Markets Rally on Trade Deal; Earnings Reports Awaited

Investor confidence rises as the Trump administration announces a trade deal with China. This optimism, combined with key earnings reports next week, could influence stock performance as inflation data is also on the horizon.

Date: 11-05-2025

AI Rating: 7

Impact of Trade Deal on Stock Prices
The recent trade deal between the Trump administration and China has provided a much-needed boost to investor sentiment, reversing the bearish momentum that had been affecting the stock market. With key earnings reports expected next week, this positive outlook could enhance stock performance, particularly in sectors that rely heavily on international trade. The upcoming Consumer Price Index (CPI) and Producer Price Index (PPI) readings are also significant as they could shape future Federal Reserve actions regarding interest rates. Should these indices meet expectations, it may lead to market stability, crucial for sustaining any upward movement in stock prices.

Earnings Season Insights
Although this week marked the peak of earnings season, many companies still have reports pending. Investors are moving away from fixation on headline figures, instead scrutinizing forward guidance. The mixed to lower guidance has created a cautious environment, which could signal challenges ahead for stock prices. For example, companies like United Parcel Service (UPS) may see interest from investors viewing current levels as a buying opportunity based on the positive earnings news despite potential short-term challenges. Moreover, firms dealing with artificial intelligence, such as Tempus AI, might benefit from renewed institutional interest spurred by strong earnings, presenting potential upside.

Market Resistance Levels
Without further clarity on trade agreements and economic health, the S&P 500 may struggle with resistance near the 5,700 level, indicating a potential supply zone where sellers might step in to cap further price increases. Conversely, companies showing strong earnings and buybacks, like Wells Fargo, might offset some of this resistance as they indicate confidence in their financial health and commitments to shareholders.

Conclusion
The market is set for fluctuations driven by trade deal optimism as well as reactions to upcoming CPI and PPI data. Therefore, stock price movements in the short term may largely be influenced by earnings guidance and the surrounding macroeconomic context.

Stocks: UPS WFC AMZN TSLA QCOM DIS