Weekly Market Commentary May 19th to May 23rd 2025

In terms of traditional macroeconomic news, data last week was light but included Housing data and S&P Manufacturing and Services surveys. Fiscal policy made headlines starting over the weekend with Moody’s downgrading U.S. debt from AAA to Aa1, aligning its outlook with both S&P and Fitch. During the week, the House passed a bill to extend the 2017 tax cuts with additional provisions for tax breaks for tips, overtime and seniors.

We continue to see a bifurcated housing market with New Home Sales jumping nearly 11% to a seasonally adjusted annual rate of 743k, well above the expected 695k. Existing Home Sales, however, remain slow in comparison as sales slid 0.5% to 4.0 million, slightly below the expected 4.1 million.

The surveys for both S&P Services and Manufacturing were encouraging as they easily surpassed expectations. Business continues to expand in the private sector as business optimism has improved since April. Both the S&P Services PMI and S&P Manufacturing surveys posted a 52.3, in expansionary territory.

Last week equity markets took a breather as fiscal policy, and stalling tariff negotiations dampened sentiment slightly. All three major market indices fell in unison. The S&P 500 fell 2.1% to 5,802, while the Dow Jones Industrials declined 2.5% to 41,603 and the Nasdaq fell 2.5% to 18,373. U.S. Treasury yields continued their trend higher with the 10-Year finishing the week at 4.51%.

This upcoming week we will receive Pending Home Sales and the Federal Reserve’s preferred inflation gauge, Personal Consumption Expenditures (PCE).