S&P 500 Stocks Just Signaled a Death Cross. Don't Panic.

This commentary was issued recently by money managers, research firms, and market newsletter writers and has been edited by Barron's.

Stocks Seek a Bottom

Cabot Turnaround Letter Cabot Wealth Network April 17: After shrinking for the past few days, new 52-week lows on the New York Stock Exchange began expanding again and, by Wednesday, were back up to above 40 in a sign that internal weakness [in the market] is still a problem.

That said, it is clear the market is trying to find a bottom, and we will probably have a confirmed low by early May, if not sooner. It is normal for the major indexes to test their lows before launching an extended rally, and that can take the form of a double bottom, a higher low, or — in rarer cases — a lower low. I'm not sure which of the three permutations we'll see once the bottoming process concludes, but I do see a stronger environment heading into May.

To reiterate a point I made back in March, the renowned market statistician Jason Goepfert of Sentiment Trader pointed out that the S&P 500 recently had two straight days with 90% advancing stocks after hitting a six-month low. Whenever this has happened going back to 1933, the S&P has been higher 12 months later in almost every instance, with 100% accuracy in forecasting the market being higher two months later and 95% accuracy in being higher three months later.

Clif Droke

U.S. Farmers Are A-OK

Tiny Tidbits Paulsen Perspectives April 17: U.S. agriculture is highly dependent on the export markets and is at the epicenter of the contemporary Trump tariff storm. It is therefore encouraging that U.S. farmers were headed into this crisis in reasonably good shape [based on a Purdue University barometer of U.S. agricultural economic health]. According to this measure, the U.S. agricultural economy improved significantly during 2024 into the early part of this year.

Currently, this barometer is higher than 80% of the time since 2015 when it first started being reported. I suspect the president will find some way to buffer the impact of tariffs on U.S. farmers, but this sector may be able to persevere better than many expect.

Jim Paulsen

Remember Mr. Eccles

Talking Points BMO April 17: Central banks can't do much to fix the damage from a trade war. That was the key theme from this week, as Federal Reserve Chair Powell continued to preach patience, and the Bank of Canada hit a pause for the first time in a year. And both monetary authorities openly fretted about the potential for inflation to spark up again in a world of higher tariffs and kinked supply chains.

Equity markets didn't like that message, and headed lower after the jagged recovery last week. This time, there was no finger pointing at the bond market, as Treasury yields spent most of the week in a slow-motion descent, with 10-years easing 20 basis points to below 4.3%. Currencies were also unusually calm, with the dollar barely changed on net against the euro and loonie, but a bit weaker versus the pound and yen.

But just because bonds and currencies were well behaved doesn't mean the week was drama-free. Apparently, the Fed's patience message wasn't well received at the White House, with the president posting in response that the Fed was "too late" and that "Powell's termination cannot come fast enough." This blast came a day after Powell spoke about the critical importance of an independent Fed.

For the record, the chair's term expires in May 2026, although his term as governor runs until 2028. It's rare, but not unheard of, for a chair to stay on the Fed board (and thus still have a say and a vote on policy) — the last one to do that was Marriner Eccles, from 1948 to 1951. We'll just note that the Fed's headquarters building in Washington is named after Mr. Eccles.

Douglas Porter

On Recession Watch

U.S. Data Preview Herrmann Forecasting tlk77d@gmail.com April 16: [Fed] Chairman Alan Greenspan in 1995-96 was the last Federal Reserve official to achieve an economic "soft landing." Soft landings of the economy are a relatively "rare event," statistically speaking. In our models' central forecast, 2024 may witness the second-weakest 12-month gain in private-sector payrolls since 2010 (outside of the 2020 recession), while 2025 may witness a further "slowing" in private nonfarm payrolls.

In spite of the improvement in broad measures of business confidence following the Trump victory, that impulse has faded, and our models continue to discern vulnerabilities to the underlying growth rate of employment and the economy in 2025. The administration's tariff program reinforces our concerns over an economic recession for years 2025 and 2026.

John D. Herrmann

Beware 5% Treasury Yields

From Our Audience The National Investor April 15: It's a BIG wild card, what happens with market interest rates; arguably more so now than the trade war. If we have seen the high for long-term Treasury yields, I think the status quo will be maintained there (on the bellwether 10-year note, a yield of 4% to 4.5% or so).

Frankly, that would provide almost a perfect environment for the kind of ongoing "rotation" I see, which will be more healthy than not for stocks. That level of interest rates likely won't be enough to cause a full-blown recession — instead, that "slow, dull ache" of stagflation, which will favor commodities, value stocks, solid yield plays, and the like. Assuming that the trade war settles down to something less apocalyptic, that remains my base case.

The thing to be feared is a surge in yields to above their prior peaks. Lest some of you have forgotten (and I have recounted this history many a time), it was a relentless rise in borrowing costs that knocked the legs from under stocks in 1987.

The same will happen again — worsening the declines we have seen recently — if we see the 10-year note move much above 5%.

Christopher T. Temple

To be considered for this section, material, with the author's name and address, should be sent to MarketWatch@barrons.com.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

This commentary was issued recently by money managers, research firms, and market newsletter writers and has been edited by Barron's.

Stocks Seek a Bottom

Cabot Turnaround Letter Cabot Wealth Network April 17: After shrinking for the past few days, new 52-week lows on the New York Stock Exchange began expanding again and, by Wednesday, were back up to above 40 in a sign that internal weakness [in the market] is still a problem.

That said, it is clear the market is trying to find a bottom, and we will probably have a confirmed low by early May, if not sooner. It is normal for the major indexes to test their lows before launching an extended rally, and that can take the form of a double bottom, a higher low, or — in rarer cases — a lower low. I'm not sure which of the three permutations we'll see once the bottoming process concludes, but I do see a stronger environment heading into May.

To reiterate a point I made back in March, the renowned market statistician Jason Goepfert of Sentiment Trader pointed out that the S&P 500 recently had two straight days with 90% advancing stocks after hitting a six-month low. Whenever this has happened going back to 1933, the S&P has been higher 12 months later in almost every instance, with 100% accuracy in forecasting the market being higher two months later and 95% accuracy in being higher three months later.

Clif Droke

U.S. Farmers Are A-OK

Tiny Tidbits Paulsen Perspectives April 17: U.S. agriculture is highly dependent on the export markets and is at the epicenter of the contemporary Trump tariff storm. It is therefore encouraging that U.S. farmers were headed into this crisis in reasonably good shape [based on a Purdue University barometer of U.S. agricultural economic health]. According to this measure, the U.S. agricultural economy improved significantly during 2024 into the early part of this year.

Currently, this barometer is higher than 80% of the time since 2015 when it first started being reported. I suspect the president will find some way to buffer the impact of tariffs on U.S. farmers, but this sector may be able to persevere better than many expect.

Jim Paulsen

Remember Mr. Eccles

Talking Points BMO April 17: Central banks can't do much to fix the damage from a trade war. That was the key theme from this week, as Federal Reserve Chair Powell continued to preach patience, and the Bank of Canada hit a pause for the first time in a year. And both monetary authorities openly fretted about the potential for inflation to spark up again in a world of higher tariffs and kinked supply chains.

Equity markets didn't like that message, and headed lower after the jagged recovery last week. This time, there was no finger pointing at the bond market, as Treasury yields spent most of the week in a slow-motion descent, with 10-years easing 20 basis points to below 4.3%. Currencies were also unusually calm, with the dollar barely changed on net against the euro and loonie, but a bit weaker versus the pound and yen.

But just because bonds and currencies were well behaved doesn't mean the week was drama-free. Apparently, the Fed's patience message wasn't well received at the White House, with the president posting in response that the Fed was "too late" and that "Powell's termination cannot come fast enough." This blast came a day after Powell spoke about the critical importance of an independent Fed.

For the record, the chair's term expires in May 2026, although his term as governor runs until 2028. It's rare, but not unheard of, for a chair to stay on the Fed board (and thus still have a say and a vote on policy) — the last one to do that was Marriner Eccles, from 1948 to 1951. We'll just note that the Fed's headquarters building in Washington is named after Mr. Eccles.

Douglas Porter

On Recession Watch

U.S. Data Preview Herrmann Forecasting tlk77d@gmail.com April 16: [Fed] Chairman Alan Greenspan in 1995-96 was the last Federal Reserve official to achieve an economic "soft landing." Soft landings of the economy are a relatively "rare event," statistically speaking. In our models' central forecast, 2024 may witness the second-weakest 12-month gain in private-sector payrolls since 2010 (outside of the 2020 recession), while 2025 may witness a further "slowing" in private nonfarm payrolls.

In spite of the improvement in broad measures of business confidence following the Trump victory, that impulse has faded, and our models continue to discern vulnerabilities to the underlying growth rate of employment and the economy in 2025. The administration's tariff program reinforces our concerns over an economic recession for years 2025 and 2026.

John D. Herrmann

Beware 5% Treasury Yields

From Our Audience The National Investor April 15: It's a BIG wild card, what happens with market interest rates; arguably more so now than the trade war. If we have seen the high for long-term Treasury yields, I think the status quo will be maintained there (on the bellwether 10-year note, a yield of 4% to 4.5% or so).

Frankly, that would provide almost a perfect environment for the kind of ongoing "rotation" I see, which will be more healthy than not for stocks. That level of interest rates likely won't be enough to cause a full-blown recession — instead, that "slow, dull ache" of stagflation, which will favor commodities, value stocks, solid yield plays, and the like. Assuming that the trade war settles down to something less apocalyptic, that remains my base case.

The thing to be feared is a surge in yields to above their prior peaks. Lest some of you have forgotten (and I have recounted this history many a time), it was a relentless rise in borrowing costs that knocked the legs from under stocks in 1987.

The same will happen again — worsening the declines we have seen recently — if we see the 10-year note move much above 5%.

Christopher T. Temple

To be considered for this section, material, with the author's name and address, should be sent to MarketWatch@barrons.com.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

The WSJ Dollar Index is down 0.64 point or 0.66% this week to 96.07

• Down for three consecutive weeks
• Down 3.50 points or 3.52% over the last three weeks
• Largest three-week point and percentage decline since the week ending Nov. 25, 2022
• Down 10 of the past 14 weeks
• Today it is down 0.10 point or 0.10%
• Down seven of the past nine trading days
• Off 8.63% from its record close of 105.14 hit Tuesday, Sept. 27, 2022
• Lowest closing value since Tuesday, Oct. 1, 2024
• Off 7.28% from its 52-week high of 103.61 hit Friday, Jan. 10, 2025
• Up 0.80% from its 52-week low of 95.31 hit Friday, Sept. 27, 2024
• Down 4.41% from 52 weeks ago
• Month-to-date it is down 3.70%
• Year-to-date it is down 6.69 points or 6.51%

Data based on 5 p.m. ET values

Source: Tullett Prebon and Dow Jones Market Data

CoinDesk Bitcoin Price Index is down $347.19 today or 0.41% to $84531.61

• Snaps a two-day winning streak
• Up 2.58% month-to-date
• Down 9.51% year-to-date
• Down 20.8% from its all-time high of $106734.51 on Dec. 17, 2024 (based on 4 p.m. levels)
• Up 31.43% from 52 weeks ago (April 19, 2024), when it traded at $64314.73
• Down 20.80% from its 52-week high of $106734.51 on Dec. 17, 2024 (based on 4 p.m. levels)
• Up 58.12% from its 52-week low of $53461.36 on Aug. 5, 2024 (based on 4 p.m. levels)
• Traded as low as $84323.77
• Down 0.65% at today's intraday low

Note: CoinDesk Bitcoin Price Index (XBX) at 4 p.m. ET close

Data compiled by Dow Jones Market Data

CoinDesk Bitcoin Price Index is down $347.19 today or 0.41% to $84531.61

• Snaps a two-day winning streak
• Up 2.58% month-to-date
• Down 9.51% year-to-date
• Down 20.8% from its all-time high of $106734.51 on Dec. 17, 2024 (based on 4 p.m. levels)
• Up 31.43% from 52 weeks ago (April 19, 2024), when it traded at $64314.73
• Down 20.80% from its 52-week high of $106734.51 on Dec. 17, 2024 (based on 4 p.m. levels)
• Up 58.12% from its 52-week low of $53461.36 on Aug. 5, 2024 (based on 4 p.m. levels)
• Traded as low as $84323.77
• Down 0.65% at today's intraday low

Note: CoinDesk Bitcoin Price Index (XBX) at 4 p.m. ET close

Data compiled by Dow Jones Market Data

In New York, the Dow Jones Index fell 527 points or 1.33 percent on Thursday.

Leading the losses are Walmart (-0.27%), UnitedHealth (-0.26%) and Travelers Companies (-0.09%).