The Markets (as of market close May 9, 2025)
U.S. equities ended the week on a cautious note as traders digested mixed economic data and ongoing geopolitical issues. The S&P 500 and Nasdaq posted modest gains, buoyed by strong performances in the technology sector, while the Dow Jones Industrial Average edged lower due to declines in industrial and financial stocks. Treasury yields remained relatively stable, with the 10-year yield hovering around 4.26%, reflecting investor uncertainty about the Federal Reserve’s next moves amid persistent inflationary pressures.
Last Week’s Economic News
- Gross Domestic Product (GDP): The U.S. economy contracted at an annual rate of 0.3% in the first quarter of 2025. The decrease was due in part to a surge in imports ahead of speculation on potential tariffs and a reduction in government spending.
- Personal Income and Outlays: In March, personal income increased by 0.5%, while personal consumption expenditures rose by 0.7%. The personal saving rate declined to 3.9%, indicating that consumers are dipping into savings to maintain spending levels.
- Employment Situation: The U.S. economy added 177,000 jobs in April, surpassing expectations. The unemployment rate remained steady at 4.2%. However, the median duration of unemployment increased to 10.4 weeks, suggesting that while job creation continues, finding employment is taking longer for some individuals.
- Federal Reserve Policy: The Federal Reserve maintained its benchmark interest rate at 4.25%-4.50%, citing a mixed economic outlook. The Fed Chair expressed concerns about rising risks of both inflation and unemployment, indicating a cautious approach to future rate adjustments.
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Eye on the Week Ahead
Stock market traders will likely focus on the following economic reports and events:
- Consumer Price Index (CPI): Scheduled for release on May 14, this report will provide insights into inflation trends and could influence the Federal Reserve’s monetary policy decisions.
- Retail Sales: The April retail sales report, due on May 15, will shed light on consumer spending patterns amid economic uncertainties.
- Industrial Production: Data on industrial production for April, set to be released on May 16, will offer a glimpse into the manufacturing sector’s health.
- Housing Starts: The housing starts report for April, expected on May 17, will provide information on the real estate market’s momentum.
Have a nice week!
Sincerely,
Robert G. Carpenter
President & CEO
Baltimore-Washington Financial Advisors