From Fear to Greed: Is This Stock Market Recovery Sustainable?

Good morning, Hustlrs!

This week, the stock market bounced back after the U.S. and China paused their trade war —but there are still risks ahead.

Here’s what mattered this week:

☕️ Quick Brew: This Week’s Market Pulse

• The U.S. and China agreed to roll back some tariffs (extra taxes on imported goods), making investors happy and causing stock prices to rise.

• Stock markets have recovered from April's drops, but risks still exist as trade talks continue.

• Investors should be careful—markets can change quickly!

• It’s important to have a strong and balanced investment strategy to handle uncertainty.

📰 The Big Stories

1 . How the Market Made a Comeback

Just a month ago, investors were scared as the stocks crashed over the U.S. - China trade wars. Stock prices were falling fast, and many worried about a global recession (when the economy shrinks, people lose jobs, and businesses struggle).

In early April, the stock market dropped super fast – the S&P 500 fell more than 10% in just 22 days, which doesn't happen very often.

Wall Street got scared because the U.S. and China were putting higher taxes on each other's products, making people worry about a worldwide economic slowdown that affected both stocks and bonds at the same time.

But financial markets can shift direction rapidly and unexpectedly.

After critical negotiations, the U.S. and China agreed to pause the worst trade taxes for 90 days, reduce other taxes, and restart important trade discussions.

This made everyone feel better: U.S. stocks shot up, with the S&P 500, Dow Jones, and Nasdaq having some of their strongest weekly gains of the year.

Since those April lows, U.S. stocks have gained back almost $8 trillion in total value.

As one strategist put it, “The markets threw a fit and got what they demanded: Trump taking a step back”. 

The question now is: Will this market improvement continue?

What's causing stocks to rise—and what might stop them?

The Good News

• Tariffs Paused: Both the U.S. and China have stopped the 24% import taxes for 90 days and canceled some other taxes, showing they want to reduce tensions

• More Trade Talks: Both countries plan to continue discussions, which could lead to long-term solutions.

• Strong Economy: Good job reports and company earnings helped bring confidence back to investors.

The Risks

• It’s Temporary:The tariff suspension only lasts for 90 days. If talks fail, taxes could return, making the market drop again.

• Stocks Are Expensive: Prices have gone up fast, so there’s little room for mistakes. Bad news could cause a big decline.

• Uncertainty Remains: Even though markets are recovering, trade issues and economic worries haven’t disappeared.

• Technical Resistance: The Nasdaq 100 (a collection of 100 large tech companies' stocks) is testing key technical levels (price points that are hard to break through). While the trend may be turning upward, feelings are still fragile, and drops are likely as traders reconsider risks.

Stock prices often fall when countries fight over trade. Earlier in 2025, new tariffs  between the U.S. and trading partners like China, Canada and Mexico caused markets to drop. When the U.S. softened its stance in April, stocks bounced back. Even now, investors are watching carefully and waiting for more news before making big moves.

🚦 What Could Happen Next? 

Nobody knows for sure, but here are three possible scenarios:

• V-Shaped Recovery: Stocks continue to rise quickly, soon reaching new record highs as trade tensions ease.

• Another Drop: Trade talks fail, tariffs return, and stocks fall again.

• Staying Steady:  Stocks move up and down without big changes as investors wait for more news.

2. U.S. Credit Rating Downgrade: What It Means for You

Moody’s(a company that rates how risky it is to lend money to countries and businesses) lowered the U.S. credit rating from AAA to Aa1. Why? Because of the government's rising debt, increasing interest expenses, and ongoing political disagreements over financial policies.

What happened next? The 2023 Aug 1 downgrade led to 10% decline over 2 months. Will this time be different? Who knows at this point.

Image Credit: therocktradingco.com

What should YOU do?

Stay Calm: Stay calm and avoid making quick decisions. The U.S. government is still financially strong, and most big investors won’t suddenly change their strategies.

Diversify: Since the market is unpredictable, it's smart to have a mix of investments. Gold and defensive stocks (companies that don’t lose value easily) could help manage risk.

Watch for deals: Sometimes, short-term drops in stock prices create chances to buy good stocks at lower prices.

Stay Informed: This downgrade is a sign of bigger financial and political issues. Keep an eye on economic news to understand what might come next.

Bottom line: Don’t panic. Use this moment to check your risks, diversify (spread out your investments), and stay flexible.

Final Thought: Greed Is Not a Strategy

It’s tempting to chase quick gains when markets rise, but smart investors stay disciplined, stay diversified, and focus on long-term success. The best investors don’t try to predict the future—they prepare for anything. 

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The Global Hustlr Team

This is for informational purposes only and should not be interpreted as specific investment advice. Investors should make investment decisions based on their unique investment objectives and financial situation. While the information is believed to be accurate, it is not guaranteed and is subject to change without notice.