TheDrop Market Analysis, 05/19/25

Markets plummeted on Monday morning, but made some form of a recovery over the course of the day as investors tackle economic news.

Sec. of Treasury Scott Bessent.

In the morning up to around noon, most stocks were bearish, especially the Nasdaq and Russell index funds, as the Trump administration's large-scale economic reforms particularly affected Big Tech and small business in the United States, at least to the standpoint of investors. However, over the course of the trading day, stocks rebounded outstandingly to reverse many of its previous losses or even make some gains as investors downplay economic trends as temporary. Sec. of Treasury Scott Bessent, in an attempt to promote the rally, encouraged investors that Trump's economic volatility is merely an act of diplomacy, as an agent of renegotiating unfair trade deals.

However, generally these trends have proven to be fatal, and if left unrecognized could cause imminent distress to the economic bubble. J.P. Morgan Chase CEO Jamie Dimon cited concerns about the possibilities of stagflation and economic recession in response to investors' optimism over neglecting poor economic signs. In addition, the analyst group Moody downgraded its U.S. Credit Score in response to a wave of economic reforms by the Trump administration that could influence the nation's borrowing power in the future, including higher inflation from tariffs that could reduce the value of the national currency and the global reserve currency for that matter. However, on the contrary to devaluation, the central bank body BIS has warned investors in the forex industry that dollars could become in short supply as recent economic volatility has caused the highest rates of currency exchange in decades.

Looking at the day average, index funds performed differently; while the S&P, Dow, and Nasdaq rose by small margins, the Russell 2000 index fund fell by 0.4% as small business continue to grapple economic pressures.

While most of the Mag. 7 rose substantially, Apple (1.2%) and Tesla (2.3%) both fell, underperforming the rest of the market. Tesla especially has faced correction as it stabilizes following a three-week hiatus. As for currency, the USD and gold weakened in response to inflation risks and the massive investor selloff of currency.

UnitedHealth Group made a strong rally after having fallen significantly last week.