📈 Weekly Market Recap | Economic Data & Market Drivers
Stocks Climb as Trade Sentiment Improves
U.S. equities moved higher this week, buoyed by growing optimism surrounding global trade. Reports signaling potential progress in U.S.–China negotiations and other trade discussions helped shift market sentiment. Additionally, remarks from President Biden softening recent criticism of the Federal Reserve Chair appeared to ease investor concerns, contributing to broader market stability.
The Nasdaq Composite led the charge with a strong rebound, while small- and mid-cap stocks extended their winning streak to a third consecutive week. Lighter trading volumes, noted by several desks, may have reflected a “wait-and-see” tone as investors navigated earnings season and policy developments.
Corporate Earnings Beat Boosts Confidence
Earnings season added fuel to the rally, with a majority of early Q1 results exceeding expectations. According to preliminary estimates, nearly three-quarters of S&P 500 companies that have reported so far have delivered earnings surprises on the upside. This earnings momentum likely helped underpin risk appetite even in the face of mixed macroeconomic data.
U.S. Business Growth Slows Sharply
S&P Global’s flash PMI release for April showed a notable deceleration in overall U.S. business activity — the slowest pace in 16 months. While manufacturing surprisingly ticked up (50.7 vs. 50.2 prior), service sector growth slumped, pulling the composite index down to 51.2 from 53.5. Notably, input and output price pressures picked up, reflecting continued cost pass-throughs and tariff effects.
Forward-looking sentiment weakened, with optimism falling to levels last seen in mid-2022. Manufacturers were slightly more upbeat than service providers, supported in part by hopes for more favorable policy tailwinds.
Durable Goods Surge on Transportation Spike
March data from the Census Bureau showed a 9.2% jump in durable goods orders — the third consecutive monthly increase. The headline print was lifted by a sharp rise in transportation equipment orders, led by a surge in commercial aircraft demand. However, excluding transportation, orders were flat, suggesting underlying business investment may be slowing amid policy and economic uncertainty.
Housing Market Struggles Under Pressure
In real estate, existing home sales fell 5.9% in March, hitting their lowest level for that month since 2009, according to the National Association of Realtors. High mortgage rates and affordability constraints continue to weigh on activity. That said, historically low mortgage delinquencies suggest underlying market health remains intact, despite the volume decline.
Consumer Sentiment Drops Again as Inflation Worries Mount
Consumer sentiment dipped for the fourth consecutive month in April, with the University of Michigan’s index falling 8% from March. Short-term inflation expectations surged to 6.5% — the highest since 1981 — as consumers expressed growing concern about trade disruptions and the potential return of elevated inflation.
Treasuries Rally Amid Growth Concerns
U.S. Treasury yields moved lower across the curve, helping bond prices edge up as markets priced in the risk of slowing growth. Long-term maturities saw the largest moves. Meanwhile, municipal bonds underperformed due to seasonal headwinds, though reinvestment flows at the start of May may offer near-term support. Corporate credit outperformed, with investment-grade issuance met by strong investor demand.
