Donald Trump has shifted from an ultra-aggressive stance to a more conciliatory one — except perhaps with a few of his favorite scapegoats, like Harvard University. It's a strategy that might feel familiar from his first term, but this time it's different. Trump nearly went too far, and it was pressure from the business community and his less dogmatic advisors that forced a change of course. Now, markets believe they have a better sense of his "red lines" and are regaining a taste for risk, closer to what they're used to. This helps explain the surprising market moves in April, when stocks came close to a crash before bouncing back sharply. Even so, the months ahead look far more uncertain than most of the past few decades.

Exceptional times bring exceptional volatility. On Friday, May 2, 2025, the S&P 500 marked nine straight days of gains — its longest winning streak since November 2004. The index has now fully recovered the heavy losses triggered by the tariffs Trump announced a few weeks into his second term. Still, the S&P 500 remains down just over 3% for 2025 and about 7.5% below its February record high.

The FTSE 100 has done even better, posting 15 consecutive days of gains — its longest streak ever — and rising 5.2% year-to-date. That said, the Stoxx Europe 600 is doing slightly better, up 5.7% and outperforming the S&P 500 by about 9%. The best performer among the major indices remains Germany's DAX, up 16% since January 1, buoyed by promises of a fiscal policy reversal in Berlin.

The broader macroeconomic backdrop remains dominated by US-China trade relations. The White House is ramping up calls for negotiations with Beijing, and markets are betting talks will happen before too much damage is done to the global economy. It’s a risky bet, and it partly explains the strength of the market rebound. Investors are also speculating about possible support from the Federal Reserve, but not right away. On Wednesday, the Fed is expected to announce no change to interest rates, as policymakers have repeatedly hinted. Despite clear pressure from Trump and his Treasury Secretary Scott Bessent, futures markets show a 97.2% probability of no move, according to the CME’s FedWatch tool. Fed Governor Chris Waller even suggested last Friday that a rate cut is unlikely at the next meeting in June, arguing that the 90-day pause on new tariffs makes near-term economic data less meaningful. However, futures traders are more divided: there's roughly a 50/50 split between no move and a 25-basis-point cut in June.

On the corporate side, earnings season remains solid. With 72% of S&P 500 companies having reported, the proportion beating analysts' expectations — and by how much — is in line with historical trends. So far, the White House’s erratic trade announcements haven’t created major disruptions. Executives in the most cyclical sectors are cautious about their outlooks, but analysts haven't meaningfully downgraded full-year forecasts. One big piece of news did shake up the corporate world: Warren Buffett announced he will step down as CEO of Berkshire Hathaway at the end of the year — a major milestone for a company led for decades by arguably the greatest investor of all time. His successor, Greg Abel, who has been groomed for years for the role, faces the daunting task of stepping out from Buffett’s long shadow.

A few other headlines to kick off the week:

  • The Wall Street Journal reports that China may offer concessions on fentanyl production to jump-start trade talks with the US.

  • Trump said he will not attempt to remove the Fed chair before the end of his term and confirmed he is not considering running for a third term.

  • Xi Jinping is set to attend May 9 commemorations in Moscow.

  • US lawmakers are pushing the SEC to delist Alibaba and other Chinese companies, according to the Financial Times.

  • In France, Prime Minister François Bayrou floated the idea of a referendum on a deficit reduction plan.

  • OPEC+ announced it would speed up oil production increases, sending oil prices sharply lower early this week.

  • In Romania, nationalist candidate George Simion is leading the presidential race by a wide margin.

  • The Israeli army has begun calling up reservists for a possible expansion of operations in Gaza, according to Israeli media.

  • In lighter news, Brazil says it has foiled a plot to attack a Lady Gaga concert. Meanwhile, Trump announced 100% tariffs on films produced outside the US.

On the macro calendar, all eyes are on the Fed this week. While a pause is expected, investors will be listening closely to Jerome Powell’s comments Wednesday evening, especially given the White House's push for lower rates. On Thursday, the Bank of England is also expected to announce a 25-basis-point cut.

On the earnings front, the flow of corporate results remains steady, though slightly less intense. In the US, Palantir, AMD, Walt Disney, and Uber are set to report. In Europe, Novo Nordisk, AXA, Zurich Insurance, and AB InBev will release their numbers.

In Asia-Pacific, several markets are closed for holidays, including Japan, Hong Kong, South Korea, and mainland China. India’s Sensex is up 0.5%, but Australia’s ASX and Taiwan’s Taiex are both down about 0.7%. Early indicators for Europe are pointing slightly lower.

Today's economic highlights

The US services PMI index for April will be published at 10 a.m. See the full calendar here.

  • Dollar: 0.8803 EUR & 0.7502 GBP
  • Bund/OAT spread: 72 points (-0.5%)
  • VIX: 22.7 (-2%)
  • Gold: $3,221
  • Brent: $60.20
  • 10-year US: 4.31%
  • Bitcoin: $94,440

In corporate news:

  • Amazon, Comcast, Netflix, Walt Disney, Warner Bros Discovery – former U.S. president Donald Trump announced on Sunday the implementation of 100% tariffs on all films produced outside the United States, lamenting the "death" of the American film industry due to incentives offered by other countries to attract directors and studios. Walt Disney, Warner Bros Discovery, Amazon, and Comcast, the owner of Universal, are down between 0.8% and 2.7% in premarket trading.
  • Berkshire Hathaway – Warren Buffett announced on Saturday that he would step down as CEO of conglomerate Berkshire Hathaway at the end of the year, handing over the reins to current vice chairman Greg Abel. The stock is down 2.8% in premarket trading. The company also reported lower operating income for the first quarter, due to insurance losses from wildfires and currency fluctuations, while its cash holdings hit a record $347.7 billion.
  • Chevron, Exxon – OPEC+ is ramping up production, pushing oil prices down as markets fear an imbalance between supply and demand amid the specter of a trade war. Chevron and Exxon are each falling 1.3% in premarket trading.
  • Freshpet – Freshpet shares are falling nearly 3% in premarket trading after the pet food manufacturer lowered its full-year sales forecast.
  • Ford, On Semiconductor, Palantir – on semiconductor is scheduled to report its quarterly results Monday before the New York Stock Exchange opens, while ford and palantir will release theirs after the close.
  • Howard Hughes Holdings – Pershing Square Capital Management, the investment firm led by billionaire Bill Ackman, will purchase 9 million newly issued shares of the real estate developer for $900 million, the two groups announced Monday.
  • Sunoco – sunoco announced Monday it will acquire Canadian company Parkland in a deal valued at approximately $9.1 billion including debt. Sunoco shares are down 3.4% in premarket trading.
  • Tesla – new car sales of tesla in Spain fell 36% in April compared to the same month in 2024, according to data published Monday by industry group ANFAC, continuing a trend already observed in other European countries, including France.
  • Tyson foods – tyson foods reported better-than-expected second-quarter earnings on Monday, driven by stronger demand and lower costs. Shares are down about 2% in premarket trading.

Analyst Recommendations:

  • Air Products & Chemicals: BNP Paribas Exane maintains its Outperform rating and lowers the price target from $338 to $325.
  • Albemarle: Deutsche Bank maintains its Hold rating and raises the price target from $60 to $65.
  • Amazon: DZ Bank AG Research maintains its Buy rating and lowers the price target from $270 to $240.
  • Api Group: Barclays maintains its Overweight rating and raises the price target from $43 to $48.
  • Aptiv: Barclays maintains its Equal Weight rating and raises the price target from $55 to $65.
  • Crowdstrike Holdings: Citizens maintains its Outperform rating and raises the price target from $400 to $500.
  • Dexcom: Barclays maintains its Equal Weight rating and raises the price target from $90 to $93.
  • General Motors: Bernstein maintains its Underperform rating and raises the price target from $35 to $36.
  • Hyatt Hotels: HSBC maintains its Hold rating and raises the price target from $113 to $116.
  • Ingersoll Rand: BNP Paribas Exane maintains its Neutral rating and raises the price target from $67 to $77.
  • Linde: DZ Bank AG Research maintains its Buy rating and lowers the price target from $530 to $525.
  • Mettler-Toledo International: Wells Fargo maintains its Equal Weight rating and raises the price target from $1125 to $1200.
  • Mohawk Industries: Barclays maintains its Equal Weight rating and lowers the price target from $115 to $111.
  • PepsiCo: DZ Bank AG Research maintains its Hold rating and lowers the price target from $162 to $146.
  • Pfizer: DZ Bank AG Research maintains its Buy rating and lowers the price target from $32 to $31.
  • Regeneron Pharmaceuticals: DZ Bank AG Research maintains its Buy rating and lowers the price target from $1010 to $860.
  • Schlumberger: Griffin Securities maintains a Neutral rating and lowers the price target from $44 to $38.
  • Smurfit Westrock: Stifel maintains its Buy rating and lowers the price target from $67 to $61.60.
  • Starbucks: DZ Bank AG Research maintains its Sell rating and lowers the price target from $95 to $76.
  • Twilio: HSBC upgrades its rating from Reduce to Hold and raises the price target from $77 to $99.
  • United States Steel: Morgan Stanley maintains its Equal Weight rating and raises the price target from $35 to $38.
  • Westlake: Barclays maintains its Overweight rating and lowers the price target from $135 to $100.