Insights 
VT 
The S&P 500 rose by 1.47% on Friday, spurred by a better-than-expected Nonfarm Payrolls report. Despite this, there are growing tariff concerns that may affect corporate earnings in the future.
U.S. stock futures suggest a 0.7% lower open for the S&P 500 today, reducing some of Friday’s gains. Attention is on trade-related news and the upcoming FOMC rate decision on Wednesday.
Bearish Sentiment Persists
The AAII Investor Sentiment Survey indicates bearish sentiment at 59.3%, with only 20.9% feeling bullish. This sentiment comes as the S&P 500 nears its late March local highs.
The S&P 500 increased by 2.92% last week, building on the prior week’s 4.6% rally. However, uncertainty persists about whether this marks a new uptrend or a correction within a broader downtrend.
The Nasdaq 100 rose by 1.60% on Friday but is expected to fall back to the 20,000 mark, with futures showing a 0.9% decline. New 100% tariffs on movies produced outside the U.S. are impacting stocks like Netflix and Disney.
The VIX declined to as low as 22.34, suggesting a reduction in market fear. However, a lower VIX raises the probability of a market downtrend, with support for S&P 500 futures at 5,600.
Market Direction Uncertain
What we’ve seen over the past fortnight is a market attempting to find direction, but doing so under the shadow of policy risk and economic data that remains difficult to frame with any strong conviction. Friday’s bump in the S&P 500—driven by an unexpectedly positive Nonfarm Payrolls report—was encouraging on the surface. It added 1.47% in a single day, which brought some short-term optimism. Employment growth generally gives markets a shot in the arm, as it hints at economic resilience. But this particular jobs data might now raise the odds of holding rates higher for longer, which rarely bodes well for risk assets over an extended stretch. The initial rally may have been more about relief than renewed confidence.
Early pre-market indicators point to a downward opening—S&P 500 futures off by around 0.7%—which is unwinding part of last week’s gains. Markets are clearly uneasy. We interpret the retreat not as a sharp reversal, but as pricing in uncertainty ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting. Powell and company have been measured, opting to wait for more decisive signs inflation is retreating. That caution will now be tested. Any deviation from the expected neutral stance would likely lead to outsized moves in both directions.
Sentiment data remains heavily skewed, with the AAII survey showing nearly three bearish investors for every one who’s bullish. At 59.3% bearish and just 20.9% bullish, it’s one of the more tilted readings we’ve seen in recent quarters. When such a majority leans one way, there’s often the potential for a surprise in the opposite direction. It might not happen overnight, but the ingredients for a short-term squeeze are in place, especially if traders have positioned heavily against near-term upside.
Despite a two-week rally pushing the S&P 500 almost 8% higher, there’s simmering doubt over whether we’re witnessing the start of a durable rebound or simply another bounce in a weaker medium-term trend. The Nasdaq 100, which gained 1.6% on Friday, now faces renewed pressure—futures suggest a retreat back to the 20,000 mark. Confidence across high-growth sectors remains highly sensitive to both regulatory updates and unpredictable policy moves.
A recent announcement around 100% tariffs on foreign-made entertainment has already delivered marked selling in companies like Netflix and Disney. The impact isn’t just symbolic—investors are reassessing the earnings potential of firms with global supply chains, especially those exposed to discretionary consumer spending. We expect hedging demand to pick up for names in these sectors, as the tariff fallout is unlikely to be short-lived.
Volatility readings continue to ease, with the VIX falling to 22.34—a level we haven’t seen in weeks. This softening could easily tempt some to believe that downside risks have exited the conversation. Yet the move may be misleading. Lower volatility tends to coincide with complacency, and when that emerges in the presence of unresolved macro risks, the setup for sharper downturns increases. We find that the S&P 500 futures now look to 5,600 as the next area into which downside flows could concentrate.
Looking ahead, positions should remain fluid. The careful eye should be kept on policy signals, potential earnings revisions from tariff-exposed firms, and whether market breadth begins to deteriorate once again. The key is not to overcommit to either direction while so many macro variables remain unresolved.
