Wall Street expects clarity about Trump’s commercial policies after an agitated April

Bloomberg – April gave stock market investors a bit of everything: tears when the prices of the actions collapsed When President Donald Trump initiated a world trade War, relief when they recovered when they paused some of their toughest tariffsy confusion when they went up Despite the growing signals of economic agitation.

Now that the calendar marks the beginning of May, Wall Street simply expects some clarity about the commercial policies of the Trump administration and the growth expectations of US companies. But investors should probably not contain breathing, since uncertainty seems to be the slogan at this time.

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Wednesday’s session is an example of that concern. The S&P 500 index is about to break a streak of six profit sessionssince it sinks after the reports that show that the US economy contracted in April for the first time since 2022 and that the hiring slowed into US companies.

“This month has been like a classic V -shaped Mountain,” said Scott Ladner, Investment Director of Horizon Investments LLC. “We went from being very bulls on April 1 to super bassists on April 3and only one thing changed. From here, the direction of the trip has to be clear. ”

Looking at the figures, the bag’s turn in April is quite remarkable. After the announcement of Trump tariffs on April 2, The S&P 500 collapsed more than 12% in four sessions. On April 9, Trump reversed, putting a 90 -day break in some of his strongest taxes, which caused a 9.5%jump, the greatest rebound in a day in 17 years. Since then, the market has drifted, with the S&P lowering less than 2% in the month.

Painful commercial positioning

But under the coutine rebound a sense of restlessness is hidden from what is yet to come.

“When analyzing the positioning, it is very clear that the ‘painful trade’ from now on remains greater,” said Ladner, who describes himself as a “pessimistic” at this time. However, in the future, he sees several potentially bullish catalysts, As one or more commercial agreements, a tax reduction and possibly a lower general tariff rate Once all negotiations have been completed.

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Ladner is selling American variable income in favor of the international exposure right now, but is not going on to cash. And it is not the only one. Variable rental entries remain strong, but are gravitating far from the US and towards the rest of the world, according to data from Deutsche Bank AG (DB) Friday. The positioning of systematic strategies remains very low, while discretionary investors have returned to almost neutral levels.

Even so, the general positioning for variable income has risen in the last two weeks, according to Parag Thatte, of Deustche Bank, and It has increased since Trump announced the tariff pause.

High correlations

The unique Wall Street approach in commercial conversations has led the correlation between members of the S&P 500 to the highest level since 2020. That means that the market is moving like a monolith, What leaves few places to take refuge if a calamity occurs.

Growing pessimism

Meanwhile, investors are increasingly pessimistic. The survey of the American Association of Individual Investors, which is followed very closely, shows that the bearish feeling, or the expectations that the prices of the shares will fall in the next six months, It is unusually high and superior to the historical average for the 21st time in 23 weeks.

Strong closure

Ironically, an extreme bearish feeling and a low positioning are typically a recipe for strong rebounds, which is what is happening in the S&P 500. His six -day winning streak was the longest since November, when Trump was chosen, and The gain in those sessions was the largest since March 2022.

Even so, market professionals urge caution. The fall of the S&P 500 this year is in line with the descents observed in previous recessions shallow or periods of miniestanflation, according to HSBC strategists in a client note on Tuesday. Some volatility operators are echoing similar concerns: do not accommodate too much and cover while it is cheap.

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Cheap insurance

The price of sales contracts for one month on the reference index, which are used to protect themselves from the Variable rental falls, in relation to the purchase options, which benefit from the rise in shares of the shares, It is at its lowest level since April 2.

Uncertainty persists

The concern between strategists and investors is that the sudden setback of the shares from the minimums of the beginning of the month occurs in the face of even high levels of uncertainty. Although Trump and his administration have yielded in more tariffs since the initial pause, as the pardon to the car industrythe resolution of the World Trade War that he began is still very far.

And the president continues to add risks to the mixture, such as his repeated attacks on the president of the Federal Reserve, Jerome Powellwhich is a confidence figure in Wall Street. On Tuesday, Trump rolled back against Powell while redoubled his economic policies and his tariff regime.

All this creates a rebound that can be real but that it is unlikely to last, said Paul Christopher, head of global investment strategy of the Wells Fargo investment institute.

“This market seems to be in the process of playing background/consolidation that we usually see after strong falls,” said Christopher. “Although we may not see a complete rejoice of recent minimums, We will probably visit that area again”.

With the collaboration of Yiqin Shen, Bernard Goyder and Matt Turner.

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