Weekly Market Commentary

Stay up-to-date on markets and the economy with our latest weekly commentary report.

Read Time: 5 Min

May 16, 2025

Worldwide Headlines

  1. Tariff talk takes a back seat. President Trump was in the Middle East this week and plans to unilaterally set tariffs for many countries in the coming weeks. However, the economic reports released this week sharing April data showed reasonable economic activity, including lower than expected inflation reports and a solid employment market.
  2. U.S. markets react boldly. Over the past month in investment markets, it has been stocks over bonds, U.S. stocks over ex-U.S. stocks and a renewed focus on the technology sector of the S&P 500. By way of reference, the S&P 500 is now positive for the year after bottoming on April 8. This is considered good news for patient investors.
  3. Inflation is still contained and waiting. Both national inflation reports from April were released this week and were lower than expected. The Consumer Price Index was higher by 0.2% compared to the prior month when +0.3% was expected. The Producer Price Index was lower by 0.5% from the prior month when +0.2% was expected. In other words, the expected rising inflation rate from tariffs has yet to materialize but it is still early in the process.

Economic Reports

  1. NFIB Small Business Optimism Index reading for April was 95.8, which was slightly better than expected but still lower for four consecutive months and the lowest reading since its recent high of 105.1 last December.
  2. Consumer Price Index for April came in at +0.2% from the prior month and +2.3% from the prior year. Both numbers were slightly lower than expected. The CPI report showed a pullback in airfares and hotels, suggesting weaker demand for discretionary services. Used cars, trucks and apparel also fell. Grocery prices declined for the first time in almost a year, including the biggest drop since 1984 in egg prices.
  3. Retail Sales during April rose 0.1% from the prior month when flat was expected. Additionally, the prior month was upgraded from +1.4% to +1.7%. The thought now is that Americans over shopped ahead of the tariffs in the first quarter and are now cooling their spending. Inside the April report, only six of the 13 categories posted gains in spending.
  4. The Producer Price Index for April unexpectedly declined by 0.5% from the prior month (the largest decline in five years) when +0.2% was expected. Producer prices are now higher by 2.4% compared to a year ago. Food, energy and services costs all declined during the month.
  5. Industrial Production during April was flat, when +0.1% was expected. Of the three components in the report (manufacturing, utilities, mining) only utilities increased.
  6. Housing Starts during April totaled 1.361 million annualized when 1.364 million was expected. Building Permits for future activity totaled 1.412 million, below the estimate of 1.450 million. The housing starts number was higher than a month ago and led by a gain in multi-family home construction (apartments/condominiums). Builders have little incentive to ramp up production with the supply of new homes at a 17-year high of 503,000.
  7. Import Prices during April rose by 0.1% from the prior month and are also +0.1% from the prior year. This number will come more into focus with the tariffs.
  8. Weekly Initial Jobless Claims totaled 229,000, which was on par with the prior week and ahead of the weekly average so far this year of 222,900.
  9. University of Michigan Consumer Sentiment Index preliminary reading for May fell to 50.8, which is the second-lowest level on record (NOTE: June 2022 was this lowest reading at 50.0 in data going back to 1978). Nearly three-fourths of respondents mentioned concern about tariffs.

Markets this Week (mid-day Friday)

  1. U.S. Dollar Index is higher. DXY at 101.145 or +0.89% so far this week (1 yr. range = 98.278 to 109.956).
  2. Bond yields are higher. We see the 2-year Treasury yield up to 3.97%; 10-year gains to 4.43%.
  3. Stocks are also higher. All five major global stock indexes we track are higher on the week led upward by the S&P 500 over +4.50% on the week.
  4. Commodities are higher. Four of six sectors in Bloomberg Commodity Index are higher on the week, including Grains, Base Metals, Livestock and Energy.

Next Week

  1. Economic Reports
    • o Leading Economic Index, S&P Global/US PMIs, Existing Home Sales, New Home Sales
      • U.S. consensus QoQ real GDP est.: Q1 = -0.3%, Q2 = +0.9%, Q3 = +0.6%, Q4 = +1.1%
      • U.S. consensus YoY inflation est.: Q1 = +2.7%, Q2 = +2.9%, Q3 = +3.4%, Q4 = +3.5%
  2. Earnings Reports
    • Q1-2025 S&P 500 EPS estimate at the beginning of the period = +6.6%
    • Q1-2025 S&P 500 summary to date: 462 reported; 77% beat estimate; YoY EPS = +13.3%
    • S&P 500 YoY EPS estimates: Q1-2025 = +13.2%, Q2-2025 = +3.2%, Q3-2025 = +7.0%, Q4-2025 = +6.5%
  3. Events
    • Central bank meetings in Australia, Nigeria, Indonesia, o Qatar Economic Forum #5
    • G-7 finance ministers and central bank governors meet in Canada o Memorial Day is Monday, May 26 in U.S.

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