What caused yesterday’s market drop ⬇️

What’s on my radar for today 📡

May 21, 2025

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Morning all, welcome to another soft market day today….so far.

On Tuesday, May 20, 2025, U.S. stock markets experienced a modest decline, ending a six-day winning streak. The S&P 500 fell 0.4%, the Dow Jones Industrial Average dropped 114.83 points (0.3%), and the Nasdaq Composite decreased by 0.4%.

Several factors contributed to this downturn:

1. Decline in Major Technology Stocks

Significant losses in major technology companies weighed heavily on the market. Alphabet and Amazon each declined over 1%, while Apple and Nvidia fell by about 0.9%. Tesla was the exception among the "Magnificent Seven" tech stocks, rising 0.5% after CEO Elon Musk announced he would reduce political spending and remain Tesla’s head for the next five years .

2. Rising Treasury Yields Amid Fiscal Concerns

Investor concerns over U.S. fiscal policy led to a sell-off in bonds, pushing yields higher. The 10-year U.S. Treasury yield rose to 4.479%, and the 30-year yield increased to 4.967%. These moves reflect apprehensions about a new tax-and-spending bill and a recent Moody’s downgrade of the U.S. credit rating .

3. Anticipation of Federal Reserve Commentary

Investors were cautious ahead of scheduled remarks from Federal Reserve officials. The market is anticipating at least two interest rate cuts by the end of 2025, with the first expected in September. However, the potential impact of President Trump's tariff policies on future Fed decisions added to market uncertainty.

4. Mixed Corporate Earnings Reports

Home Depot's shares slipped 0.6% after the company missed profit forecasts, despite committing to price stability in the face of tariffs. Conversely, Walmart indicated potential customer price hikes, attracting criticism from President Trump 

Overall, the market's decline was driven by a combination of sector-specific losses, fiscal policy concerns, and anticipation of future monetary policy decisions.

This recent drop could offer me a nice “buy the dip” opportunity on SPY today but I will be watching closely as that thesis could change if SPY breaks below key levels of support for me which are at $585 and then $572.

With Tesla's stock up over 50% since late April and Elon Musk reaffirming his commitment as CEO, do you believe TSLA is a buy at its current price of ~$344?

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Join me live in the Market Masters room for more details at 9am

Cheers

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