Weekly Market Commentary

May 12, 2025

The Markets

The winds of uncertainty are blowing, and the waters are choppy.

In recent weeks, United States stock markets saw steady gains, recovered from the April downturn as investors set aside uncertainty,” reported Connor Smith of Barron’s.

Last week, investors became more cautious as they considered:

Trade successes and negotiations. Last week, President Trump announced a trade deal with the United Kingdom and, over the weekend, U.S.-China trade negotiations began. “With talks between the US and China about to start, trillions of dollars are hanging in the balance for American companies. The average member of the [Standard & Poor’s 500 Index] made 6.1 [percent] of its revenue from selling goods in China or to Chinese companies in 2024, according to an analysis from Bloomberg Intelligence’s Gina Martin Adams and Gillian Wolff,” reported Rita Nazareth of Bloomberg. 

The outlook for the economy. Last week, the Federal Reserve left rates unchanged. Fed Chair Jerome Powell offered assurances that the economy is solid, the unemployment rate remains low, and inflation is closer to the Fed’s two percent goal but not there yet. In a post meeting press conference, Powell stated,“…we’ve judged that the risks to higher employment and higher inflation have both risen [compared to March]…there’s a great deal of uncertainty...”

The outlook for company earnings. Companies in the S&P 500 Index performed well in the first quarter. Overall, the earnings growth rate for companies that have reported so far is 13.4 percent, reported John Butters of Factset. However, as Butters explained, analysts lowered [earnings per share] estimates more than normal for S&P 500 companies because of uncertainty, including a possible economic slowdown or recession.

Last week, major U.S. stock indexes finished flat to slightly lower. Yields on many maturities of U.S. Treasuries moved slightly higher over the week.

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

NO, YOU DON’T NEED TO STOCK UP ON TOILET PAPER. During the pandemic, concerns about supply chains and shortages led some people to stock up on items like toilet paper. As it turns out, the frenzied buying may have been the cause of those shortages.

Today, people are concerned about items that are typically imported from other countries becoming scarce. Last week, Bloomberg published the “Ultimate Tariff Buying Guide” to help people understand “what to purchase right now, what to skip and what’s a maybe.” Claire Ballentine and Will Kubzansky of Bloomberg advised that “right now” purchases may include:

Kid stuff. A lot of the equipment parents rely on – car seats, strollers, cribs, toys – are made in China so prices may rise significantly. Parents don’t have to worry about disposable baby care items as “diapers, wipes and most infant formulas won’t see a huge impact from tariffs because the majority of these products are manufactured domestically.”

Computers, smart phones, and electronics. While these goods currently are exempt from reciprocal tariffs, they are subject to other types of tariffs. If you have a student headed to college in the fall who will need electronics or you’re considering replacing your current smartphone, tablet, or computer, you may want to accelerate the purchase.

Automobiles. “If you already planned to buy a car sometime in 2025, bringing your purchase forward a few months could save you thousands of dollars,” according to a source cited by Ballentine and Kubzansky.

It’s a good idea to be prepared for higher costs if you’re planning to travel outside of the United States, too. “Due to tariffs shaking global markets, the [U.S.] dollar has weakened this year. That downward trend shows no signs of subsiding, so international travelers should expect worse deals when scoping out a trip or traveling abroad,” reported Ballentine and Kubzansky.

Weekly Focus – Think About It

"If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained, you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle."

– Sun Tzu, Military strategist