TheDrop Market Analysis, 05/06/25

Markets sank in response to more tariff threats and a decision from the Federal Reserve.

Fed Chair Jerome Powell.

The S&P 500 fell 0.8%, the Dow fell 1%, and the Nasdaq fell 0.9%.

Investors generally placed their bets to Wednesday's Fed meeting which will include key discussions regarding future fiscal policy; generally, they believed that the Fed will want to keep rates steady to counter slowly rising inflation due to tariff policies. In addition, investors are anticipating Fed Chair Jerome Powell's statements regarding the state of the economy, one of his first responses to the Trump-era economy of 2025.

Furthermore, tariff threats have elevated. The U.S. trade deficit reached record highs, and the president has made little progress so far in his trade negotiations with China. As of now, many of these rates will stay steep.

In the topic of earnings reports, AMD reported its crucial report Tuesday in after-hours, rising 2% as it beat expectations by a respectable level.

But, most stocks performed poorly, particularly in the members of the Mag. 7 which have been hurt from the inflationary economic environment. Tesla fell 1.8%, Nvidia fell 0.3%, Apple fell 0.2%, Amazon fell 0.7%, Google fell 0.5%, Microsoft fell 0.7%, and Meta fell 2%. Even Palantir, the rising star in the artificial intelligence industry, fell by 12.1% as its rally came to an end.