The Standard & Poor's 500 index has jumped some 20% from its April low, but the trauma of the 10%-plus sell-off is still with us.

Want some proof? Look at what happened Friday when President Trump threatened to boost tariffs to 50% on imports from the European Union and add 25% tariffs on iPhones imported from India.

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The S&P 500 fell 0.7%. The Dow was off 0.6%. The Nasdaq Composite and Nasdaq-100 indexes were down about 1% each.

Information technology stocks tumbled 1.3%. Apple  (AAPL)  fell 3% (and 7.6% for the week), and its market capitalization dropped under $3 trillion.

That's why Jay Woods, chief global strategist with Freedom Capital Markets, thinks investors need to be patient over the next few months.

There are important earnings coming up this week and other events in the next few months that can whipsaw markets, Woods said this week in an interview with Chris Versace, columnist and portfolio manager of theStreet Pro.

The interview is part theStreet  Pro's "Stocks and Markets" podcast series.

Watch the complete interview here.

The U.S. market has seen a big runup since bottoming in early April, and it's a bit frothy.

The Nasdaq saw its relative strength index top 70 — an overbought signal — for four days ending on May 19.

The S&P 500 came within 3% of a new high on May 19 and now looks like it needs to bounce off its 200-day moving average, now about 5,773, to boost investor confidence.

Plus, it's not clear when the tariff battles will end. One reason for the 50% tariff threat on the European Union is the Trump Administration thinks the progress on trade talks is too slow.

Related: Hedge-fund manager sees U.S. becoming Greece

Woods has been working on Wall Street for 20-plus years after graduating from Fordham University. His career includes time spent as a floor trader on the New York Stock Exchange.

By training, he is a technically-minded analyst and starts any analysis by understand financial charts and moving on to the fundamentals.

Here are the key challenges Woods said markets and investors face:

Nvidia Earnings

Nvidia  (NVDA) , the high-end chip maker, reports second-quarter earnings after Wednesday's close, and Woods said the company hasn't been rewarded for the strong earnings it has reported in recent quarters.

Nvidia is the developer of graphic processing units that are key to making artificial intelligence work.

Related: Veteran fund manager sends hard-nosed message on Fed interest rate policy

The stock closed Friday at $131.29. But it hasn't come close lately to its 52-week high of $153.13, reached on Jan. 7.

Story Continues

The problem is the hangover from the emergence of DeepSeek, a Chinese AI development company founded in July 2023.

In January, DeepSeek said could deliver large-language models of software as freeware. By Jan. 27, its freeware was the most downloaded software ap on Apple's IOS app store, exceeding Chat GPT's OpenAI software.

Nvidia shares dropped as much as 18% before stabilizing with a 17% loss.

Nvidia shares are up 11% since that January low and 21% in the second quarter. The shares are still down 2.3% on the year. But, again, not through $150. And that affects other big tech names, including Microsoft  (MSFT) , Woods said.Traders working on the New York Stock Exchange (NYSE) floor during the Hinge Health initial public offering on May 22. Bloomberg/Getty Images

Pure tech is only part of what's needed to boost stocks, Woods said.

The other is strength in two tech stocks listed as Consumer Discretionary stocks:

Amazon.com  (AMZN)  Tesla  (TSLA) .

These stocks represent about 40% of the market capitalization of the sector. Amazon is off 8.4% this year. Tesla is still down 16% in 2025, despite jumping 31% so far in the second quarter.

Apple is more problematic because it hasn't had a "wow" product in some time, Woods said.

Related: Analyst sets eye-popping Tesla stock price target

Tariffs and earnings

Successful trade talks are critical for the market. And Woods is confident that most trade talks will be completed at worst by the end of the year and more likely in the third quarter.

To make sense for investors, however, the Trump tariff rates have to come down and come down a lot, he said. Why? Then, companies won't have to raise prices.

"If tariffs don't come down as quick as we might hope they do, that guidance (companies) are supposedly keeping could be at risk."

(A note: Woods' interview was conducted on Tuesday before Trump's threats against European Union and Apple.)

More Tech Stocks:

Amazon makes move that the White House hates, then walks it back Analyst reboots Apple stock price target ahead of earnings Controversial EV tax credits will be bad news for Tesla

When will the Fed cut interest rates?

The Federal Reserve's key interest rate is at 4.25% to 4.5%.

"I think we could get a rate cut in June, but we won't until the following meeting," he said. That assumes economic data is stable. particularly on inflation.

That meeting is scheduled for July 28-29.

Part of the inflation question, of course, depends on trade talks.

Related: Veteran fund manager unveils eye-popping S&P 500 forecast

See a big stock rally ahead? Be patient, money manager says first appeared on TheStreet on May 25, 2025

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