Weekly Wrap

The stock market had another winning weak. The S&P 500 closed 2.9% higher than last Friday, logging its nine-straight win at the end of the week. The Nasdaq Composite was 3.4% higher than Friday's close and the Dow Jones Industrial Average registered a 3.0% gain. 

Factor contributing to the inclination to buy included:

• Optimism around the trade war situation after China suggested that it is leaving the door open for trade talks with the U.S.
• Positive responses to earnings from Microsoft (MSFT), which increased 11.1% from last week, and Meta Platforms (META), which increased 9.1% from Friday
• Momentum after S&P 500 surpassed its 50-day moving average (5,582)
• Reacting to the March Personal Income and Spending Report, which showed a nice 0.7% jump in personal spending and unchanged readings for both the PCE and core-PCE Price Indexes on a month-over-month basis, and the April Employment Situation report, which showed a 177,000 increase in nonfarm payrolls and a 4.2% unemployment rate

Apple (AAPL) was left out of the rally, dropping 1.9% this week following its earnings report and Amazon (AMZN) received a muted response to its earnings results, settling 0.5% higher than last week. 

The broad advance left ten of the 11 S&P 500 sectors higher. The technology (+4.0%), communication services (+4.2%), and industrial (+4.3%) sectors were the top performers. The energy sector was alone in the red by Friday, dropping 0.7%. 

There's still some headwinds in play, though. Some economic data is weakening, keeping fear about a recession part of the market narrative. 

The April Consumer Confidence Index slumped to 86.0 (Briefing.com consensus 88.3) from 93.9 in March, pulled down by the lowest reading for the Expectations Index (54.4) since October 2011; meanwhile, average 12-month inflation expectations jumped to 7.0% from 6.0%, hitting their highest level since November 2022.

Market participants were also digesting a relatively soft initial jobless claims number, along with another contractionary reading in the ISM Manufacturing Index in April (i.e. a reading below 50%), and a Q1 GDP report that triggered some stagflation worries with real GDP down 0.3% and the GDP Price Deflator up 3.7%.

Monday:

It was a choppy day for stocks. The market started, and ended, the session higher. The major equity indices traded below their prior closing levels around mid-day, though. The Nasdaq Composite recovered from its session low, but didn't manage a positive finish due to weakness in some mega caps. The S&P 500 settled fractionally higher than Friday and the Dow Jones Industrial Average was up more than 100 points.

The mixed trading reflected a wait-and-see mindset ahead of a busy week. Participants receive earnings results from more than 160 S&P 500 companies. There's also a lot of economic data to get through.

There was no US economic data of note on Monday.

Tuesday:

The stock market exhibited choppy action in the early going, but finished on a high note. The Dow Jones Industrial Average was 300 points higher than Monday's close, and the S&P 500 and Nasdaq Composite each settled 0.6% higher than Monday.

The upside bias was driven by ongoing momentum following solid gains of late.

Early trepidation was related to uncertainty around tariffs after Treasury Secretary Bessent indicated that the U.S. will be speaking to at least 17 important trade partners over the next few weeks. That figure doesn't include China, which indicated that there are currently no consultations or negotiations with the U.S. on tariffs.

In the afternoon, President Trump signed an executive order to prevent the cumulative application of overlapping tariffs on certain imported goods—such as automobiles and auto parts—when multiple tariff programs target the same item. The news was welcome after this morning's data reflected impact from tariff concerns in the form of dropping consumer confidence.

Reviewing Tuesday's economic data:

• March Adv. Intl. Trade in Goods -$162.0 bln; Prior was revised to -$147.8 bln from -$147.9 bln
• March Adv. Retail Inventories -0.1%; Prior was revised to 0.1% from 0.1%
• March Adv. Wholesale Inventories 0.5%; Prior was revised to 0.5% from 0.3%
• March FHFA Housing Price Index 0.1% ; Prior was revised to 0.3% from 0.2%
• February S&P Case-Shiller Home Price Index 4.5% (Briefing.com consensus 4.7%); Prior 4.7%
• April Consumer Confidence 86.0 (Briefing.com consensus 88.3); Prior was revised to 93.9 from 92.9
  • The key takeaway from the report 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.
• March JOLTs - Job Openings 7.192 mln; Prior was revised to 7.480 mln from 7.568 mln

Wednesday:

The stock market initially gave back some of its recent gains. The rebound mentality was still present, however, leading major equity indices to close well off session lows.

The S&P 500, which dropped as much as 2.3% at its low, closed 0.2% above its prior close.

The initial drop was driven in part by stagflation concerns following a disappointing Q1 GDP report, which showed a 0.3% contraction in growth alongside a 3.7% rise in the GDP Price Deflator. A modest increase of 62,000 private payrolls in April, per the ADP Employment Change Report, added to the unease.

Another headwind for stocks today was consumer spending anxiety amplified by underwhelming earnings.

Reviewing Wednesday's economic data:

• Mortgage Applications Index -4.2% wk/wk, with refinance applications down 4% and purchase applications down 4%.
• The April ADP Employment Change Report showed an estimated 62,000 jobs were added to private-sector payrolls (Briefing.com consensus 128,000), and the pay for job-stayers rose 4.5% year-over-year, which was a slight deceleration from March.
• The Q1 Employment Cost Index was up 0.9%, as expected, for the three-month period ending in March 2025, following a 0.9% increase for the three-month period ending in December 2024. Wages and salaries increased 0.8%, versus 1.0% for the prior quarter, and benefit costs jumped 1.2%, versus 0.8% for the prior quarter.
  • The key takeaway from the report is that employment costs have softened year-over-year, with compensation costs increasing 3.6% for the 12 months ending in March 2025, versus 4.2% for the 12 months ending in March 2024.
• The Adv. Q1 GDP report showed a 0.3% decline in real GDP (Briefing.com consensus 0.4%), with net exports subtracting 4.83 percentage points from growth, following a 2.4% increase in Q4. The GDP Price Deflator jumped 3.7% (Briefing.com consensus 3.1%) following a 2.3% increase in Q4.
  • The key takeaway from the report is that there was obvious frontrunning of the tariff measures, which showed up in a 41.3% increase in imports. Separately, consumer spending growth was decent at 1.8%, yet that was a marked slowdown from the 4.0% growth seen in Q4.
• April Chicago PMI 44.6 vs. 46.0 Briefing.com consensus; prior 47.6.
• Personal income increased 0.5% month-over-month in March (Briefing.com consensus 0.4%) after increasing a revised 0.7% (from 0.8%) in February. Personal spending rose 0.7% month-over-month (Briefing.com consensus 0.4%) after increasing a revised 0.5% (from 0.4%) in February. The PCE Price Index was unchanged month-over-month (Briefing.com consensus 0.0%), which left it up 2.3% year-over-year versus a revised 2.7% (from 2.5%) in February. The core-PCE Price Index was also unchanged month-over-month (Briefing.com consensus 0.1%), which left it up 2.6% year-over-year versus a revised 3.0% (from 2.8%) in February.
  • The key takeaway from the report is that it showed an acceleration in spending as consumers prepared for the implementation of tariffs. The PCE Price Index decelerated to 2.3% year-over-year from 2.7% while the core PCE Price Index decelerated to 2.6% year-over-year from 3.0%, making for a welcome sight.
• March Pending Home Sales up 6.1% (Briefing.com consensus -0.2%); prior revised to 2.1% from 2.0%

Thursday:

The stock market started the new month with a win. The major indices settled off their best levels of the day with gains ranging from 0.2% to 1.5%.

The positive bias was driven by ongoing momentum following a huge move off the market's April low, along with strong responses to earnings from Microsoft (MSFT) and Meta Platforms (META).

The S&P 500 logged its eight consecutive positive session and closed above its 50-day moving average (5,592) after closing shy of that level on Wednesday.

The inclination to buy was also driven by optimism around the trade war situation, and an emerging hope that the Fed might see a case to cut the target range for the fed funds rate sooner rather than later due to weakening economic data.

Reviewing Thursday's economic data:

• Weekly Initial Claims 241K (Briefing.com consensus 225K); Prior was revised to 223K from 222K, Weekly Continuing Claims 1.916 mln; Prior was revised to 1.833 mln from 1.841 mln
  • The key takeaway from the report is that the relatively large jump in both initial and continuing jobless claims will stoke concerns about a softening labor market, which in turn might elevate the market's thinking that the Fed can be convinced that it needs to be less restrictive with its policy stance.
• April S&P Global US Manufacturing PMI - Final 50.2; Prior 50.2
• March Construction Spending -0.5% (Briefing.com consensus 0.3%); Prior was revised to 0.6% from 0.7%
  • The key takeaway from the report is that residential spending rebounded after a poor January, which is encouraging for longer term health of the housing market.
• April ISM Manufacturing Index 48.7% (Briefing.com consensus 47.9%); Prior 49.0%
  • The key takeaway from the report is that it paints a poor picture for the second month in a row, as the headline index slipped into contraction while prices rose sharply for the second consecutive month.

Friday:

The stock market finished a winning week on a high note. The S&P 500 logged its ninth-straight gain, rising 1.5% despite earnings-related decline in Apple (AAPL) and Amazon (AMZN). The Nasdaq Composite was more than 250 points above its prior close and the Dow Jones Industrial Average rose 1.4%.

The positive bias was driven by momentum after a big run of late, along with optimism around the trade with China after an acknowledgement that China may be open to talks with the U.S.

Market participants were also feeling better about the economic situation after a solid jobs report. There was a 177,000 increase in nonfarm payrolls and the unemployment rate was steady at 4.2%.

Reviewing Friday's economic data:

• April Nonfarm Payrolls 177K (Briefing.com consensus 130K); Prior was revised to 185K from 228K, April Nonfarm Private Payrolls 167K (Briefing.com consensus 125K); Prior was revised to 170K from 209K, April Avg. Hourly Earnings 0.2% (Briefing.com consensus 0.3%); Prior 0.3%, April Unemployment Rate 4.2% (Briefing.com consensus 4.2%); Prior 4.2%, April Average Workweek 34.3 (Briefing.com consensus 34.2); Prior was revised to 34.3 from 34.2
  • The key takeaway from the report is that the employment situation in April remained relatively solid in spite of the volatility associated with the tariff actions and many castigations that they will hurt the economy. It is possible that will prove to be the case, but looking back at April, that wasn't the case in large part for the labor market.
• March Factory Orders 4.3% (Briefing.com consensus 4.1%); Prior was revised to 0.5% from 0.6%
  • The key takeaway from the report is that the headline number masks a languid situation for factory orders in March, which were negative when the transportation component is removed.