05/05: Pre-Market Pulse: Consumer Spending Softens, Market Crossroads, Fed on Deck

The Market Setup

We kick off the week with markets consolidating after a powerful two-week rally that now sees the S&P 500 trading back near “Liberation Day” levels—April 2nd, when tariff escalation first shook global markets. Despite signs of slowing consumer activity, equities have marched upward, driven by strong big tech earnings and a surge in retail-driven momentum.

S&P500 as of 3:42pm EST on May 5, 2025. The apex triangle highlights consolidation in which the market could violently break higher or lower over the next few days.

Today, we find ourselves in a familiar setup: a rising trendline intersecting a horizontal band of resistance - an apex triangle, with the market likely to break either higher or lower this week. Near-term momentum (MACD and RSI) still leans bullish, but the Fed’s interest rate decision on Wednesday and mounting macro headwinds suggest that any upside may be capped.

Consumer Spending Weakens

Signals data shows that March’s pull-up in consumer spending—largely driven by fear of rising prices—has completely reversed in April. Nearly every category outside of furniture and appliances is down month-over-month. When you remove those categories, Visa transaction volumes are now trending below February levels.

This is big. We received a sell signal on Visa last Friday, and over the weekend, the CIO of Raymond James publicly confirmed the same view. Visa’s historical reliability as a proxy for U.S. consumer health makes this a potentially early indicator of a downturn—one the Fed is surely watching.

Key Signals This Morning

• Dollar General (DG): Buy Signal (Score: 95)

  Discount retail is back. With consumer discretionary names under pressure, we’re seeing rotation into staples. DG is nearing a very bullish crossover: the 50-day moving average is set to break above the 200-day. This one’s flashing strong.