nasdaq 100: -0.7%
* Dow Jones Industrial Average: -0.3%
* Russell 2000: -0.1%
* Cryptocurrency-linked firms: rallied after Trump's executive order supporting the industry

Corporate Highlights

* Nvidia led losses in semiconductor stocks amid disappointing forecasts from Texas Instruments.
* Meta Platforms surged on plans to invest heavily in artificial intelligence projects.
* Verizon and American Express reported strong earnings.
* Boeing continued to struggle with charges and losses.
* Novo Nordisk's experimental weight-loss drug showed promising results.

Economic Data and Fed Expectations

Consumer sentiment in the US dropped slightly for the first time in six months, while business activity growth slowed down. Despite concerns about inflation, the labor market remains strong, and the stock market is near all-time highs. The Federal Reserve is expected to keep rates steady at next week's meeting, with the possibility of rate cuts later in the year.

Outlook

Analysts expect US equities to remain volatile due to concerns about AI investment returns, tariffs, and interest rates. However, dips are likely to be buying opportunities, as the economic outlook remains strong. Investors remain cautious but optimistic, with a focus on raising cash and being selective in their investments.