Presented by Mark Gallagher
Strong earnings and hiring data helped ease concerns around softening consumer sentiment last week. In a notable development, China granted tariff exemptions on roughly $40 billion in U.S. goods—an encouraging sign for trade stability. The S&P 500 posted gains, marking its third positive week in the past four.
Quick Hits
- Beyond the headlines: Resilient earnings and hiring offered optimism amid worries.
- Report releases: Consumer confidence fell in April despite better-than-expected personal spending and jobs reports for March.
- Financial market data: Technology and consumer discretionary firms rallied on hints of progress between the U.S. and China.
- Looking ahead: The highlight will be this week’s Federal Open Market Committee (FOMC) meeting.
Keep reading for an in-depth look.
Beyond the Headlines: Resilient Earnings and Hiring Offer Optimism Amid Worries
Markets opened the week with positive momentum, building on encouraging signs from the previous week. Strong corporate earnings and easing trade tensions gave investors a sense of relief.
One of the early headlines focused on a sharp drop in shipments from China to U.S. ports. Gene Seroka, executive director of the Port of Los Angeles, noted that many major retailers are halting shipments from China due to rising tariffs. Although that sounds concerning, it’s important to view it in context. U.S. imports from China reached their highest level since late 2018 earlier this year. These fluctuations likely reflect businesses adjusting supply chains in response to shifting trade policies rather than a clear, sustained decline.
Tuesday brought a shift in tone as consumer confidence declined for the fifth consecutive month, falling to its lowest level since 2020. Concerns about job prospects and income are weighing on sentiment. Credit card giant Visa offered a more optimistic data point: payment volume on its network rose 7 percent year-over-year, suggesting consumers are continuing to spend.
On Wednesday, we got a deeper look at consumer behavior. Personal spending for March rose 0.7 percent, exceeding expectations. First-quarter GDP, however, fell at a 0.3 percent annual rate as imports far outpaced exports, dragging down overall growth. Part of the spending slowdown was tied to disruptions from January wildfires in California.
Despite mixed economic data, earnings from major technology firms lifted market sentiment. Two of the largest tech firms beat expectations. Cloud business grew faster than forecast, and companies reaffirmed their commitment to investing in artificial intelligence (AI) infrastructure—a key growth theme driving equity markets in recent years. Continued investment in this space is seen as a positive signal for future innovation and business spending.
The week ended with a blend of caution and optimism. Manufacturing sentiment remained in contraction territory, though the data was better than feared. On Friday, the job market delivered a strong upside surprise: the U.S. added 177,000 jobs in March, well above the forecast of 138,000.
In summary, while consumer confidence has softened, actual spending and hiring remained resilient. Shifting trade dynamics are creating volatility in import data, but that may balance out in coming quarters. Importantly, companies are continuing to invest in long-term growth areas such as AI, which supports a more constructive outlook for equities.
As Liz Ann Sonders of Charles Schwab wisely noted, “Neither get in nor get out is an investing strategy; that’s just gambling on moments in time.”
If you’re feeling uncertain, now is a great time to speak with your financial advisor to ensure that your portfolio remains aligned with your long-term goals.
Report Releases—April 28–May 2, 2025
Conference Board Consumer Confidence Index: April (Tuesday)
Consumer confidence fell more than expected, marking five consecutive months with falling confidence.
- Expected/prior month consumer confidence: 88.0/93.9
- Actual consumer confidence: 86.0
Advanced Estimate of Annualized GDP: First Quarter (Wednesday)
Economic growth slowed more than expected in the first quarter. Net exports were the primary detractor from overall economic growth due to a surge in imports.
- Expected/prior quarter GDP growth: –0.2%/+2.4%
- Actual GDP growth: –0.3%
Personal Spending and Personal Income: March (Wednesday)
Personal income and spending grew slightly more than expected.
- Expected/prior personal income monthly change: +0.4%/+0.7%
- Actual personal income change: +0.5%
- Expected/prior personal spending monthly change: +0.5%/+0.1%
- Actual personal spending change: +0.7%
Employment Report: April (Friday)
The employment report showed continued healthy levels of job growth, with 177,000 jobs added during the month.
- Expected/prior change in nonfarm payrolls: +138,000/+185,000
- Actual change in nonfarm payrolls: +177,000
The Takeaway
- In April, consumer confidence dipped lower than expected as consumers expressed concern about job availability and income levels.
- Personal spending and job growth beat expectations in March.
Financial Market Data
Equity
| Index | Week-to-Date | Month-to-Date | Year-to-Date | 12-Month |
| S&P 500 | 2.94% | 2.12% | –2.91% | 13.80% |
| Nasdaq Composite | 3.43% | 3.05% | –6.71% | 14.33% |
| DJIA | 3.00% | 1.59% | –2.39% | 10.03% |
| MSCI EAFE | 3.18% | 1.45% | 13.68% | 14.65% |
| MSCI Emerging Markets | 3.38% | 1.86% | 6.32% | 10.82% |
| Russell 2000 | 3.24% | 2.89% | –9.02% | 1.59% |
Source: Bloomberg, as of May 2, 2025
U.S. equities moved higher for the second consecutive week. Tech earnings, a better-than-expected jobs report, and continued easing of trade tensions with China helped push the market higher. The week started with a couple of negatives: falling consumer confidence and a negative advance estimate of first-quarter economic growth for the U.S. Earnings showed a continued commitment to AI infrastructure spending, which was welcomed by investors. We saw continued easing of tariffs, with China allowing an estimated $40 billion in U.S. goods into the country without applying reciprocal tariffs.
Fixed Income
| Index | Month-to-Date | Year-to-Date | 12-Month |
| U.S. Broad Market | –0.60% | 2.37% | 6.36% |
| U.S. Treasury | –0.38% | 2.70% | 6.12% |
| U.S. Mortgages | –0.72% | 2.51% | 6.97% |
| Municipal Bond | –0.95% | –0.88% | 1.58% |
Source: Bloomberg, as of May 2, 2025
The Treasury yield curve lifted, with the short and long end moving incrementally higher. The 2-year increased 8 basis points (bps) to close at 3.84 percent, the 10-year rose 6 bps to 4.32 percent, and the 30-year climbed 6 bps to 4.8 percent.
The Takeaway
- Equities moved higher on earnings, a solid jobs report, and easing trade tensions.
- The Treasury yield curve lifted, with yields rising 6–8 bps.
Looking Ahead
The focus this week will be on business confidence, the U.S. trade deficit, and wholesale inventories. The highlight, however, will be the midweek FOMC meeting.
- On Monday, the ISM Services index for April will be released. Service sector confidence is expected to fall for the second consecutive month.
- The U.S. trade balance report for March will be released Tuesday. Expectations are for a slight decrease in the deficit from February.
- On Wednesday, the FOMC will make its rate decision. The Federal Reserve (Fed) is expected to keep short-term interest rates unchanged.
- Finally, on Thursday, wholesale inventories for March will be released. Inventories rose 0.5 percent in the previous month.
Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.
Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent. One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.
Authored by the Investment Research team at Commonwealth Financial Network®.
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