Can Trump's Bullish Calls Keep Retail Investors Ahead of Wall Street?
Despite the market's sharp decline triggered by Trump's aggressive tariffs, Tuesday's gains quietly pushed the $S&P 500 Index (.SPX.US)$ back to its year-start level. Trump's uncanny ability to predict market bottoms has retail investors hanging on his every word.
Trump's "Buy the Dip" Magic
The U.S. stock market is on fire, and former President Donald Trump is fanning the flames. On Tuesday, the $S&P 500 Index (.SPX.US)$ erased its year-to-date losses, reclaiming its highs in a rally that's got retail investors buzzing with excitement.
Under Trump's relentless bullish calls, the $Nasdaq Composite Index (.IXIC.US)$ has surged over 24% as of yesterday's close. For the average investor, this feels like a golden moment—a chance to ride the wave of optimism Trump's been championing.
But while Main Street is all in, Wall Street's pros are watching from the sidelines, missing out on one of the most electrifying rebounds of the year.
Retail Investors Steal the Show
This rally isn't powered by Wall Street's heavyweights. Institutional investors, cautious and underweight, have been caught flat-footed. Hedge funds have slashed exposure to the "Magnificent 7" tech giants and reduced their long/short ratios since the start of the year.
Meanwhile, retail investors—fueled by Trump's "buy the dip" mantra—are driving the charge. Retail investors have been steadily increasing their net capital inflows during the downturn. According to Goldman Sachs' retail client fund flow data, measured as 2-week rolling net flows, daily data in $bn, since 2019, this trend has been pushing stocks higher.
The fundamentals back this enthusiasm. The Q1 earnings season smashed expectations, with S&P 500 companies posting 12% profit growth against a forecast of 6%. Profit margins expanded the highest since Q2 2022, driven by strong pricing power. The median S&P 500 stock delivered 6% EPS growth, doubling the expected 3%.
Add to that a technical rebound— $Nasdaq Composite Index (.IXIC.US)$ 's 5-day RSI hit oversold levels on April 8—and the stage was set for a powerful rally.
Challenges Linger, But Optimism Prevails
Not everything is rosy. Tariffs, while easing, remain a wild card. Citi notes that hiring plans are cooling, with job openings dropping in March and high-frequency data showing a sharp decline in job ads by late April. Continuing unemployment claims hit a post-pandemic high for the week ending April 19, and Citi warns that unemployment could climb to 4.4%-4.5% by mid-May if the trend holds.
The Fed's path is another hurdle. Fed Chair Jerome Powell reiterated that rate cuts hinge on weaker labor market data—think rising unemployment, falling labor participation, or slowing wages. Market pricing reflects this caution: the odds of a June rate cut have plummeted from 30.5% to 8.2% in a week, with July cuts now under 40%. Goldman Sachs expects the Fed to delay cuts until December, shifting from "insurance" cuts to "normalization" as the economy holds steady.
Still, Trump's economic vision is gaining traction. Reuters reports his economic approval rating has climbed to 44%, signaling growing confidence in his leadership.
Where Does Trump Take Us Next?
Trump's strategy is clear: stay bold, buy the dips, and ride the momentum. But what comes next remains uncertain. While positive developments are stacking up, risks linger. Tariffs, though easing, could still spark volatility, and the Fed's cautious stance may keep markets on edge.
On the bright side, the AI narrative seems to be back withavengeance. Overnight, the BIS scrapped Biden-era AI proliferation rules, and chip giants $NVIDIA (NVDA.US)$ and $Advanced Micro Devices (AMD.US)$ announced plans to supply 18,000 chips for a Saudi AI factory. After months of tariff and macro noise, AI is reclaiming the spotlight, boosting market risk appetite.
Recommended Reading: Sovereign AI Narrative Returns, Boosting Conviction in Computing Stocks
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Gold has rebounded to $3,300! It's time to get on board?
🎙️ Discussion: 1. Has it $Gold Futures (AUG5) (GCmain.US)$ rebounded to $3,300? Will the short-term trend continue to rise? 2. What factors
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May 6 20:45
S&P 500's Put/Call Ratio Hits 5-Year Low: Fear Fades and Bottom Near?
Tonyco : The bullish indicators are strong. I dont know what the Republicans will do to ruin things- but given my history with them(every lifestage marked with their ruinous policies) they'll figure out a way to crash it.
74611659 : Made a bubble
72534072 : My pleasure, Mr. President.
Smalltimeplayer Tonyco : why would the republicans crash their own markets ? just to prove a point ?
Alirezakhalajtehrani : my visa turamp?
Fortune Cowboy1 : Keep going.
EZ_money Tonyco : they tariffed an island that doesn't have anyone living on it only penguins
what a joke