WEEKLY MARKET SUMMARY

Global Equities: Stocks rallied most of the week as sentiment shifted towards optimism over tariffs and trade despite a lack of concrete progress. Corporate earnings were mostly positive and while some companies issued guidance cuts, the overall tone on earnings calls was cautious but not in full-blown panic mode regarding the impact of tariffs. The S&P 500 regained 4.6% during the week, while the Nasdaq Composite led the major domestic indices with a 6.7% weekly advance. The Dow Jones Industrial Average lagged with a 2.5% weekly gain, while the Russell 2000 Small Cap index rose 4.1%. Overseas markets were also higher, with Developed Market stocks gaining 3.7% and Emerging Markets up 3.7%.

Fixed Income: Bond markets stabilized as 10-Year US Treasury yields settled under 4.3% for the first time since April 8th, ending the week at 4.27%. President Trump walked back comments from the prior week regarding his anticipation of Fed Chair Jerome Powell’s “termination”, stating he had no intention of firing him, which sparked a significant rally in stock and bond markets. The Fed will enter its “quiet period” ahead of the May 6-7 policy meeting, at which there is little to no expectation of a rate cut. High yield bonds posted a strong weekly performance, rising 1.3% and retaking key technical support above their 50-day moving average and regaining a positive year-to-date total return.

Commodities: US West Texas Intermediate (WTI) Crude prices slipped to $63.20 on concerns over global demand as the tariff drama drags on. US Energy Secretary Chris Wright voiced concern that “$50 oil is not sustainable” for US shale producers, contradicting a statement from 10 days prior that suggested US drilling output could increase even if oil prices fell to $50/barrel. Oil drillers such as Halliburton (HAL) and Baker Hughes (BKR) warned that trade policy uncertainty would weigh on their outlook during their respective earnings calls this week. Gold prices fell sharply this week after peaking at $3,500, ending the week at $3,317 as investors rotated back into stocks on tariff optimism.

WEEKLY ECONOMIC SUMMARY

Consumer Sentiment Slips: US consumers expressed concerns over inflation and the economy in the latest reading from the University of Michigan’s Consumer Sentiment Survey, which fell 8% in April to a final reading of 52.2. Economists noted that a pessimistic tone from survey data does not always translate into spending cutbacks, a sentiment echoed by Fed Chair Jerome Powell earlier in the month. Still, the 52.2 reading is within striking distance of the June 2022 all-time low of 50, and well below the 20-year average of 80.

Home Sales Decline: Sales of existing homes fell by 5.9% in March to a seasonally adjusted annual rate of 4.02 million, marking the largest monthly decline since November 2022. New home sales were more encouraging, rising 7.4% in March to a seasonally adjusted 724,000 units. High interest rates have kept many potential buyers priced out of the market while also limiting the number of pre-existing homes for sale as the “lock-in” effect of prior low interest rates has made many potential sellers unwilling to lose their favorable borrowing rates. That could change if the tariff drama is resolved, however, as mortgage applications jumped 20% this week on the slight decline in yields.

Earnings Update: Big tech survived its first Q1 earnings release as Alphabet (GOOG) released results that handily beat expectations. Alphabet posted an impressive 49% EPS growth on a 12% revenue increase, with Google Cloud sales of $12.3 billion which met expectations. Shares jumped after hours but ended the Friday session with a relatively modest 1.8% gain. On the other end of the spectrum were Tesla (TSLA) earnings, which fell short of relatively low expectations as revenue fell –20% and EPS cratered –71% to just $409 million. The EV maker would have reported a net loss were it not for $595 million in government carbon credits as vehicle sales plummeted. Despite the staggeringly bad results, shares soared following earnings on comments from Elon Musk that he would be spending less time on government DOGE tasks and more time managing the company starting next month.

CHART OF THE WEEK

The Chart of the Week shows the Gross Domestic Product (GDP) growth rate for China, along with the forward projection from the International Monetary Fund (IMF). The IMF slashed its 2025 Chinese GDP growth forecast from 4.6% to 4.0% due to “prolonged trade policy uncertainty and the tariffs now in place.” The US also incurred a self-inflicted GDP forecast downgrade, falling from 2.7% to 1.8% per IMF projections for 2025. While markets have grown hopeful that a resolution will be reached between the two nations, there have been no confirmed trade talks to date.