May 4, 2025
Volume 12, Issue 18
Weekly Recap
Domestic equities traded higher last week, with the S&P 500 logging its second consecutive week of gains for the first time since January and closing Friday with its ninth straight session in positive territory. The technology-heavy Nasdaq Composite rose 3.42 percent, supported by better-than-expected earnings reports from several large-cap tech companies. Small and mid-cap indexes advanced for the fourth week in a row. Positive sentiment early in the week appeared to be driven by a continuation of the prior week’s optimism around de-escalating trade tensions, with President Trump rolling back some of his initial tariffs on cars and auto parts and Commerce Secretary Howard Lutnick announcing that a major trade deal was nearing the finish line.
Later in the week, the focus largely shifted to earnings as companies representing nearly 40 percent of the S&P 500’s market cap reported first-quarter results, including four of the so-called Magnificent Seven names. While a number of companies have discussed limited visibility into forward guidance, largely driven by uncertain trade policy, sentiment remained generally positive as traders seemed willing to wager that businesses would be able to weather slowing economic growth and tariff-fueled disruptions.
Last week’s busy economic calendar painted a mixed picture of the health of the U.S. economy. On the negative side, the Bureau of Labor Statistics reported Tuesday that job openings fell to 7.2 million in March, down from February’s reading of 7.5 million and the lowest reading since September, suggesting that demand for workers may be cooling amid elevated levels of economic uncertainty. On Wednesday, payroll processing firm ADP reported its count of private payrolls increased by only 62,000 in April, a sharp decline from March’s downwardly revised reading of 147,000.
Meanwhile, Friday’s jobs report surprised to the upside, with employers adding 177,000 jobs in April, down slightly from March but well ahead of estimates for 135,000. The unemployment rate remained stable at 4.2 percent, while average hourly earnings rose by a modest 0.2 percent from the prior month. The better-than-expected report was well received and helped send stocks higher on the print. Elsewhere, the Bureau of Economic Analysis released its advance estimate of first-quarter economic activity on Wednesday, which indicated that the U.S. economy contracted at an annual rate of 0.3 percent in the first quarter, the first negative reading since 2022. The BEA attributed the contraction in GDP to “an upturn in imports, a deceleration in consumer spending, and a downturn in government spending.” The sharp increase in imports during the first quarter suggested that businesses spent aggressively ahead of the Trump administration’s impending tariffs, most of which went into effect in early April.
In more positive news, the BEA reported that its Personal Consumption Expenditures Price Index – the Federal Reserve’s preferred measure of inflation – was flat month-over-month in March, while consumer spending rose 0.7 percent. The report suggested that the economy was in a relatively good place to close out the first quarter, with cooling inflation and resilient consumer spending. However, data in the report do not reflect the impacts of the majority of the Trump administration’s recent tariff actions. U.S. Treasury securities fluctuated throughout the week in response to the slew of economic data releases. Yields across most maturities were generally lower through Thursday, though most increased Friday following the better-than-expected jobs report. The benchmark 10-year U.S. Treasury note closed last week yielding 4.11 percent, slightly higher than the prior week.
Market Monitor
A full listing of market performance data is available here.
DQYDJ.com (“Don’t Quit Your Day Job”) offers helpful investment calculators here, including one that shows total returns for individual stocks. Koyfin.com provides reams of data on individual stocks, including the ability to track total return — and just about anything else — over time.
In the News
This week’s data were heavily focused on jobs. The U.S. economy continued to add jobs at a steady clip in April, although the pace of gains slowed slightly during a month that saw changing tariff announcements and market turmoil. The U.S. added 177,000 jobs in April, the Labor Department reported Friday, above the gain of 133,000 jobs economists polled by The Wall Street Journal had expected to see. The unemployment rate, which is based on a separate survey from the jobs figures, held steady at 4.2 percent. The number of job openings was little changed at 7.2 million in March, the U.S. Bureau of Labor Statistics reported Tuesday. Over the month, hires held at 5.4 million, and total separations changed little at 5.1 million. Within separations, quits (3.3 million) were unchanged and layoffs and discharges (1.6 million) edged down. Hiring in the U.S. private sector slowed markedly amid growing policy uncertainty. Just 62,000 jobs were created in April, down from 147,000 in March, according to the ADP National Employment report released Wednesday. Economists polled by The Wall Street Journal had expected hiring to slow less sharply to 120,000 extra positions on the month. U.S. initial jobless claims climbed last week, according to the Department of Labor, but remained close to recent levels. In the week through April 19 there were 222,000 initial jobless claims, compared with 216,000 a week earlier. Economists polled by the Journal had been forecasting 220,000 initial claims.
The Bureau of Economic Analysis reported Wednesday that real gross domestic product fell at an annual rate of 0.3 percent in the first quarter of 2025, the first contraction since 2022. Meanwhile, the Federal Reserve’s preferred measure of inflation, the personal consumption expenditures price index, increased 2.3 percent year-over-year in March, down from a 2.5 percent annual rate one month earlier. After stripping out more volatile food and energy prices, core PCE increased at a 2.6 percent annual rate in March. Consumer spending grew 0.7 percent month-over-month, as Americans braced for tariff price hikes by purchasing durable goods.
U.S. consumer spending jumped in March while a key measure of inflation decelerated, a welcome reprieve before tariffs are expected to broadly drive up prices. Inflation-adjusted consumer spending climbed 0.7 percent last month, according to Bureau of Economic Analysis data out Wednesday. That was the most since the start of 2023 and suggested households spent aggressively to get ahead of new tariffs. Meantime, the Federal Reserve’s preferred inflation gauge – the personal consumption expenditures price index – stagnated from a month earlier for the first time in nearly a year. Excluding food and energy, the so-called core PCE was also unchanged, the tamest in almost five years. The ISM manufacturing index indicated expansion. The PMI was at 48.7 percent in April, down from 49.0 percent in March. The employment index was at 46.5 percent, up from 44.7 percent the previous month, and the new orders index was at 47.2 percent, up from 45.2 percent. “Woodstock for Capitalists” (a/k/a the Berkshire Hathaway annual meeting), kicked of yesterday in Omaha. Read and see CNBC’s coverage here.
Charts of the Week
I found the following articles to be of note. Some may be of interest only to advisors while others are aimed more broadly. You may hit paywalls below; many can be overcome here.
- This post will change your life (Joachim Klement)
- Who Are You Listening To? (Eric Soda)
- 35th Annual Retirement Confidence Survey (EBRI)
This is the best thing I’ve read recently. The best interview. The most important. The most mysterious. The most powerful. The most harrowing.
The effectiveness of ants at cleaning detritus off a rainforest floor at their scale can be hard to fully understand. Thanks to their biomechanics and the physiology of their mandibles and necks, ants can lift stuff more than 5,000 times their body weight, which again should probably make Ant-Man more interesting than he is, but here we are. Ants are responsible for 25 percent of the terrestrial biomass in tropical forests, again provoking the question of why Ant-Man lives in Manhattan. Their ability to move lots and lots of material is impressive: one nest can harvest two metric tons of leaves annually, which again, I guess would be even more impressive if Ant-Man specifically fought flora-based adversaries with leaf-based offensive equipment, instead of Thanos.
“The older generation had certainly pretty well ruined this world before passing it on to us. They give us this thing, knocked to pieces, leaky, red-hot, threatening to blow up; and then they are surprised that we don’t accept it with the same attitude of pretty, decorous enthusiasm with which they received it, way back in the 1880s.” ~ John F. Carter, Jr., The Atlantic (September, 1920)
Securities and advisory services are offered through Madison Avenue Securities, LLC, a member of FINRA and SIPC, a registered investment advisor. This report provides general information only and is based upon current public information we consider reliable. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment or any options, futures, or derivatives related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities, other investment, or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Diversification does not guaranty against loss in declining markets.
