Stocks rose for a second straight week, with the S&P 500 (SPX) gaining 2.92%, the Dow Jones Industrial Average (DJIA) ending the week with a gain of 3%, up 3%, and the tech-heavy Nasdaq-100 (NDX) surging 3.45%. The S&P 500 notched its longest daily rally in over two decades, driven by robust tech earnings, progress in tariff negotiations, and continued strength in the job market.
The two main forces that had pressured stocks – tariff uncertainty and concerns about the sustainability of the AI-led rally – began to ease, at least for now. The Q1 earnings season has been by-and-large positive, with over 75% of reporting S&P 500 companies beating EPS estimates.
Microsoft and Meta Platforms reignited investor optimism last week, beating expectations and, more importantly, issuing bullish guidance while maintaining aggressive AI-related capex plans. That momentum lifted a broad range of AI hardware and infrastructure stocks, as well as adjacent plays like power producers and electronics suppliers.
This optimism from pure-play tech giants overshadowed signs of trouble in the outlooks of more consumer-facing companies such as Apple and Amazon, both already feeling the impact of the trade spat with China and bracing for an impending consumer pullback amid an economic slowdown. They join a growing list of retailers and consumer goods firms slashing or withdrawing guidance, citing rising costs from tariffs and weakening demand.
Although the worst of the tariff uncertainty seems to be behind us, with the markets apparently making peace with a new tariff regime, the impacts of the Trump administration’s trade policies on the U.S. economy are just beginning to trickle in. Although the unexpected Q1 2025 GDP contraction shook sentiment, it was the result of companies front-loading orders ahead of anticipated tariffs and is expected to be reversed in the second quarter. Meanwhile, the economy’s underlying metrics remained sound, as confirmed by the stronger-than-expected April jobs report, with job gains at their strongest since May 2023.
While stock markets are increasingly optimistic about de-escalating trade tensions, consumers seem less convinced. Consumer sentiment fell in April for the fourth month in a row, reaching levels not seen since the pandemic era, as households brace for tariff-induced price increases. However, elevated consumer inflation expectations, coupled with the job market’s strength, may keep the Fed on hold longer from acting as it weighs the impact of tariffs on growth and inflation.
Three Economic Events
Here are three key economic events that could affect your portfolio this week. For a full listing of additional economic reports, check out the TipRanks Economic Calendar.
» April’s ISM Services PMI – Monday, 05/05 – This report reflects business conditions in the U.S. services sector, which accounts for over 70% of GDP. The ISM Services PMI is a key leading indicator, helping analysts anticipate shifts in economic momentum, as changes in its components often precede broader economic trends.
» April’s S&P Global Services PMI – Monday, 05/05 – This report offers an alternative perspective on the U.S. services sector. Unlike ISM, S&P Global’s survey includes a wider spectrum of private-sector firms, including small and mid-sized enterprises. It places greater emphasis on output and business expectations, whereas ISM focuses more on actual spending and activity. Together, the two reports provide a more comprehensive view of the sector’s health.
» March’s Consumer Credit Change – Wednesday, 05/07 – This report measures the monthly change in total outstanding consumer credit, excluding mortgage debt. It provides insight into how much consumers are borrowing to finance spending on goods and services. Rising consumer credit can signal strong consumer confidence and robust household spending, while declines may indicate caution or financial strain.
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