Wall Street’s winning streak snaps: What’s next for US stocks?

2 minutes read

06 May 2025

Wall Street’s winning streak snaps: What’s next for US stocks?

It felt like just another Monday on Wall Street. The S&P 500 had notched nine straight days of gains-the longest run since 2004. Investors were riding high, scanning headlines for the next catalyst. But as the opening bell rang, the mood shifted. The major indexes slipped, snapping the rally and reminding everyone that even the strongest markets need a breather.

Trade tensions return: Tariffs take centre stage

The day’s drama began with renewed tariff threats from President Trump, including a proposed 100% levy on foreign-made films. Global trade worries came roaring back, and stocks responded in kind. The S&P 500 dropped 0.64% to 5,650.38, the Nasdaq fell 0.74% to 17,844.24, and the Dow lost 98.60 points to close at 41,218.83. At one point, the Dow was down over 250 points before buyers stepped in. A bar chart showing the percentage change of major US stock indices: S&P 500 (blue, slightly negative), Nasdaq (green, positive), and Dow Jones (red, significantly negative).

Yet, there was a twist. Data from the Institute for Supply Management showed the US service sector growing faster than expected in April, which helped trim losses and steady nerves. As Lisa Shalett, Chief Investment Officer at Morgan Stanley, put it: “This data is a reminder that the US economy still has legs. But the market is clearly nervous about how tariffs could impact growth going forward.”

The S&P 500’s nine-day rally, the longest in over two decades, ended as trade-related headwinds proved too much for bulls to ignore. “We do see this run-up being more on excitement-not just fundamentals, but an actual change,” said Ryankmans, chief investment at Dun & Associates Investment Counsel.

Eyes on the Fed: Will policy steady the ship?

With trade headlines swirling, investors quickly shifted focus to the Federal Reserve’s two-day meeting. No one expects a rate hike, but every word from Chair Jerome Powell will be scrutinised for clues about the Fed’s next move. The big question: Will the central bank signal support if tariffs start to bite?

“Markets are walking a tightrope,” said Christopher Harvey, Head of Equity Strategy at Wells Fargo. “If the Fed hints at staying patient, that could calm nerves. But any sign they’re worried about inflation or trade could spark more selling.”

Corporate news added more fuel to the fire. Ford beat earnings expectations but withdrew guidance due to tariff uncertainty. Palantir shares tumbled 9% after hours, despite strong revenue. Berkshire Hathaway dropped 5% as Warren Buffett named Greg Abel his successor.

Still, some see opportunity. Goldman Sachs analysts wrote, “This is a classic ‘buy-the-dip’ setup for AI and big tech. Volatility creates entry points for long-term investors.”

The day closed with oil rebounding, gold near record highs, and futures showing a market on edge. Wall Street, recently euphoric, is now bracing for the next chapter. Will tariffs derail the rally, or will the Fed and resilient earnings keep the bull market running? The only certainty: the story isn’t over yet.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.