Market Update: April 28, 2025
Economic data included a rise in durable goods orders and new home sales. On the negative side, existing home sales declined, as did consumer sentiment and the index of leading economic indicators.
Stocks saw gains globally last week, with some further optimism about U.S. trade deals coming to pass, including a de-escalation of U.S.-China tensions, and a walkback of the President’s threat to fire the Chair of the Federal Reserve. Bonds fared positively along with falling yields, related to some reduction in inflation fears. Commodities were mixed, with energy falling with high supply and gold flows pulling back as global tensions abated a bit.
U.S. stocks rose sharply last week, despite Monday starting off poorly, with the President’s comments about firing Fed Chair Powell causing some consternation, as noted earlier. In typical recent back-and-forth fashion, Tuesday saw a recovery along with a quick walkback on the Powell firing talk, along with Treasury Secretary Bessent’s comments that alluded to tariff de-escalation, with current levels at an “unsustainable” path. There were further hints that the 145% rate on China won’t persist as the administration expects to reach a deal “in the very near future,” and the President intending to be “very nice” to China.
By sector, gains were strongest in technology (widespread, with hopes for progress on trade deals) and consumer discretionary (largely Tesla, despite weaker earnings, but apparently due to Elon Musk announcing that he’ll spend more time with the company than DOGE), with each rising over 7%, while defensive consumer staples lagged with a decline of a percent. Real estate was little changed for the week. The positive news is that the S&P 500 has rebounded by 11% from the most recent Apr. 8 low point when it had fallen -19% from the Feb. 19 peak, almost a bear market, although the index is still down -10% from the peak.
Earnings continue to roll in, with just over 35% of companies in the S&P 500 now having reported, per FactSet. Three-quarters have noted a positive earnings surprise, with blended Q1 year-over-year earnings growth upgraded to now over 10%, although expectations for Q2 have fallen from over 9% to now 6%. The strongest gains have come from health care (over 35%), communications (over 20%), and tech (over 15%), while energy and materials continue to show negative results.
Foreign stocks also experienced gains, led by Europe and Japan, slightly beating also-positive results in the U.K. and emerging markets. As in the U.S., hopes for a reduction in trade tensions fueled stronger sentiment as recession fears waned, although odds still appear to remain higher in Europe than in the U.S., as noted by the ECB’s own economists. By country, EM was led by substantial recovery gains in Brazil, China, and Mexico.
Bonds also saw gains last week, with improved sentiment over tariffs pointing to perceptions of perhaps lower inflation and lower chances of recession. High yield and floating rate bank loans gained a percent, as spreads contracted during the week. Foreign bonds were mixed with a rising dollar holding back developed market debt, while emerging market bonds fared positively along with general risk-taking.
Commodities were mixed for the week, with gains in industrial metals and agriculture offset by declines in energy and precious metals. Crude oil fell by over a percent to $63/barrel, with mixed messages about global demand with an uncertain U.S.-China trade path forward, as well as progress toward a U.S.-Iran nuclear deal. Natural gas prices corrected by nearly -9% with warmer temperatures on the heels of waning winter heating demand and higher inventories.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.