[WEEK 16] Gold Prices, Housing & Retail Data, and More Big Earnings To Watch

The most significant takeaway from recent market activity is the clear demonstration of the "executive put," as President Trump's unexpected 90-day pause on certain tariffs triggered a historic market surge. While many anticipated a policy-driven rally, the timing – occurring after the tariffs were initially imposed – surprised market participants.

The S&P 500 experienced its largest single-day gain since 2008 on Wednesday, fueled by short-covering, retail buying, and leveraged ETF activity. This dramatic intraday rebound, despite the exclusion of China from the tariff pause, resulted in record trading volume.

However, the rally occurred against a backdrop of lingering concerns about the potential impact of tariffs on the real economy, particularly as earnings season approaches. The S&P 500, closing at 20.2 times Wall Street's consensus 2025 earnings estimate, remains richly valued. Sustaining positive returns from these levels requires the index to maintain its current earnings power through 2026, a scenario contingent on avoiding a recession.

Furthermore, some believe that traders will begin to discount near-term earnings results, particularly for technology companies like Microsoft, viewing the current quarter as a "mulligan" due to the tariff-induced uncertainty. The expectation is that deal closures will be pushed out, impacting revenue.