Back in the black
- SPX closed up for the year on Tuesday
- First positive close since the end of Feb.
- UNH extends correction from April high
We haven’t been here in a while.
On Tuesday, the S&P 500 (SPX) extended its “relief rally” after Monday’s China tariff pause, gaining 0.7% and hitting its highest level since February 28—which was, coincidentally, the last time the index closed in positive territory for the year:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest directly in an index.)
The SPX’s push back into the black is all the more impressive given the index was down more than 15% for the year just five weeks ago, and was still in negative territory at the end of April.
In fact, the SPX has climbed into positive year-to-date territory in May after ending April in negative territory just a little more than a handful of times over the decades. The following table shows its returns five to 30 trading days (roughly one to six weeks) after the seven other times it accomplished the same feat:
Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest directly in an index.)
More often than not, the index followed through to the upside over the next several weeks. The relative “weak point” occurred after 10 trading days, when the SPX was higher in four cases and lower in three.
Of course, each of these examples represented unique market circumstances, and the current environment is no exception. Just as the early-April lows occurred after the tariff-announcement shock, this week’s highs have unfolded as the White House paused tariffs on China, marking a dramatic reversal—at least for now—in the administration’s stance. However, given tariffs have been paused rather than cancelled means uncertainty is still elevated. The markets appear to have welcomed the news as a step in the right direction, but there are still many steps to take.
Also, at least for a while, there’s likely to be less headline-grabbing “good news” on the trade front, which could translate into a loss of upside momentum. As Morgan Stanley & Co. strategists note, it’s not unusual for markets to bottom on bad news (e.g., “Liberation Day”) and top, at least temporarily, on good news (e.g., the better-than-expected US-China negotiation news).1
That’s perhaps why, although they expect the second half of 2025 to be much stronger for stocks than the first half, they think buying dips—rather than chasing the market on strong up days like Monday—may be a good approach for the near-term.
Market Mover Update: UnitedHealth (UNH) landed on multiple LiveAction scans for unusual volatility and options activity on Tuesday. The health insurer fell nearly 18% to a four-and-a-half-year low of $311.38 after news it was suspending guidance for 2025 and bringing back a former (2016-2017) CEO to head the company:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
The drop extended the UNH’s decline since April 11 to more than 48%. Morgan Stanley & Co., however, maintained an overweight rating and $563 price target for the stock.2
After hitting record highs for nine days in a row, Oddity Tech (ODD) fell more than 17% intraday on Tuesday, while also occupying second place on the LiveAction scan for unusual put options volume (see “Options shift”).
Today’s numbers include (all times ET): mortgage applications (7 a.m.), EIA Petroleum Status Report (10:30 a.m.).
Today’s earnings include: CoreWeave (CRWV), Dynatrace (DT), Cisco (CSCO), USA Rare Earth (USAR).
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1 MorganStanley.com. Leadership Change at UNH and FY'25 Guidance Suspended Following Continued MLR Pressure. 5/13/25.
2 MorganStanley.com. U.S.-China Trade Truce: What’s Next? 5/12/25.