Weekly Market Commentary May 5th to May 9th 2025

It was very quiet in both the economy and the markets this week, a welcome break from the roller-coaster ride we’ve been on recently from all the geopolitical noise. The Fed spoke loudly by doing nothing, and first quarter corporate earnings season is in full swing with 72% of companies reporting so far showing a 12.8% blended growth rate for the quarter.

On Monday, the Institute of Supply Management released their ISM Services Index which measures current and expected business conditions based on responses from purchasing and supply managers in non-manufacturing companies. Anything above 50 indicates the sector is expanding and April came in at 51.6, a full percentage point higher than what was expected, but a full percentage point lower than the 12-month moving average.

The only other major news of the week was the Fed’s decision to hold short-term interest rates steady at 4.25% – 4.50%. This decision was unanimously expected even with relentless pressure from Washington to cut. Despite a negative GDP report last week, the solid employment situation and concerns that tariffs will reignite inflation led Powell to state “It’s not a situation where we can be preemptive, because we actually don’t know what the right responses to the data will be until we see more data.” Translation? The Fed will maintain their higher for longer stance. Look for a possible cut at the next meeting in June. Or not.

In the financial markets, things were also relatively tame. Markets have responded favorably to news on tariff deals, and we expect more resolution going forward. Stocks were marginally down on the week with the S&P 500 (which closed at 5,660), Dow Jones Industrials, and NASDAQ finishing just under where they started. Bonds were also off
slightly on the week across the curve with the 10-Year U.S. Treasury closing up 5 basis points to 4.38%.

Key consumer economic releases next week include Consumer Prices (CPI), Producer Prices (PPI), Retail Sales, and Housing Starts/Building Permits.