“The big money is not in the buying and selling, but in the waiting.”
-Charlie Munger
Here’s what you need to know this week:
· Stocks post strong gains and recoup most of the losses from earlier this month
· Markets prepare for the first wave of economic data since tariff talks began
Rebound
Stocks posted one of their best weeks of the year on renewed optimism surrounding tariff negotiations. The S&P 500 gained 4.5%, the NASDAQ gained 6.6%, and the Dow Jones posted a 2.5% gain[1]. These moves place all three indices within striking distance of regaining all the ground lost in the days following “Liberation Day”.
Last week’s gains were driven by two catalysts. The first was President Trump reversing his rhetoric regarding Federal Reserve Chairman Jerome Powell. You may recall that President Trump said two weeks ago that he was considering firing Powell and was exploring legal options on how to do so. However, last Wednesday Trump told reporters that “I have no intention of firing Powell” although he reiterated his belief that Powell needs to lower interest rates immediately[2].
The second catalyst was apparent progress on tariff negotiations with China, the main target of the trade war. President Trump told Time Magazine in an interview last Tuesday that he had spoken with Chinese President Xi Jinping and that his trade team was in active talks with Chinese negotiators. The Chinese Foreign Ministry denied that any talks have taken place[3]. However, import agencies in Shenzen, China, have quietly rolled back the 125% tariff rate on semiconductors, hinting that at least some progress has been made on tariff negotiations[4]. Both the US and China want to show a strong stance against each other, but it appears tensions may be beginning to thaw.
Report Card
Markets have been unusually quiet this week as investors await a slew of economic data. Later this morning we will receive two key economic reports: the Personal Consumption Expenditures (PCE) report for March and the Gross Domestic Product (GDP) report for the first quarter. The PCE report is the Federal Reserve’s preferred measure of inflation, and is expected to show annualized inflation at 2.2% and monthly inflation as completely flat[5]. While this is an encouraging inflation report, this report will not include the impact of tariffs because they were not announced until April 2nd.
The first quarter GDP report also works on a lag but may provide insight into the impact of tariffs as corporations began battening down the hatches ahead of the tariff announcement. Economists expect the GDP report to show annualized economic growth of 0.3%, a sharp decline from the 2.4% rate from 2024[6].
Friday will bring a stronger economic indicator of the tariff impact with the nonfarm payrolls report (NFP) for April. Analysts expect to see a gain of 138,000 jobs which while positive is a notable decline from March’s gain of 228,000 jobs[7]. This report also moves on a lag, so investors have been looking ahead to secondary data for clues as to the impact of the trade war.
One area that has been closely analyzed as an early indicator is port activity. The Port of Los Angeles is the largest US port for imports from Asia and this port is already showing signs of disruption. The week of April 20th showed a major spike compared to 2024 which most analysts believe reflects importers rushing to deliver products before the tariffs take effect. The next three weeks’ scheduled volume has plummeted:
Ports in Seattle and Houston have also reported significant drop offs in scheduled deliveries. It is still too soon to know the full impact of tariffs or even the threat of tariffs and we likely won’t see concrete data until the end of next month. Until then investors will keep looking for clues.
What Else
· Liberal candidate Mark Carney officially won the Canadian election for Prime Minister
· Pope Francis was laid to rest on Saturday after passing away at the age of 88
· Former Congressman George Santos was sentenced to 87 months in prison after being convicted of wire fraud and aggravated identity theft
· The Iberian Peninsula (Spain and Portugal) lost power in a massive power outage on Monday; officials are still investigating the cause
· The murder trial of Luigi Mangione, accused of killing UnitedHealth CEO Brian Thompson, began last week
· The price of gold has fallen nearly $200/oz to $3,300/oz after notching multiple all-time highs this year
· The OKC Thunder swept the Memphis Grizzlies 4-0
What We’re Reading
More than twenty side mirrors and car windows have been vandalized across the New England town of Rockport, Massachusetts over the past few weeks. The vandal: a large pileated woodpecker. Click below to read about this avian crime spree and see pictures of culprit, who still remains at large:
What’s Happening Downtown
The Hispanic Chamber of Commerce is hosting a Cinco de Mayo Festival at Scissortail Park this Friday, May 2nd. The event runs from 3:00 – 10:00 PM, is free to attend, and will feature music and dance performances as well as food stalls and trucks. Click below to learn more:
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, Brandon Ingerson, Jenni Hess
Sources: [1] Yahoo! Finance [2] Yahoo! Finance [3] NYT [4] CNN [5] Yahoo! Finance [6] CNBC [7] Yahoo! Finance