How six months of doom-and-gloom headlines failed to stop the S&P 500’s climb.

Over the past six months, financial markets have delivered one of the clearest cases of price vs. narrative divergence that we’ve seen in years. On the one hand, investor sentiment—measured by news flow and keyword trends—remained deeply negative. On the other, the S&P 500 climbed steadily higher, powered by corporate earnings strength, resilient consumer spending, and ongoing enthusiasm for artificial intelligence.

Our latest Glideslope sentiment chart, now integrated into Fraywire, makes this disconnect plain to see. The gray line shows sentiment scores, the blue line tracks the S&P 500’s closing levels, and the red dots highlight days when “tariff” was a dominant headline keyword.

---

Trump’s Tariffs and the Dominant Negative Driver

From late March through April 2025, tariff talk consumed the news cycle. The turning point came on April 2, when President Trump unveiled his “Liberation Day” tariffs. Markets immediately sold off in panic, with sentiment scores plunging to their lowest point of the year—deep into the –40 to –50 range.

But here’s the twist: the S&P 500 bottomed just as sentiment hit maximum pessimism. From there, equities began to recover, even as Trump doubled down on tariff threats and “trade war” chatter kept trending in headlines for months.

This tells us two things:

1. Tariff narratives fueled sentiment negativity.
   Even when fundamentals improved, the news flow stayed anchored to Trump’s trade brinkmanship.
2. Markets adjusted faster than sentiment.
   By May, traders were pricing in easing risks and resilient earnings, while sentiment surveys stayed locked in “doom and gloom” mode.

Trump’s tariffs caused panic in April, but that panic marked the market bottom. Stocks recovered while headlines stayed stuck on doom.

---

The Wall of Worry Rally

The persistence of negative sentiment while prices kept rising is a classic “wall of worry” scenario. Headlines warned of recession, trade wars, and political risk. Yet, earnings beats, AI-driven market leadership, and growing expectations of Fed rate cuts carried stocks higher.

Instead of acting as a warning signal, persistent negative sentiment became fuel for the rally. Bears and cautious investors—eventually forced to chase prices higher—helped drive momentum into the summer months.

The scarier the headlines got, the higher stocks climbed. Investors betting on disaster missed one of the strongest rallies of the year.

---

Why This Divergence Matters

Sentiment extremes often align with market turning points. April’s Trump-driven tariff panic coincided with the bottom in equities. The rebound shows how sentiment can be a contrarian indicator—when negativity is overwhelming, markets are often near exhaustion of selling pressure.

But once the rally takes hold, sentiment volatility becomes noise. Prices kept climbing into August even as tariffs resurfaced in headlines. Investors had stopped reacting with panic.

Extreme negativity in April signaled the market’s low. By summer, people stopped caring about tariff headlines—stocks kept rising anyway.

---

Takeaways

• Markets climbed a “wall of worry” while sentiment stayed negative.
• Trump’s tariff war drove the bulk of sentiment gloom, but earnings and AI carried stocks higher.
• Extreme pessimism in April lined up with the market bottom—a classic contrarian signal.
• By summer, investors had tariff fatigue: prices rose even as headlines stayed bearish.

---

New Features on Glideslope + Fraywire

This chart is more than just analysis—it’s part of a new and improved feature set available right now on Glideslope.Ai and inside the Fraywire terminal.

Here’s what’s new:

• S&P 500 Closing Prices: Added as a continuous line so you can track sentiment alongside actual price levels.
• RSI Levels: A technical momentum gauge layered into the chart, giving extra context for overbought/oversold conditions.
  • RSI is like a speedometer for the market. When it’s too high, prices may have run too hot (overbought). When it’s too low, prices may have fallen too hard (oversold). It doesn’t predict direction—it just shows when moves might be stretched.
• Keyword Mapping: Trending keywords (like “tariff”) are now overlaid directly on sentiment data, letting you see how narrative shocks align with market moves.
• Interactive Widget: The chart is available as a Fraywire widget—customizable, searchable, and free for anyone to explore.

You can experiment with the live chart here: https://www.glideslope.ai/chart

---

This combination of sentiment tracking, technical overlays, and keyword analysis brings market psychology into sharp focus. If April taught us anything, it’s that the loudest headlines—even those from the White House—don’t always dictate where the market goes.