Weekly Market Update – May 2, 2025

Quick Takes

• Stocks finished last week on a historic note with another positive week, buoyed by easing trade concerns, better-than-expected corporate earnings, and encouraging employment growth. The S&P 500 Index was up +2.9% for the week, riding nine straight days of gains, which is the longest consecutive daily winning streak in more than 20 years.
• Job openings declined, but hiring remains strong. On Tuesday the Bureau of Labor Statistics (BLS) reported that job openings fell to 7.2 million in March, the lowest reading since September. But on Friday the BLS payroll report for April surprised to the upside, with employers adding 177,000 jobs in April, well ahead of estimates for 135,000. 
• On Wednesday, the Bureau of Economic Analysis (BEA) released its advance estimate of first-quarter economic activity, which showed the U.S. economy contracted at an annual rate of -0.3%, the first negative reading since 2022. However, the decline was almost entirely the result of a sharp increase in imports as businesses front ran impending tariffs.

Source: Bloomberg. Data as of May 2, 2025.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

U.S. Stocks post longest winning streak in 20 years

Peak tariff tantrum appears to have passed as markets are no longer pricing in a worst-case scenario for an all-out trade war. Positive sentiment emerged early last week from the continuation of the prior week’s de-escalating trade tensions, with the White House reporting that a major trade deal was close to being announced (though the country couldn’t be named yet). By the end of the week China said that it was evaluating the possibility of starting trade negotiations with the U.S. Investors were also upbeat from a strong April jobs report on Friday morning and better-than-feared earnings reports from several Magnificent Seven (Mag 7) members during the week.

The S&P 500 Index closed the week up +2.9%, following the prior week’s +4.6% rise – the first time since January that the index has been up for two consecutive weeks. That stretch has also included nine straight days of gains, which is the longest consecutive daily winning streak since November 2004. Friday’s closing level was also significant in that it marked the full recovery of the market’s decline from all the tariff turbulence, precisely on the one-month anniversary since the April 2 “Liberation Day” press conference when President Donald Trump announced his “reciprocal” tariffs. Technology stocks did particularly well, with the tech-heavy Nasdaq Composite Index up +3.4% on top of the prior week’s +6.7% gain. The Nasdaq recaptured all of its tariff-related losses on Thursday. Following the prior week’s solid earnings report from Alphabet (parent company of Google), fellow Mag 7 members Meta Platforms (Facebook) posted stronger-than-expected first quarter revenue and Microsoft also delivered top- and bottom-line beats. Those results overshadowed less favorable reports from Mag 7 members Apple and Amazon. But it wasn’t just mega-cap tech stocks that have performed well in the last two weeks. Underscoring the impressive breadth of the market’s advance, small cap stocks have also had a strong showing. The Russell 2000 Index was up +3.4% last week following the prior week’s +6.7% gain. It has now been up for four consecutive weeks, its longest weekly winning streak since May 2024. 

Non-U.S. stocks continued their impressive rally as well. The MSCI EAFE Index was up +3.1% last week, the fourth straight weekly gain for developed market international stocks. The MSCI Emerging Markets Index was up +3.3%, its third consecutive week of gains. Those gains came despite the U.S. Dollar Index rising for a second straight week, typically a headwind for non-U.S. stock. 

The yields on U.S. Treasurys were mostly lower through Thursday but reversed higher on Friday following the upside surprise in April jobs growth. The yield on the 10-year UST and 2-year UST were up +7 and +8 basis points for the week to finish at 4.31% and 3.82%, respectively. The Bloomberg U.S. Aggregate Bond Index slipped -0.3% for the week, following the prior week’s +0.7% gain. Non-U.S. bonds, as measured by the Bloomberg Global Aggregate ex U.S. Bond Index, were up a +0.2% following a slight +0.05% gain the previous week.

The Week Ahead

The calendar is markedly lighter this week following last week’s economic and earnings bonanza. On Monday we get the Services Purchase Manager’s Indices (PMIs) from ISM and S&P Global. Tuesday is light with just the U.S. Trade Balance. Wednesday is the busiest it gets, with weekly MBA Mortgage Applications, Consumer Credit, and the Federal Reserve’s monetary policy committee announcement of its third interest rate decision of the year (they are expected to leave the federal funds rate unchanged). With no reports on Friday, Thursday concludes the week with jobless claims and Wholesale Inventories.

On the earnings front, about 90 S&P 500 companies are set to report earnings including Ford, Palantir Technologies and Vertex Pharmaceuticals on Monday; Advanced Micro Devices, Arista Networks, and Zoetis on Tuesday; Arm Holdings, Novo Nordisk, and Walt Disney Wednesday; ConocoPhillips, Match Group, and Monster Beverage on Thursday; and EchoStar, Starwood Property Trust, and Xenon Pharmaceuticals on Friday.

Chart of the Week

The U.S. economy contracted for the first time in 3 years as real Gross Domestic Product (GDP) shrank at a -0.3% annual pace in the first quarter, according to the initial estimate. That was slightly under the -0.2% annual rate Wall Street was expecting. That’s down from the +2.4% annual pace in the fourth quarter of 2024. A decline in the headline number was anticipated as a result of a surge of imports ahead of the Trump administration’s tariffs. Indeed, Net Exports were a -4.8% drag on headline GDP growth due to a massive +41% increase in Imports (which detract from GDP). Real Final Sales to domestic purchasers, which exclude International Trade and Inventories, rose by a solid +2.3%, highlighting the material negative impact Imports had on GDP. Also detracting from 1Q-2025 GDP was Government Spending, which fell -1.4%, driven by a -5.1% decline in Federal Spending. State and Local Government Investment also waned, rising at its slowest pace since 2022. Government Spending hasn’t declined since 2Q-2022 and has been above average in contributing to GDP for the last several quarters. Importantly, Private Investment surged +21.9%, although that data is also distorted by a spike in Inventories ahead of tariffs. Business Investment rose +9.8%, while Residential Investment rose a mild +1.3%.  Another positive aspect beneath the headline GDP number was Personal Consumption, which was +1.8%. That is down from +4.0% the prior quarter but was ahead of Wall Street forecasts for a +1.2% increase. The bottom line of the report is that there was obvious frontrunning of the tariffs, suggesting that subsequent GDP data could reverse higher. That’s exactly what happened the last time GDP declined in 1Q-2022, which was followed by a +0.3% annualized rise in 2Q-2021. Separately, Consumer Spending growth was a decent upside surprise at +1.8%.

GDP Declined as the Economy Braced for Tariffs

Decline almost entirely due to front-running of imports ahead of tariffs

Source: Bloomberg.

Did You Know?

RARE EARTHS DEAL – After months of negotiations, Ukraine and the U.S. on Wednesday signed a deal that will give the U.S. preferential access to Ukrainian minerals and fund investment in Ukraine’s reconstruction. (Source: Chief Executive)

BLACKOUT – Spain and Portugal experienced widespread power outages on Monday. The cause of the failure hasn’t yet been established. (Source: Bespoke)

GLOBAL PMIs SOLID TOO – Like the U.S., global manufacturing Purchasing Managers’ Indices (PMIs) generally held up better than expected in April despite ongoing tariff uncertainty. The Institute for Supply Management’s measure fell marginally to 48.7 from 49.0 in March. In China, the PMI fell to 49.0 from 50.5. In Japan, it rose to 48.7 from 48.4. In the eurozone it ticked up to 48.7 from 48.6, and to 45.4 from 44.9 in the United Kingdom. (Source: ISM, MFS)

This Week in History

TURN UP THE VOLUME – On April 28, 1901, total daily trading volume on the New York Stock Exchange exceeded 2 million for the first time, as 2,471,258 shares changed hands. (Source: The Wall Street Journal)

Economic Review

• In the wake of all the tariff turmoil, the April Employment Situation Report showed just how resilient the U.S. labor market is as new Non-Farm Payrolls (NFP) totaled 177,000. That was down from 185,000 the prior month, which was revised lower from the originally reported 228,000, but it easily beat Wall Street forecasts for 138,000 payrolls. February was also revised lower by -15,000. Besides the prior month downward revisions, the other downside was that the Unemployment Rate was unchanged at +4.2%, as expected. According to the Bureau of Labor Statistics (BLS) report, Health care continued to be a leader in job creation, adding 51,000 jobs. Other sectors posting gains included Transportation and Warehousing (+29,000), and Financial Activities (+14,000). Wages grew in line with expectations with Average Hourly Earnings (AHE) slipping to +0.2% from +0.3% where they were expected to stay. Year-over-year, AHE were up +3.8%, unchanged from the prior month, but a bit light from the +3.9% annual rate expected. The Fed would like to see wage growth slow to around +3% annually or less, a level it sees as consistent with low inflation. Average Weekly Hours Worked were steady at 34.3 after the prior month was revised up from 34.2 where it was expected to stay. Labor-Force Participation was up a tick to 62.6% from 62.5% where it was expected to stay. The Survey of Households, which is used to determine the Unemployment Rate, was even stronger with an increase of 436,000. April Private Sector Payrolls increased by 167,000, following 170,000 the prior month (revised down from 209,000) and 107,000 in February (revised down from 116,000). March was the first time since the last Trump administration of two consecutive months of private sector payrolls increasing while government sector jobs decreased. The bottom line was that job growth was stronger than expected again, including private sector jobs, despite the volatility in the market associated with the tariff uncertainty.
• The April Institute for Supply Management’s (ISM) Manufacturing PMI slipped to 48.7 from an unrevised 49.0 the prior month but was above expectations for a drop to 47.9%. The index of New Orders, a sign of future demand, rose to 47.2% from 45.2% while the Production barometer slid to 44.0% from 48.3%. Employment increased to 46.5% from 44.7%. The Prices Paid index, a measure of inflation, rose to 69.8% from 69.4%, the highest since July 2022. 
• Unlike the competing ISM report, the final S&P Global U.S. Manufacturing Purchasing Managers Index (PMI) managed to remain in expansion territory in April, but just barely at 50.2, down from the preliminary ‘flash’ estimate of 50.7 two weeks ago, but unchanged from the prior month’s reading (levels above 50 indicate economic expansion, while levels below 50 indicate contraction). Production fell for a second straight month, but at a slower pace than March, among marginal New Order book growth. Business Confidence about future output was at a 10-month low. Output Price inflation increased at the fastest rate since February 2023. Input Price inflation rose at a slightly slower pace than in March.
• The Job Openings Labor Turnover Survey (JOLTS) showed that Job Openings fell to a six-month low in March to 7.192 million from 7.480 million the prior month (revised down from 7.568 million). That was below expectations for 7.500 million. Job Openings peaked at 12 million in 2022, but companies have since cut back on hiring. Job openings fell the most in transportation and warehousing, government, and leisure and hospitality. Job openings are an indication of the health of the labor market and the broader U.S. economy. The ratio of Job Openings to Unemployed Workers was 1.02, down from 1.07 the prior month and is down from a peak of 2.0 in July 2022 which is the prepandemic level the Fed wants to see it at. The Number of People Quitting Jobs was 3.195 million, down from 3.256 million the prior month. The record was 4.5 million job quitters in late 2021. The Quits Rate was 2.1%, up a tick from an unrevised 2.0% the prior month. People tend to quit less often when the economy softens and jobs become harder to find. The Layoffs Rate was down to 1.0% from 1.1% the prior month. The Hiring Rate was unchanged at 3.4%. 
• Personal Spending increased +0.7% in March, above expectations for +0.6%, and up from +0.5% the prior month (revised up from +0.4%). After adjusting for inflation, Real Personal Spending increased +0.7% for the month, above expectations for +0.5% and up sharply from +0.1% the prior month (unrevised). The results seem to show an acceleration of spending ahead of the expected tariffs as consumers purchased new cars and other items to avoid potential price increases. Meanwhile, Personal Income rose +0.5%, above expectations for +0.4%, but below the +0.7% increase the prior month (revised lower from the originally reported +0.8%). Real Disposable Income was up 0.5% month-over-month, and up +1.7% year-over-year. The Personal Savings Rate dipped to +3.9% from +4.1%.
• The cost of goods and services was unchanged for the month of March, matching expectations, and down from +0.4% the prior month (which was revised up from +0.3%). For the year the Personal Consumption Expenditure (PCE) Deflator (aka PCE Price Index) was up +2.3%, above expectations for +2.2%, but down from the +2.7% annual rate the prior month (revised higher from +2.5%). The Core PCE Price Index, which excludes food and energy and is the Fed’s preferred inflation gauge, was flat for the month, below expectations for +0.1%, and down sharply from +0.5% the prior month (revised up from +0.4%). Year-over-year, the Core-PCE Price Index was up +2.6%, matching expectations, and down from +3.0% (revised higher from the originally reported +2.8%).  
• The Conference Board’s Consumer Confidence Index fell for a fifth straight month to 86.0 in April, down from 93.9 the prior month (which was revised up from 92.9). That was below Wall Street expectations for a decline to 88.0. The Present Situation gauge slipped to 133.5 from 134.4 (which was revised lower from the originally reported 134.5). The Expectations gauge — which reflects consumers’ six-month outlook — dropped to 54.4 from 66.9 the prior month (revised higher from 65.2), the lowest level since October 2011. Sustained levels below 80 on the expectations index can signal a recession within the next year. In good times, the index can top 120 or more. Average 12-month inflation expectations jumped to 7.0% from 6.0% in March, the highest reading since November 2022. A key takeaway is that the drop in confidence was guided primarily by the decline in consumers’ outlook, which was driven by worsening views of business conditions, employment prospects, and future income. The drop in confidence was broad-based across all age groups and most income groups.
• The Commerce Department reported that Factory Orders surged +4.3% for the month of March, which was actually just shy of expectations for a +4.5% rise, but up from +0.5% the prior month (revised down from +0.6%). But Factory Orders Ex Transportation was down -0.2%, short of expectations for a +0.3% increase and down from +0.3% the prior month (revised lower from +0.4%). Durable Goods Orders for long-lasting items such as televisions, appliances and transportation equipment rose +9.2% in March, matching expectations, and up from the prior month’s +0.8% rise (revised down from +0.9%). Durable Goods Orders Excluding Transportation were flat, as expected, and down from +0.7% the prior month. The important Core Capital Goods Orders (capital goods excluding volatile sectors like transportation and defense), a proxy for business spending, was up +0.01%, matching expectations, and up from a -0.4% decline the prior month (revised down from +0.1%). Core Capital Goods Shipments, which are factored into GDP, rose +0.2%, shy of expectations for a +0.3% increase which is where they were the month before (unrevised).  
• The Commerce Department reported that Construction Spending fell -0.5% in March, far short of the +0.2% increase expected, and down from the prior month’s +0.6% rise (revised lower from +0.7%). Over the past year, construction spending is up +2.8%, down a tick from the +2.9% annual rate the previous month. Total Private Construction was down -0.6% after a +0.9% rise the month before and total Public Construction was down -0.2% after two months at +0.2%. Private Residential Spending dipped -0.4% month-over-month and private Nonresidential Spending was down -0.8%. The report showed that single-family construction was up +0.1%, after +1.0% the prior month, and multifamily construction flat for a second straight month. The key takeaway from the report is that spending weakened in March for both private and public construction.
• According to the Case-Shiller S&P CoreLogic 20-City Home Price Index, U.S. housing prices rose again in February and marked a new record high price level. Home prices in the 20 biggest U.S. metropolitan areas increased a seasonally adjusted +0.40%, matching expectations and up from a +0.38% increase the prior month (revised down from +0.46%). On a year-over-year (YoY) basis, the 20-city index was up +4.50%, below expectations for +4.70% and down from the prior month’s +4.72% annual pace (revised higher from +4.67%).  Chicago had the biggest year-over-year home-price gains (up +7.7%) while Cleveland was at the bottom of the list of annual gains at -1.5%.
• The competing Federal Housing Finance Agency (FHFA) House Price Index (HPI) also showed U.S. home prices moved up in February, with the index hitting an all-time high of 437.3. The government agency reported prices rising +0.1%, down from +0.3% the prior month (revised higher from +0.2%). Wall Street was expecting a +0.3% rise. It was the 9th month of increases. The government data showed home prices up +3.9% year-over-year, down from +4.8% the prior month. House prices were up YoY in all of the 9 regions, with the highest rate in the Middle Atlantic (+7.10%). The Pacific division recorded the smallest YoY appreciation, at +0.9%
• The Texas Manufacturing Outlook Survey showed Texas factory activity sank in April with the General Business Activity index down to -35.8 from an unrevised -16.3 the prior month, its lowest level since May 2020. That was far short of expectations for a -17.0 reading. It was at a three-year high of +14.1 in January.  The Production index, a key measure of state manufacturing conditions, was down slightly to +5.1 from +6.0 but New Orders plunged to -20.0 from -0.1 and Shipments fell to -5.5 from +6.1. But the Company Outlook index fell to -35.8 after sinking to -10.7 the prior month. Employment improved modestly to -3.9 from -4.6. Prices Paid were up to +48.4 from +37.7 and Prices Received rose to -14.9 from +6.3. Indicators of conditions six months from now weakened as well, falling to -15.2 from -6.6 the prior month. The Texas Service Sector Outlook Survey declined for the month too, falling to -19.4 from -11.3 the prior month (unrevised).  
• The Chicago Purchasing Managers Index (PMI), a barometer for the Chicago region’s business and manufacturing conditions (also known as the Chicago Business Barometer), fell to 44.6 in April from an unrevised 47.6 the prior month. That was well below Wall Street expectations for a 45.9 reading. Readings below the 50 level indicate contraction and it has been in contraction territory for 17 consecutive months now. Four of the seven sub-components rose, but the decrease was driven by a pull-back in New Orders and Production, and to a lesser extent Supplier Deliveries. Order Backlogs, Inventories, Prices Paid, and Employment rose relative to March. 
• The National Association of Realtors (NAR) reported that Pending Home Sales rose +6.1% in March after last month’s +2.1% rise (revised up from +2.0%), which was far above Wall Street expectations for a +1.0% increase. Year-over-year sales were just barely negative at -0.1%, up from the -7.0% drop the prior month (revised up from -7.2%), which was far better than the -5.7% decrease expected. From a regional perspective, the Midwest expanded +4.9%, the South jumped +9.8%, the West was up +4.8%, and the Northeast saw a modest dip of -0.5%. 
• Weekly MBA Mortgage Applications dropped -4.2% for the week ending April 25 following a -12.7% plunge the prior week. The Purchase Index was down -4.4% after falling -6.6% the prior week. The Refinance Index plunged -3.7% after sinking -20.0% the prior week. The average 30-Year Mortgage Rate slipped to 6.89% from 6.90% the prior week.
• Weekly Initial Jobless Claims rose +18,000 to 241,000 for the week ending April 18, right in line with expectations. The prior week was revised higher by +1,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) jumped by +83,000 to 1,916,000 in the week ending April 19, worse than expectations for 1,865,000 claims. Last week’s reading was revised lower from 1,841,000 to 1,833,000.

Asset Class Performance

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. US Bonds (iShares Core US Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (SPDR® Bloomberg Barclays International Corporate Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares US Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% US Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.