Things you need to know.

• Stocks fell, bonds rose, gold rose, oil rose.
• Trump talks fixed rather than negotiated tariffs (I call BS).
• Scotty to meet the Chinese in a neutral country – Think Zurich, Switzerland.
• It’s FED Day…. hold your hats…No cut for you!
• Try the Spring Pasta

Stocks fell and bonds rose…. (again, no surprise) –Even as Donny tried hard to ease the nervousness about potential economic damage created by his ongoing discussions (or not) with heads of state (Carney from Canada, XiXi from China, etc) over tariffs saying that he might ‘set tariff levels rather than negotiate those levels in a ‘back and forth’ anxiety creating process. In addition, the FED’s rate decision only added to the ‘risk-off’ mood. Bonds rose, after a successful $42 billion, 10 yr bond sale that saw yields decline by 8 bps to end the day at 4.29%. Oil rose by 3.25% to end the day at $59.10 while Gold advanced, gaining 3.6% or $120/oz to end the day at $3,441.

As the afternoon bell rang – we saw losses across the board. The Dow gave back 390 pts or 1%, the S&P down 44 pts or 0.8%, the Nasdaq lost 155 pts or 0.9%, the Russell lost 21 pts or 1%, the Transports gave up 320 pts or 2.3%, the Equal Weight S&P gave back 49 pts or 0.7% while the Mag 7 Index lost 205 pts or 0.9%.

Now, no one should be surprised – We discussed this – the damage done to the markets during the swift sell off in April needs to be repaired and the swift recovery, typical in bear market rallies, which makes ‘everyone’ feel good (again) will continue to cause erratic swings – causing nearly every investor to experience heartburn no matter which way the market moves. The longs will benefit on the up days, leaving the shorts screaming, while the shorts will celebrate the down days leavings (some) of the longs screaming….other long term buyers will welcome the down days as well because it allows them to put more money to work at more attractive levels. And to be clear – this is not unexpected after the kind of action we have seen.

And then you had our friends at Goldman chime in…. telling us that while any tariff announcement might limit the downside risk, the current valuations suggest that the upside is limited. Which essentially says, ‘We don’t know what to do’.

Famed investor Paul Tudor Jones warning that the worst is not over – suggesting that the lows are NOT in yet…so that 4835 level that most of the street considers the low, is, in his opinion, not the low. He tells us that.

“You have Trump, who’s locked in on tariffs; you have the FED, who’s locked in on NOT cutting rates, and that’s not good for the stock market.”

Interestingly enough, he did not offer any predictions on what the low is…but I would argue that many strategists/analysts on the street would look at the 200 WEEK moving average (vs. the 200 day moving average) as a guide that defines and assesses the long-term direction of the market, identify support/resistance levels, and gauge whether the market is in a bullish or bearish phase. Here’s what the current 200-week MA of ~4,700 reveals: (understanding that it changes every day).

• Bullish Long-Term Trend:
  • The S&P 500’s current level of 5,624.35 is 19.7% above the 200-week MA of 4700. This significant premium indicates the market is in a long-term bullish trend, as prices well above the 200-week MA typically reflect sustained investor confidence and upward momentum.
  • Historically, when the S&P 500 trades above its 200-week MA, it suggests the market is in a “secular bull market,” meaning a prolonged period of growth, even with periodic corrections.
• Support Level:
  • The 200-week MA (~4,700) acts as a major support level in the event of a major market pullback and 4700 would represent a major market pullback if you take it from the top – which was 6147….. If the S&P 500 were to decline to 4700 – that would represent a 24% decline off of the high, putting us solidly in BEAR market territory. BUT, this level should attract lots of buyers as it represents a price where the market has historically found balance over the long term.

Now look – the 200-week MA’s current level of 4,700 reflects the averaging of prices from mid-2021 to May 2025, including lower prices during the 2022 bear market (3,600) and higher prices in 2024–2025 (~5,000–6,000). Its steady rise from ~4,674 in April 2025 to ~4,700 today indicates the market has absorbed volatility while maintaining its upward trajectory. This resilience suggests strong underlying fundamentals, such as corporate earnings growth or investor demand, despite challenges like rising Treasury yields, inflationary pressures, tariffs and a whole lot of investor uncertainty.

Now, IF the S&P were to fall below the 200-week MA (~4,700), that would mean the SH*T hit the fan….. It would signal a potential shift to a bearish long-term trend depending on the extent to which it fell. This is a RARE occurrence associated with major market downturns (think 2008 or 2020). Such a drop would require a significant catalyst, like a sharp economic slowdown or aggressive Fed tightening – which is NOT impossible but is not my current assessment.

The current distance from the 200-week MA (~19.7%) is notable but not extreme. During overheated markets (e.g., 2000 or 2021), the S&P has traded 30–50% above its 200-week MA before correcting. At the markets recent high of 6147 – we were only 25% above this average, well below 30 – 50% seen in overheated markets – which doesn’t mean we can’t trade lower. There is still room for a pullback – which might feel uncomfortable – but, unless we breach 4700, we are still in a ‘structural bull market’. Capisce?

Now, BAC tells us that their ‘individual investor clients’ have been ‘snapping up stocks for 21 weeks (think piling in, tripping over each other) – noting that this is the longest buying streak going back to 2008. And a look at the sectors shows us where they are putting money to work. Utilities +6.3%, Financials +1.8%, Industrials +1.3%, Real Estate +2.25%, Aerospace & Defense up 6%, Big Pharma is flat (which is a win) etc.

Down the food chain – they are also putting money into the bond market – the US Treasury Total Return Index is up 2.4%, Gold is up 25%, Emerging markets are up 8%, and the contra trades are up as well…..(those are the ones betting against us). The DOG + 4%, PSQ + 3.7%, SH +4%, VIXY + 40%.

In the end – while the market feels a bit edgy, the volatility will most likely continue until we get more clarity on tariff deals, fed policy, interest rates, taxes etc., and an investor with a long-term outlook can find plenty of bargains created by TDS. Remember, politics do NOT price stocks in the long term, but it does create short term chaos which provide long term opportunity.

This morning US futures are UP…. ahead of the FOMC announcement….and ahead of Scotty’s meeting with Chinese officials (in Switzerland) that will focus on ‘de-escalation’ rather than a specific deal – noting that the current situation is not sustainable. At 7:15 – Dow futures are up 300 pts, S&P’s up 38 pts, the Nasdaq ahead by 130 pts and the Russell up 16 pts.

Now, let’s be clear – No one should be expecting the FED to do anything…They will most likely repeat the same song…. No cut for you! Not now, not next month and no cut the month after that…..that then brings us to August – where there isn’t a meeting, but there is the annual Jackson Hole ‘event’ sponsored by the Kansas City Fed that has yet to be defined…NO title yet, so hold onto your hats…They will most likely announce the ‘theme’ sometime in July (it’s all very dramatic)….I can’t wait to see what central bankers from around the world will discuss.

Tomorrow brings us the usual eco data point suspects, but it is Friday that investors will focus on after today…and why? Because the April CPI (inflation) report is due out at 8:30 am….and the m/m numbers for both the top line and Core are expected to be UP, while the y/y numbers for both top and Core are expected to be unchanged….and the clock ticks.

European markets are all lower…. France down 0.5% while Italy is only down 0.1%. Big Pharma across the zone is under pressure after Donny announced that tariffs on this sector are coming next week….and that is taking healthcare stocks lower. German Factory orders jumped by 3.6% last month vs. the expected 1.3% and that marks the first rise in factory orders this year. Speaking of Germany – Fred Merz has won and is now officially Germany’s newest Chancellor after the first vote failed to give him the required 316 votes….and the second vote gave him 325 of the 630 – so while he is the winner, he did not get a resounding Yay vote….and that may prove to be a challenge in getting lawmakers to work together.

The S&P closed at 5,606 down 44 pts – as the backing and filling continues. Yesterday we traded down to 5586 just 11 pts above 5575 a level that I expected us to test….and we did and it held….(at least for now – it is a fragile trendline with not a ton of support – so keep your eyes focused on it). The fact that futures are up this morning is positive, but the true test will come at 2:30 pm when JJ takes center stage to address all of the questions on what happened, what they discussed, who was a yes and who was a no? Etc. The market is still expecting 2 rate cuts this year…. any sense that he has taken those off the table will cause the algo’s to throw a tantrum…. While any sense that he is leaving all his options open (most likely) will hopefully help calm the markets. I repeat, I am in the NO cut camp this year….

If the markets senses a negative tone then a test of 5575 will happen fast and a failure to hold will once again cause the markets to test lower and my guess is – don’t be surprised if we test 5300 – a level that fills all of the gaps created in the chart. So, sit tight. NO need to chase anything….

Expect the excitement to continue…. stick to your plan and remain resilient –

Take good care,

[email protected]

Sources:  Bloomberg, CNBC, Reuters, Wall Street Journal

Disclosure: The content provided in this material is designed for educational and informational purposes only, and it is important to note that it does not constitute personalized recommendations. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment.  The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of Kenny Polcari or SlateStone Wealth.

The market commentary is the opinion of the author and is based on decades of industry and market experience; however, no guarantee is made or implied with respect to these opinions, which may not necessarily align with our firm’s standpoint.

While considerable effort has been invested to ensure the accuracy and dependability of the information presented, we must clarify that we cannot guarantee the accuracy of third-party information. Our usual sources for third-party data include channels such as Bloomberg.

Try the Spring Pasta

For this you need: 1 lb. of Ditalini pasta, frozen peas, asparagus, leeks, shallots, basil pesto, olive oil, butter, Mascarpone cheese, fresh lemon juice and of course fresh grated Parmegiana.

Start by bringing a pot of salted water to a rolling boil.

Clean the asparagus, cut off the ends and then cut into small bite size pieces, leaving the flower whole.

In a large sauté pan – add a bit of olive oil and butter. Add in the sliced leeks (just the white into the light green part) & shallots – sauté for about 10 mins…. Now add in the frozen peas and the asparagus – season with s&p and sauté for another 10 mins on med low heat.

Add the pasta to the pot and cook until aldente (7 mins). Strain and reserve a mugful of the pasta water (tears of the Gods).

Add the pasta to the sauté pan with the veggies, add 2 dollops of the mascarpone cheese, a bit of the pasta water, a tablespoon of the basil pesto and 2 handfuls of the fresh grated parmegiana. Mix well to coat, until it becomes a nice creamy sauce. Splash with a squirt of fresh lemon juice, just enough to bring out the bouquet of the spring medley.

Serve immediately and enjoy with a glass of crisp cold white wine – you know me – Pinot Grigio Santa Margherita.

Buon Appetito