Will Investors Buy This Dip

* Analyzing the markets with Richie Naso, a Wall Street veteran of over 40 years and former member of the NYSE.

DJIA 52-wk: +6.48% | YTD: -2.21% | Wkly: -2.47%

S&P 500 52-wk: +9.39% | YTD: -1.34% | Wkly: -2.61%

NASDAQ 52-wk: +10.73% | YTD: -2.97% | Wkly: -2.47%

AAPLE 52-wk: +2.78% | YTD: -22.02% | Wkly: -7.57%

1. Renewed Trade Tensions

Former President Donald Trump announced intentions to impose a 50% tariff on European Union imports and a 25% tariff on smartphones manufactured outside the U.S., directly impacting companies like Apple. These announcements unsettled investors and raised concerns about potential retaliatory measures and global trade disruptions. WSJ+2AP News+2The Guardian+2

2. Rising Bond Yields

The 10-year U.S. Treasury yield climbed to 4.508%, and the 30-year yield reached 5.036%, levels not seen since 2023. This surge in yields reflects investor concerns about U.S. fiscal stability, especially following a credit rating downgrade by Moody's and the passage of a new tax bill. WSJ

3. Sector Performance

Technology and communication services sectors led the declines, with Apple shares dropping over 6% due to tariff concerns. Conversely, defensive sectors like utilities outperformed, providing some stability amid the broader market sell-off. Investor's Business Daily+1The Guardian+1

Commodities Snapshot

• Oil (WTI): Closed at $61.53 per barrel, down from $62.59 the previous week, marking its first weekly decline since the previous month. The dip was attributed to subdued trading and concerns over potential oversupply from OPEC+ production increases. Midland Reporter-Telegram

Just when you think you can forget this year’s market selloff, President Donald Trump comes along and gives you a reminder.

Heading into Memorial Day Weekend, Trump issued new threats of more tariffs on the European Union and Apple AAPL (-3.02%). And worries about deficits in the U.S., caused long-term bond yields to rise as well, further pressuring stocks. The Dow Jones Industrial Average DJIA (-0.61%) was on track to fall 2.6% this week, while the Nasdaq Composite COMP (-1.00%) and the S&P 500 index SPX (-0.67%) were sliding 2.7% and 2.9%, respectively.

Despite all that, stocks are still trading higher than where they were just before the president’s flurry of tariff announcements on April 2. “If you went to sleep before Liberation Day and woke up just now, it would be like, ‘What’s the big deal?’” says Yie-Hsin Hung, CEO of State Street Global Advisors. Of course, she’s being a bit glib. It’s been a bumpy ride—and then some. The volatility is likely to persist.

The problem isn’t necessarily that the market has rebounded. It’s the speed of the bounce that has strategists alarmed. Chris Galipeau, senior market strategist at Franklin Templeton, notes that when the Cboe Volatility Index, VIX (+9.91%) or VIX, closes above 50—as it did on April 8—the S&P 500 tends to have a median gain above 20% over the next 12 months. “We got that in five weeks,” Galipeau says. “I would not chase stocks here.”

The market also looks vulnerable to more macro shocks, including deficit concerns after the House of Representatives passed Trump’s “big, beautiful bill,” and, as we were reminded on Friday, tariffs. The stock market could be stuck in place until those worries dissipate enough to get investors buying again. “Over the very near term, we would need positive trade developments to get to new all-time highs,” says Anthony Saglimbene, chief market strategist at Ameriprise. “A prolonged period of trading sideways for a while could take some of the froth out of the market.”

Annuities Are Hot Sellers During Volatile Markets. What You Need to Know.

The most popular annuities can protect against all or some losses, while offering either fixed yields or returns linked to a stock market index.

Spooked and weary of stock market gyrations, retirement investors have been pouring money into annuities to stabilize their portfolios.

Three types of annuities—multiyear guaranteed annuities, or MYGAs; fixed-index annuities, or FIAs; and registered index-linked annuities, or RILAs—pulled in $83.7 billion, or 80% of total annuity sales, in the first quarter, according to Limra, a trade group.

While that’s slightly below last year’s record, inflows have been gushing since mid-February, when the stock market was roiled by President Donald Trump’s on-again/off-again tariff pronouncements.

The allure? These annuities can protect against all or some losses, while offering either fixed yields or returns linked to a stock market index.

There are caveats.

Illiquidity is a consideration with all annuities. Earnings from these insurance products are subject to a 10% penalty if assets are withdrawn before age 59½.

Most annuities hit you with surrender charges if you withdraw more than 10% of your assets within the first three-to-seven years of your contract.

Taxes should also be weighed carefully. While annuities’ tax-deferred growth is a plus, withdrawals are subject to income-tax rates up to 37%.

Each of the three popular annuities have their own pros and cons. Starting with the least volatile ones first, here’s a snapshot of each:

MYGAs come with principal protection and a fixed yields, much like certificates of deposit—but with higher guaranteed rates.

Currently, the most competitive three-year MYGA from insurers with at least an A-minus AM Best rating pays 5.8%, offered by Knighthead Life, according to Cannex. That compares with 4% for three-year CDs, according to Bankrate.

MYGA’s best five- and seven-year guaranteed rates are 6.45% and 6.7%, respectively, also from Knighthead, compared with CDs’ 4.4% for both periods.

These annuities could give retirees peace of mind. Each has no fees and at least an A-minus rating from AM Best.

Annuity Type: Multi-Year Guaranteed Annuity (MYGA)

• Name: Knighthead Life’s Staysail
• Protection: 100% principal
• Upside: 6.45% fixed for five years
• Surrender Period: 5 years

Annuity Type: Fixed-Indexed Annuity (FIA)

• Name: Pruco Life’s PruSecure Advisor
• Protection: 100% principal
• Upside: 11% cap on S&P 500’s 1-year return*
• Surrender Period: 5 years

Annuity Type: Registered Index-Linked Annuity (RILA)

• Name: Symetra Life’s Trek Plus
• Protection: 20% buffer
• Upside: 100% of S&P 500’s 6-year return*
• Surrender Period: 6 years

*Note: Not including dividends

Source: Cannex

“A fixed annuity paying good interest can give investors comfort to weather volatility,” says Jessica McNamee, founder of Sirius Wealth Strategies. “And the thinking is that rates will be coming down, so it can be good to lock in a high rate.”

Multiyear guaranteed annuities can be an attractive addition, given they are tax-deferred accounts. “If you use them to replace a bond that generates tax-inefficient income, a MYGA can increase your effective yield,” says David Lau, founder of DPL Financial Partners, which offers a platform of fee-based annuities.

MYGAs usually don’t have fees. Costs are built into their terms.

FIAs tie your upside to a stock index’s return excluding dividends, with a cap.

Pruco Life Insurance’s Company PruSecure Advisor, which has a five-year surrender period, has an 11% one-year cap on the S&P 500. That means 11% is the most you can earn, no matter how much the index climbs.

1) Tuesday: Durable Goods

2) Wednesday: FOMC release minutes from its early May meeting. NVIDIA earnings

3) Friday: PCE

The near-term direction of the stock market could be dictated by NIVIDA’s earnings result. It’s all about their AI chip demand.

— Richie

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