Weekly Recap:

by Michael P. Reinking, CFA & Eric Criscuolo

Published on 05/09/25

Last weekend, at Berkshire Hathaway’s annual shareholder meeting, Warren Buffett announced he would be stepping down as CEO at the end of the year. Perhaps it was poetic then, that on Monday, the S&P’s streak of nine straight days of gains came to an end. It was the longest streak since 2004.

While all things must come to an end, hope springs eternal and the MAC Desk tortures cliches. For equities, that hope is centered mainly on trade. Stocks managed to repair the violent hit they took from Liberation Day in relatively short order. At the close of trading last Friday, May 2, the S&P 500 had recouped all of its tariff-related losses that triggered after President Trump’s Rose Garden announcement…April 2.  More poetry. 

Much of that repair has come from the administration going from “all gas no break”, to “maybe slow down a bit there’s a speed trap coming up”. The tariff pause was huge and calmer rhetoric following that has done much of the work. Now the hope is pivoting to tangible progress. Things like actual trade deals. Which brings us to this week.

Equities ended the week lower, with the S&P 500 down 0.5%. Three days down, two days up, less than 1% daily change each day. The S&P equal-weight outperformed, up 0.2% with value and smid caps beating large/mega caps and growth. Volatility has come down. The ICE MOVE index fell below 100 for the first time since March 28 (but looks to close just above it today) and the VIX is just below 22, back to where it was before Liberation Day. 

The major headlines for the week were taken by the Fed rate decision (to wait), an actual trade deal (sort of) and news of a high level meeting between the US and China this weekend, finally. We'll get into these a moment.

After regaining the 50-day average at the end of last week, the S&P made a move toward the 200 day on Thursday but couldn't quite get there. We closed today a little lower and sit between the two averages, just below 5700.

This week was also the peak in the earnings cycle and it continued the trend of generally solid if unspectacular results. Good numbers from the previous few weeks already allayed the worst fears of investors, so the upside from this week’s reports was likely capped. Until we start to hear from major retailers and Nvidia over the next couple of weeks this is having less of a market impact. According to FactSet, with 90% of companies in the S&P 500 having reported, 78% have beat EPS estimates, above the 5 and 10-year averages of 77% and 75%, respectively. 62% are beating topline estimates. which is below the 5 and 10 year averages of 69% and 64%. So, it's not all roses, but not skunk cabbage either.

Taking a look at the sectors, Industrials and Discretionary were the leading sectors this week. Electrical equipment names (Rockwell +16%, Generac/Eaton/Emerson +4 to 6%), Airlines, and Machinery were particularly strong for Industrials. For Discretionary, auto and auto parts performed well. Restaurants, Travel and Leisure were mixed: casual dining was down while cruise lines and gaming names were up, as was luxury apparel on solid Tapestry earnings and guidance.

Healthcare struggled this week. Biopharma got hit on several fronts: on the micro level from a few negative earnings reactions, and from the macro level as well. President Trump is expected to sign an Executive Order next week to pursue Most Favored Nation drug pricing. The appointment of outspoken critic Vinay Prasad as director of the FDA’s Center for Biologics Evaluation and Research also didn’t sit well with the sector.

For Comm Services, it was very appropriate for Disney to post solid earnings and strong performance during this, Star Wars week (May the Fourth). However Alphabet’s struggles around its anti-trust trial took the sector lower overall.  

The trade news was centered on two announcements. Treasury Secretary Bessent will lead a delegation to meet with Chinese counterparts this weekend in Switzerland. I'll give you three guesses what the topic will be, and it's not the merits of tankless water heaters. Futures exploded higher when the news release hit on Tuesday night, but the S&P ended the day only up 0.4%.

The administration finally put one on the board on Thursday, sort of, when it announced a trade deal with the UK, a country which was not subject to the additional reciprocal tariffs. The agreement is more of a framework, rather than a full, final deal, as many details still need to be hashed out. The 10% baseline tariff would remain in place and barriers for US goods including agriculture, chemicals and energy would be removed. The UK will receive exemptions on 100k exported autos, Rolls Royce engines and a lowered rate on steel. The S&P jumped about 1.5% during the press conference but came off those levels, finishing Thursday up 0.6%.This likely sets some precedent for future negotiations but the fact it came with maybe our closest ally and one that was only at baseline tariffs maybe negates using it as a template.

President Trump also met with Canadian PM Carney on Tuesday. He teased a “very, very big” announcement to come, likely by Monday and ahead of his Middle East trip next week.  

The major macro event this week was the Fed's rate decision and press conference. You can find our recap, including Guns N' Roses lyrics,here. The policy rate was left unchanged as widely expected, and the Fed remains very much in wait-and-see mode. Chairman Powell acknowledge the rising risks to both sides of their dual mandate but also the uncertainty. The economy is in a good place and the Fed is well positioned to respond to potential developments according to Powell. After some back and forth swings, the S&P closed right around the levels it was at just before the press release. Probabilities for a June rate cut are around 17%, down from 34% a week ago and 60% a month ago. ,

The ISM Services PMI helped sentiment when it came in above estimates and the prior month. New orders moved higher and employment improved though remained in contractionary territory. Inventories continued to steadily build and the prices component hit its highest level since early 2023.

The jobs data continues to be strong, and since that is one of the two mandates of the Federal Reserve it has kept the Fed on the sidelines, to the aggravation of our President. This week's jobless claims came in slightly lower than estimates and fell from last month as the NY school calendar anomaly reversed. Continuing claims were down from last week as well, and below consensus.

Treasury yields finished the week up about around 10bp. The 2 and 10-year jumped 10bp Thursday morning during the UK trade deal press conference when the market had a large risk-off move. The 10yr-2yr spread is ~50bp, the widest since February 2022, when the spread was in the process of collapsing into negative territory as the Fed quickly raised rates to combat inflation.

Global Markets - ended the week mixed.

Commodities - Commodities were mixed

Both high yield and investment grade credit spreads tightened modestly throughout the week.

The meeting between the US and China in Switzerland this weekend is the big event. There's an expectation that has built up for some kind of tangible result from the meeting, like an announced tariff cut, posing downside risk if nothing materializes. To that end, Trump posted on social media today that he was open to significantly lowering the 145% tariffs on Chinese imports, writing “80% Tariff on China seems right! Up to Scott B,”  Just in time for Bessent's meeting. Ball's in your court Scotty B!

Speaking of Bessent, in a letter today to Speaker Mike Johnson he urged Congress to increase or suspend the debt ceiling by mid-July, as the government's cash and extraordinary measures could be exhausted by then. It's a giant part of ongoing budget talks, which will become more of an issue for markets in the coming weeks.  

CPI for April (Tuesday) will be important after the Fed stayed in wait-and-see mode this week and the survey-based measures of inflation expectations continue to be well-above the Fed target. Earnings will continue to be a major focus though we’re past the peak of the cycle. Some important consumer-focused names, headlined by Walmart, in addition to Simon Property, Sony and Dillards. Tech names will still be reporting, including Cisco, Alibaba, Applied Materials and Tencent. Deere reports Thursday in a look at the agriculture and construction end-markets.

Sell-side conferences awaken from their slumber next week, which could should provide incremental insight into emerging trends that hadn't hit yet when companies closed their books March 31. Bank of America Healthcare and Transportation, Airlines, and Industrials conferences, JPMorgan TMT and the Wells Fargo Financial Services take place next, among others.

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