Strong corporate earnings and continued job growth helped lift markets last week—even as consumer confidence slipped again. A major development on the international front also made headlines: China granted tariff exemptions for about $40 billion in U.S. goods. This could be a step toward more stable trade relations.
Let’s break it all down.
What’s Behind the Market’s Recent Gains?
Despite mixed headlines, several positive signals helped the market finish higher for the third time in four weeks:
- Tech companies beat earnings expectations—especially in cloud and AI-related businesses.
- The U.S. added 177,000 jobs in March, beating the forecast of 138,000.
- Consumers kept spending, even though confidence dipped.
While headlines pointed to a drop in consumer sentiment, data showed many people are still opening their wallets. Visa reported a 7% jump in payment volume year-over-year, and March’s personal spending rose more than expected.
Why Are People Worried About Consumer Confidence?
The Conference Board’s Consumer Confidence Index dropped again in April, hitting its lowest point since 2020. That’s five months in a row of declining sentiment.
So what’s going on?
- Many households are concerned about job stability and income.
- Slowing economic growth—especially due to a surge in imports—has people feeling cautious.
Still, the spending data tells a more upbeat story. It’s a reminder that what people say in surveys doesn’t always match their behavior.
What’s Happening With Trade and the Global Economy?
There was a sharp drop in shipments from China to U.S. ports—but it’s not all bad news. Earlier this year, U.S. imports from China reached their highest levels since 2018. So, this recent dip could be caused by businesses adjusting supply chains because of changing tariff rules.
More importantly, China’s move to exempt $40 billion in U.S. goods from tariffs is a welcome change and could signal improved trade relations going forward.
Tech Leads the Way With AI Investment
Two major tech firms posted better-than-expected earnings and reaffirmed plans to invest in AI infrastructure. Investors welcomed this news, viewing it as a sign of long-term growth potential.
For those watching the markets, AI continues to be a powerful theme—and it’s helping drive optimism in the tech sector.
Interest Rates and the Bond Market
Bond yields moved slightly higher last week:
- 2-year Treasury: up 8 basis points to 3.84%
- 10-year Treasury: up 6 basis points to 4.32%
- 30-year Treasury: up 6 basis points to 4.80%
This reflects a cautious but steady outlook as we await the Federal Reserve’s next move.
Key Economic Reports From Last Week
Here’s a quick look at what came out:
- Consumer Confidence (April): Fell to 86.0 from 93.9
- GDP (Q1 estimate): Dropped 0.3% annualized
- Personal Spending (March): Rose 0.7%
- Jobs Report (April): 177,000 new jobs added
These mixed signals show the economy is still growing, though not without some bumps.
What to Watch This Week
Here’s what’s coming up:
- Monday, May 5: ISM Services Index (measures business confidence in the service sector)
- Tuesday, May 6: U.S. trade balance data
- Wednesday, May 7: FOMC Meeting—the Federal Reserve is expected to hold interest rates steady
- Thursday, May 8: Wholesale inventory data for March
All eyes will be on the Fed’s announcement midweek. Even if they hold rates steady, their comments could impact market expectations for the rest of the year.
What This Means for Investors
The economy is giving us mixed signals—lower consumer confidence, but higher spending and job growth. Tech companies continue to invest in AI, trade tensions may be easing, and markets have responded with cautious optimism.
As Charles Schwab’s Liz Ann Sonders put it:
“Neither get in nor get out is an investing strategy; that’s just gambling on moments in time.”
If you’re unsure about how current trends affect your financial plan, this is a great time to check in with your financial advisor. Staying aligned with your long-term goals is always a smart move.
Tom Hine is a CERTIFIED FINANCIAL PLANNER® professional and owner of Capital Wealth Management. With over 30 years of experience, Tom works with individuals and families on financial planning, retirement strategies, and investment management. He has a particular passion for special needs financial planning, shaped by his personal experience helping raise his sister Amy, who was born with a severe chromosomal condition. Tom understands the emotional and financial challenges that come with caring for a loved one with disabilities and helps clients navigate complex issues like preserving government benefit eligibility, coordinating Special Needs Trusts and ABLE accounts, and long-term care planning. With offices in Glastonbury and Wilton, CT, Tom serves clients across Connecticut and throughout the U.S. Schedule a complimentary introductory meeting with Tom.
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.
This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete, it is not a statement of all available data necessary for making an investment decision and it does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice.