Key Points
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The stock market started May on a positive note due to positive tech earnings.
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Wall Street is also satisfied with increased consumer spending ahead of tariffs.
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The bad GDP data yesterday has been offset by the positive earnings.
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The stock market plunged yesterday after the Q1 GDP report showed that the economy contracted by 0.3% (annualized). This was positive at 2.4% a quarter before, but Wall Street wasn’t startled for too long as data showed cooling inflation and soaring consumer spending. The latter is likely due to consumers buying more to avoid tariffs, but the positive macro data offset the bearish data from the GDP report.
Consequently, the stock market was positive yesterday. The showing is strong today as well, since earnings from several companies came in better than expected. Tech earnings have been especially solid. Not only that, but there has also been reassurance from some Federal Reserve members that the Fed would step in if the economy cooled down significantly. The S&P 500 could mark its eighth consecutive gain today.
Here’s a market update as of 10:00 A.M (ET) today.
- The S&P 500 is up 42.24 points, or 0.76%.
- The Nasdaq Composite is up 287.46 points, or 1.64%.
- The Dow Jones Industrial Average is up 183.01 points, or 0.45%.
Uncertainty Lingers On
Wall Street is still uncertain about the long-term outlook due to tariffs on China sticking around. The increase in consumer spending is due to tariffs and could come down, and while core inflation has come down in the latest read, it could rise again as tariffs start to bite. Companies still have some inventory due to a build-up ahead of tariffs, so there haven’t been sharp price increases across the board just yet.
“Core inflation will inevitably rebound sharply in the coming months,” according to Harry Chambers from Capital Economics.
The stock market is still erratic, but most of it is due to tariff-related problems. A full recovery is unlikely without tariff agreements with China and other countries, especially before inventories run out. According to President Donald Trump, there is a “very good probability we’ll reach a deal with China.” The US Senate also rejected a bipartisan measure to block the president’s tariffs.
Trump made the following notable comments yesterday:
- “…need to give us a little time to get moving.”
- “…engaging with numerous nations currently.”
- “…plans to support businesses in the upcoming weeks.”
- “…tax bill will include retroactive expensing to January 20.”
- “…tariff wall imminent.”
- “I comprehend interest much better than Powell.”
- “…interest rates should decrease.”
Macros
- Initial Jobless Claims 241,000 vs. 223,000 estimated.
- US S&P Manufacturing PMI Actual at 50.2 vs. the 50.5 forecast.
- US Continued Jobless Claims Actual at 1.916 million vs. the 1.8645 million forecast.
- ISM Manufacturing PMI at 48.7 vs. 47.8 estimated.
- US ISM Factory Production gauge dropped to the lowest since May 2020.
- US ISM Manufacturing New Orders Actual at 47.2 vs. the 45 forecast.
- US Construction Spending Month-Over-Month at -0.5% vs. the 0.2% forecast.
- US ISM Manufacturing Employment Index at 46.5 vs. the 44.6 forecast.
- US ISM Manufacturing Prices Paid Actual 69.8 vs. the 73 forecast.
Other Assets
- Gold is down 2.7% to $3,228.7/oz.
- Crude Oil Futures are down 1.4%.
- Natural gas futures are up 1%.
- Bitcoin is up 1.9% to $96,094.
The image featured at the top of this post is ©Openverse.