Earnings-Fueled Rally: U.S. Stocks Stage Broad-Based Rebound

U.S. stock markets staged a broad-based rally on Tuesday, April 22, following a shaky start to the week. The Dow Jones Industrial Average surged 2.7%, leading major indices higher, while approximately 99% of S&P 500 components closed in the green.

Catalyst Behind the Rally

The rebound was fueled by stronger-than-expected corporate earnings from key firms including Equifax, 3M, and Verizon, which helped ease investor concerns over President Donald Trump’s intensifying trade war.

Additionally, despite ongoing tensions between Trump and the Federal Reserve, markets are beginning to price in the possibility of 2–3 rate cuts in 2025, particularly if inflation cools and economic growth continues to moderate.

The rally was also supported by technical factors, as investors stepped in to buy the dip, with notable gains seen in the tech and consumer discretionary sectors.

The earnings over yet, and any surprises could still significantly impact investor sentiment. Tech stocks, including Apple and Amazon, which also the key “victims” in the trade war, will report in the coming days. Positive reports could sustain the rebound, while weak guidance may lead to volatility.

Can the Rally Last?

The recent rebound looks promising, supported by broad-based buying interest—around 99% of S&P 500 stocks rose. Strong earnings from major companies have also helped anchor market sentiment. If the earnings season continues to deliver, it could provide ongoing support for the market.

However, macroeconomic headwinds remain. Trump’s aggressive tariff stance continues to weigh on global growth expectations. While markets are hoping for Fed rate cuts later in 2025, the Fed has yet to give a clear signal.

If inflation fails to ease, those rate cut hopes could be dashed—potentially dragging markets lower. The impact will become clearer over the next couple of months as April inflation data begins to reflect the effects of the “reciprocal tariffs.”

Key Factors and Headwinds

This rebound shows real strength, backed by broad participation and solid earnings support. However, its sustainability hinges on several key factors:

• Will earnings continue to surprise to the upside?
• Will inflation data from April onward show signs of easing?
• Will Trump refrain from escalating further tariff threats?

If these factors align, it could signal the beginning of a genuine market turnaround. Otherwise, this may prove to be just another bear market rally. Ultimately, the true economic impact of the tariffs announced in April will only become clear as new data rolls in.

S&P500 Technical Outlook

(SP500+, 4-H Chart Analysis; Source: Ultima Market MT5)

Technically, the recent rally shows strength, but the index remains within bearish territory. The short- to medium-term trend is still guided by a bearish moving average crossover, signaling underlying downside pressure.

In the near term, price action remains confined within a descending channel, suggesting the potential for continued consolidation. A confirmed breakout above the upper boundary of this channel would be required to signal a meaningful trend shift and potential bullish reversal.

Until then, the broader outlook remains cautious, with rallies likely to face resistance at key technical levels.

Disclaimer

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