Weekly Market Commentary April 28th to May 2nd 2025
As markets continued to recover from the early month tariff driven selloff, investors were focused on this week’s broad economic data and corporate earnings looking for confirmation that a recession will be staved off and the recovery will sustain.
First quarter GDP was released on Wednesday, declining by an annualized rate of 0.3%. Consumption grew by 1.8%, down from 4.0% in the prior quarter, but the decline was mostly attributed to a surge in pre-tariff imports as net exports subtracted 4.8% from the reading. Overall, it was not as bad as feared and the negative impact on imports and exports should reverse in the second quarter.
The April ISM Manufacturing report contracted for a second consecutive month at 48.7. New export orders, production and imports were particularly weak in the month.
Wrapping up the week was payroll data from the Bureau of Labor Statistics, and it was stronger than expected. Non-farm payrolls increased to 177k in April (138k est.), while the prior two months were revised down by 58k. The unemployment rate was unchanged at 4.2%.
The S&P 500 opened at 5,525 and continued the positive momentum of last week, increasing slightly each day closing at 5,686, making it nine consecutive positive days and the longest streak in twenty years. A combination of favorable earnings from Microsoft and Meta eased concerns about slowing AI demand, along with favorable economic data and increased hopes of upcoming tariff deals. Overall, the S&P 500 increased by 2.9% for the week.
The yield on the 10-Year U.S. Treasury was mostly unchanged for the week closing at 4.3%. The 2-10 treasury spread closed at 0.48%, down from 0.50% last week. Futures markets have priced in three Fed Funds cuts in 2025 after the tariff announcement.
Key economic releases next week include the ISM Services and FOMC meeting on Wednesday followed by several Fed Governors speaking on Friday.
