Sometimes, the stock market whispers. Other times, it shouts. And right now, we’re confident that the market is screaming: It’s time to buy stocks.
If you’re skeptical, we completely understand. After all, just last month, Wall Street endured one of its fastest and most violent crashes ever.
In early April, stocks plummeted 10% in just two days – something that’s only happened five other times in the past 100 years, all during moments of crisis like the Great Depression, Black Monday, and 2008’s Great Recession. As a matter of fact, up until last week, stocks were tracking for their third-worst year on record after dropping more than 12% in the first 74 trading days…
But then came the biggest comeback rally in the past 100 years.
Signs that the global trade war is rapidly deescalating blew strong winds into Wall Street’s sails – and sparked a historic rally. The S&P 500 has now posted gains in nine consecutive sessions, rising more than 10% over that stretch. This marks the index’s biggest nine-day winning streak since the 1920s.
One of the stock market’s most violent crashes of all time has turned into one of its biggest comeback rallies of all time.
And while many investors are still reeling from the recent crash, we’re seeing signs of opportunity – especially in a very specific corner of the stock market: artificial intelligence. As trade tensions cool and the Fed pivots, we believe a select group of AI stocks could lead the next leg of this rally.
And we think this comeback could last. In fact, we have reason to believe it’ll heat up over the next few months – and evolve into a massive summer buying panic…
May: Trade Deals Clear the Way for a Stock Market Breakout
Let’s start with May, the month we expect the “trade dam” to break.
It seems that the pressure that’s been building since “Liberation Day” is finally forcing a breakthrough on the trade front.
Over the past week, multiple White House officials have suggested that several trade deals are nearly complete – especially with key allies like India, Japan, South Korea, and Vietnam.
We think those deals will be announced in May.
And they’ll likely do more than just ease tariffs. They’ll slam the brakes on inflation fears, cool the geopolitical heat, and finally give the Federal Reserve the economic clarity it’s been waiting for.
- Less Uncertainty, Clearer Policy Moves. Trade tensions muddy the waters for consumers, businesses, and investors alike. Finalized trade deals remove a major wildcard, making it easier for the Fed to assess the broader economy and chart a clearer path for interest rates.
- Sharper Read on Inflation. Tariffs and trade disruptions affect prices, both directly (via imported goods) and indirectly (via supply chains). With trade terms nailed down, the Fed can better separate temporary price spikes from lasting inflation pressures.
- Unlocking Business Investment. When trade policy is up in the air, businesses tend to hold off on spending. Trade clarity helps unlock that investment, giving the Fed stronger signals about economic momentum and making it easier to project GDP growth and adjust monetary policy accordingly.
- A Clearer Global Picture. Trade deals don’t just impact the U.S. – they ripple across global markets. With more stability abroad, the Fed can better judge how international trends might affect U.S. growth.
This transparency should trigger the next domino: a strong signal from the Fed that a rate cut is coming in June. Pair that with declining bond yields, and you’ve got the perfect environment for risk assets to run higher.
June: Fed Rate Cut & U.S.-China Deal Could Supercharge Stocks
May is all about trade deals and “green lights” from the Fed.
Then we’ll move into June, where two catalysts will converge – and ignite a major market rally.
This is when we think the dominos will fall all at once.
First, we expect a terrible May jobs report. And believe it or not, that’s good news.
Weak jobs data will show the true employment cost of the “Liberation Day” tariff blitz, which began just after the last payrolls survey.
Weak jobs, falling inflation, ongoing trade deescalation – this will give the Fed every reason it needs to pull the trigger on its first rate cut of 2025 at the June FOMC meeting.
But that’s not all.
As deals are signed with nearly every other major trading partner, pressure will mount on both the U.S. and China to come to terms. We believe that shortly after the Fed cuts rates, the two nations will announce a framework deal ahead of the early July deadline, which would serve as the clearest sign yet that the trade war is winding down.
If that comes to be, we’ll see two huge catalysts in one month: rate cuts and a U.S.-China breakthrough.
July: Tax Cuts and Earnings Could Fuel a Stock Market Meltup
Then in July, we will get the final piece of the puzzle: tax cuts.
That’s when Congress is expected to finalize a massive tax reform bill that will extend – and potentially expand – key provisions of the 2017 Tax Cuts and Jobs Act. With inflation fading, the Fed cutting, and the trade war dying, lawmakers will have the cover to push this bill through as a stimulus jolt ahead of the election. Think tax breaks, full expensing, and more.
And all of these positive catalysts will lead us into the Q2 corporate earnings season, which kicks off in the middle of July. Those reports should reflect easing cost pressures, improved demand visibility, and a surge in forward confidence. As such, we expect strong earnings, better guidance, and a growth reacceleration.
That’s when the market meltup will truly ignite.
Why This Could Be the Start of a Historic Summer Rally
Folks, we believe the stage is set for a summertime stock market surge.
Trade breakthroughs. Rate cuts. Tax reform. One by one, the dominos are lining up – and starting this month, they’ll likely begin falling in rapid succession.
May could mark the end of trade uncertainty. June may bring the Fed’s long-awaited pivot. And July could deliver an election-driven stimulus that lights a fire under the stock market. Add in surging earnings, easing inflation, and improving global sentiment, and you’ve got the makings of a full-blown market meltup.
This is more than a bounce. It’s the early phase of what we believe could be a historic summer rally… and the clock is ticking.
That’s exactly why I recently hosted an urgent market briefing, breaking down everything you need to know about what’s to come over the next few months, including the names and ticker symbols of seven AI stocks that could be the biggest winners of this buying panic.
If you haven’t watched it yet, now’s the time.
Because once this rally gets going, it could move fast – and early movers stand to benefit the most.
Watch the replay, and get the details on the seven AI stocks poised to soar.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Questions or comments about this issue? Drop us a line at langofeedback@investorplace.com.
