Last Week
Global equities traded higher last Monday morning following the weekend summit in Switzerland between U.S. and China officials, which both parties characterized as being productive. Specifically, both nations agreed to reduce tariffs for 90 days significantly. In the absence of any reversion to the more bellicose tariff rhetoric, that rally continued for the rest of the week. By the close on Friday, the S&P 500 had advanced 5.3%, the Nasdaq was 7.2% higher, and the Russell 2000 was 4.5% in the green. That rally took the indices all the way back to their levels before the April 2nd “Liberation Day” (or Obliteration Day). Advancing issues more than tripled declining issues, with every industry sector moving higher, led by an 8.2% rise in Tech stocks. Gold retreated from its recent record highs, while both the dollar and crude oil were steady.
The economic data highlight was Wednesday’s benign April consumer inflation report, while Friday’s University of Michigan report showed that 12-month forward inflation expectations continued to climb to a level almost three times higher than their current rate, with the associated sagging consumer confidence.
The bond market remained steady, with the yield on the 10-year Treasury inching up 6 basis points to 4.43%. Despite the recently renewed recession chatter, the 10-2 spread kept a positive slope at +0.45%. During the quarterly earnings conference calls, the mention of tariffs, recession, and uncertainty spiked dramatically. On the other hand, the actual earnings reports were quite positive, with overall earnings growth rising to 13.6% for the quarter.
On the Chicago Sports Scene, the Sky opened their 2025 season looking like the Washington Generals playing Caitlin Clark’s (Harlem Globetrotters) Fever in a 30-point thrashing. In baseball, the Cubs stayed in first place in the NL Central after sweeping the White Sox in Wrigley Field. Or one could say the White Sox stayed in last place in the AL Central after being swept by the Cubs.
This Week
Stock and bond markets were under pressure Monday morning after Moody’s stripped the US of its AAA rating, citing a ballooning budget deficit. The 30-year yield climbed over 5% for the first time since November 2023, and the dollar dropped almost 1% versus other currencies. Markets partially recovered within an hour, as investors shrugged off the downgrade for the time being.
New developments on Tariffs could come with the click of a tweet and would be the most significant catalyst for stock prices.
Earnings season ends with reports from a few major retailers and technology companies.
On the economic front, ISM data on Wednesday will show some softening in manufacturing and services. Additionally, April’s new and existing home sales will offer some insight into the health of the housing market on Friday.
Stocks on the Move
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.