Everything to Know about Macro and Markets
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 benchmark index liberated itself from all of the tariff-related losses it had suffered since April 2, aka “Liberation Day.” It also marked the first back-to-back weekly gains of over 2% since October 2022, and posted a record-setting nine-day rally, totaling a 10.2% gain. Still, all major indexes remain negative year-to-date.
A Big Week for Big Tech
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.
With more than 70% of constituents now reported, earnings surprises have spanned sectors, led by Health Care. Yet, investor focus has squarely been on Big Tech. 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.
Economic Outlook Still Uncertain
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.
As opposed to stock markets, the economy is a slow-moving machine, and working through higher costs like tariffs will take time. 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 as it weighs the impact of tariffs on growth and inflation.
Stocks That Made the News
▣ Microsoft (MSFT) and Meta Platforms (META) surpassed analyst estimates, with growth fueled by strong demand for cloud services and AI infrastructure, and issued strong guidance, confirming continued AI-related capex.
▣ Apple (AAPL) and Amazon (AMZN) also reported top- and bottom-line numbers that beat analysts’ expectations. However, Apple’s results were overshadowed by weakness in its China business and the anticipated surge in costs as a result of tariffs, while a $10 billion decrease in its buyback plan added to investor jitters. Meanwhile, Amazon’s cloud growth slowed and outlook disappointed, with the company saying it’s bracing for a tougher business climate in the coming months, particularly in its retail segment.
▣ Berkshire Hathaway ($BRK.B) reached a new all-time high ahead of its annual meeting in Omaha on Saturday. However, everything will be on the cards for the stock when the trading opens on Monday after the meeting brought unexpected news – including for the company’s executives. Warren Buffet, aka “the Oracle of Omaha,” who built Berkshire into the empire it is today, announced he will step down as CEO at year-end, with Greg Abel – long-slated for the role – set to take over upon board approval.
Upcoming Earnings and Dividend Announcements
The Q1 2025 earnings season is past its peak, but many earnings releases are scheduled for the next few days. Reports in focus this week are coming from Palantir Technologies (PLTR), Advanced Micro Devices (AMD), Arista Networks (ANET), Constellation Energy (CEG), Super Micro Computer (SMCI), Novo Nordisk (NVO), Uber Technologies (UBER), Walt Disney (DIS), AppLovin (APP), Vistra Energy (VST), Coinbase Global (COIN), and Cloudflare (NET).
Ex-dividend dates are coming this week for Oneok (OKE), Citigroup (C), Metlife (MET), Energy Transfer (ET), Pfizer (PFE), IBM (IBM), and other dividend-paying firms.
For additional exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.