Rate Cuts Are Coming: The First of Four Bullish Catalysts for Risk Assets

As of April 24, 2025, all four major U.S. equity benchmarks posted gains for a third straight session, supported by strong corporate earnings and easing trade tensions. Meanwhile, growing expectations for rate cuts have reignited investor appetite for equities.

Market Highlights

• Dow Jones Industrial Average climbed 486.83 points (+1.2%) to close at 40,093.40.

• S&P 500 rose 108.91 points (+2%) to 5,484.77.

• Nasdaq Composite surged 457.99 points (+2.7%) to 17,166.04.

• Russell 2000 gained 38.45 points (+2%) to 1,957.59.

Earnings Surprises: Corporate Strength on Display

Companies like ServiceNow and Hasbro reported better-than-expected Q1 results, with shares soaring 15.5% and 14.6%, respectively. ServiceNow's CEO highlighted that AI is poised to unleash the biggest growth wave in history, one likely to persist for the next decade.

Meanwhile, OpenAI projected its 2029 revenue to hit $125 billion, far above this years $3 billion target. The firm expects agency services to contribute 25% of revenue in the next five years, with gross margins expanding from 40% to 70% by 2029.

Trade Concerns Easing: Markets Refocus on Earnings Outlook

We believe the tariff drama has temporarily faded—not because it's resolved, but because markets have shifted focus back to earnings. In fact, with investment banks lowering their forecasts due to tariff impacts, the stage may be set for an upward revision cycle to begin.

(See Chart: S&P 500 earnings target cuts due to tariff risks)

Feds Waller Turns Dovish: Rate Cuts in Play

Fed Governor Christopher Wallers dovish comments yesterday provided another tailwind for risk assets. Investors are gradually reaching consensus: if the economy slips toward recession, the Fed won't stand idle.

Here's a timeline of Wallers evolving stance:

• 2022–2023: Hawkish on persistent inflation; advocated rate hikes to cool prices.

• Late 2024: Shifted dovish, citing slowing labor market as a concern despite elevated inflation.

• April 2025: Warned that Trumps new tariffs could push inflation to 5% while raising unemployment to the same level—signaling potential support for rate cuts despite inflation overshoot.

• April 14, 2025: In St. Louis, emphasized that tariffs could slow growth and raise joblessness, calling for balanced policy.

• April 23, 2025: At a "Fed Listens" event, stressed the need for public input in policymaking.

• April 24, 2025: In a Bloomberg interview, explicitly stated that rising job losses due to tariffs would justify easing policy.

Recap: Four Bullish Catalysts Lining Up

As we highlighted yesterday, the market is watching these four bullish catalysts:

• Powell signaling rate cuts

• The end of quantitative tightening

• Tariffs being imposed with a soft touch

• Approval of corporate tax relief tied to earnings outlook

• Geopolitical risk from the Russia-Ukraine war subsiding

Only when all these drivers are on the table will we see the bull market in risk assets fully validated.

Our Take on Gold



While rate cuts may provide short-term support for gold, its risk-reward profile has weakened. If no recession materializes, crowded long positions in gold could unwind in favor of risk assets and bonds.

Technical Outlook: Gold

Gold appears to be forming a head-and-shoulders top pattern on the hourly chart.

• Resistance: $3,351 / $3,379

• Support: $3,259

• Price action has confirmed a reversal pattern. We recommend considering short positions, with a stop-loss set at $30 above entry. Avoid bullish bias at this stage.

Risk Disclaimer: The views, analysis, prices, and opinions provided are for general market commentary only and do not constitute investment advice. All users must independently assess their risk before making trading decisions.