Earnings season delivered good news, and trade tensions cooled—both helped lift markets last week. Let's take a look at the headlines that made a difference and what to watch in the week ahead.
What Helped Markets Last Week? Strong Earnings and Softer Trade Tensions
Markets got a welcome boost last week thanks to two things: stronger-than-expected earnings and signs of progress on U.S.-China trade issues.
Let's break it down:
- China eased tariffs on some U.S. products, including semiconductors and pharmaceuticals. This was a big shift from earlier in the week when tensions were running high.
- Earnings from major companies in sectors like health care, communication services, and tech came in better than expected. S&P 500 companies now show estimated earnings growth of 10.2% for the quarter, up from 7.2% the week before.
These developments helped calm recent market volatility and pushed the S&P 500 higher for the second time in three weeks.
Are U.S.-China Trade Talks Back on Track?
Not quite yet—but we're seeing some movement. Here's a quick summary:
- Earlier in the week, China warned it would fight back against any trade deal that hurt its interests.
- By midweek, U.S. officials suggested that talks with China were starting again.
- On Friday, China made a surprise move by cutting tariffs on some U.S. goods.
While formal trade negotiations haven't restarted, these steps could signal that both sides are inching toward progress. China is still a major trading partner, and easing tensions can have a big ripple effect on markets.
Market Volatility Is High—But That's Normal
Even with good news, market ups and downs are still happening. The Volatility Index (VIX) has averaged 33.67 this month, which is historically high. But keep this in mind:
"Volatility is the price of admission. The reward for long-term investing is earned through enduring short-term volatility." —Morgan Housel
This is a good time to revisit your financial plan. A diversified portfolio and clear long-term goals can help you stay on track no matter what the headlines say.
Economic Updates: What the Data Showed
Here's a snapshot of last week's key economic reports:
Mixed Results in Housing
- New home sales rose 7.4% in March, beating expectations.
- Existing home sales dropped 5.9%, their biggest monthly decline in years.
Durable Goods Orders Surprised to the Upside
- Orders jumped 9.2% in March, thanks largely to transportation equipment.
- Core orders (excluding transportation) were flat.
Business Activity Slowed Slightly
- The S&P Global U.S. Composite PMI for April came in at 51.2, down from 53.5 in March.
- Services slowed more than expected, while manufacturing showed a slight uptick.
Market Snapshot: Stocks Up, Yields Down
Stocks
Big names like Alphabet and Netflix posted strong earnings.
Health care also outperformed, with companies like Bristol Myers Squibb and Gilead Sciences beating expectations.
Bonds
The Treasury yield curve flattened, with short- and intermediate-term yields falling:
- 5-year Treasury: 3.89% (-5 bps)
- 10-year Treasury: 4.27% (-6 bps)
- 30-year Treasury: 4.74% (-7 bps)
What to Watch This Week
Looking ahead, we'll be watching several key data releases:
- Tuesday, April 29: Consumer Confidence Index for April—expected to decline for a fifth straight month.
- Wednesday, April 30: Advance GDP report for Q1—25. Growth is expected to slow but still stay positive.
- Wednesday, April 30: Personal income and spending reports for March.
- Friday, May 2: April employment report—economists expect hiring to slow, with about 130,000 new jobs.
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.