Weekend Update, May 5th, 2025
A GOAT Appears
Index, Sector & Asset Performance
U.S. equities closed the wild month of April strong despite tariff uncertainty and slower economic data surprises. The S&P 500 ended the week up +2.92%, ending at 5,686, logging nine consecutive positive days, its longest winning streak in 20 years. All major U.S. indexes posted gains on the week, spurred by easing US-China trade tensions, strong technology stock earnings, and a stable labor market. Even with the massive post “Liberation Day” stock market dump, the overall S&P 500 managed to finish April marginally down.
The S&P 500 Advance-Decline Line is at its highest level ever, which indicates that market internals are stronger than much of the financial media’s commentary. This type of strength supports the potential for a sustainable rally moving forward.
Industrials gained the most last week up +4.3%. HVAC and A/C companies, Carrier Global and Trane Technologies were up +19.1% and +14.8% respectively. GE Aerospace, the largest weighting in the XLI, was up +4.7%.
This morning, media stocks are declining after President Donald Trump announced on Sunday that he plans to impose a 100% tariff on films produced overseas, extending his restrictive trade policies on US imports to the entertainment sector for the first time. This is hitting prior leadership stock Netflix -5%, although this is off it’s closing Friday all-time high.
Berkshire Hathaway Inc. (BRK/A)is dropping -3% after Warren Buffett announced he will be stepping down as CEO of Berkshire Hathaway at year-end, with Greg Abel set to take over upon board approval.
A summary of last week’s returns ex-Gold, from FS Investments shows the tech heavy NASDAQ leading along with Asia. Almost all sectors and countries rose last week.
The 10-year Treasury yield rose +7 bps on the back of Friday’s jobs report. The good news is that the inflation component fell and the real growth component of interest rates rose. As a sign of the market’s renewed faith in a soft landing, the probability of a Fed rate cut in June fell from 55% to 30%.
Economic Indicators and Earnings Commentary
GDP declined -0.3% annualized q/q in Q1, its first quarterly decline since Q2 2022. However, the record widening of the trade deficit in Q1 was the leading contributor, subtracting almost -500 Bps from GDP as consumers and businesses looked to preempt the impact of tariffs. A pull-forward of demand for foreign goods in anticipation of tariffs pushed up imports.
Inventory investment was likely significantly understated. Look for this distortion to reverse in Q2 as imports measured decline sharply.
Friday’s jobs report was better with non-farm payrolls increasing 177,000, above the consensus estimate for 133,000. The average hourly earnings increase of 0.2% m/m and 3.8% y/y were below expectations, yet remain at levels supportive of continued consumer resilience.
On the earnings front, Microsoft jumped+11% on the week after Q3 results beat estimates, alongside Meta’s +9% rise, which reignited AI-driven spending optimism.
The Federal Reserve meets mid-week in a rare early month meeting. Look for Chair Powell to repeat his messaging and highlight the risks the tariffs pose to both sides of the bank’s mandate. The market is looking for 3 Fed funds rate cuts this year in July, September, and October.
Commodities and Currencies
Oil prices dropped ahead of the upcoming OPEC+ meeting, falling on demand concerns and production changes that hit over last weekend.
Gold has declined back toward $3,250 over the past couple weeks as investors have moved into risky assets.
Bitcoin had a sharp rally, climbing over +30% to surpass $97,000, the highest level in over two months.
The U.S. dollar looks to have troughed near 100, at peak US “Unexceptionalism,” down -10% from its December 2024 highs.
1Q25 earnings season continues this week with a slew of stocks still scheduled to report results, including PLTR, AMD, UBER, SHOP, DIS, F, MAR, RACE, ANET, CEG, OXY, COP, and VRTX.
Oak Harvest Weekly Stock Talk
Market Correction or Bear Market: A Stock Market G.O.A.T shows his face, Marty Zweig
Past performance is no guarantee of future results. Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. The preceding discussion is for informational purposes only. Investing involves risk and no reference to any security listed above should be considered a buy or sell recommendation. Advisory services are provided through Oak Harvest Investment Services, LLC, a registered investment adviser.
