Weekly Update | May 2, 2025

 

The shorter term picture:
>> GALACTIC SHIELD — POSITIVE, for Q2 2025, This indicator is based on the combination of U.S. and International Equities trend statuses at the start of each quarter.
>> STARFLUX— NEGATIVE, Starflux ended the week at -0.6 (up 81.87 % last week) This short-term indicator measures U.S. Equities.
>> STARPATH — NEGATIVE, This indicator measures the interplay on dual timeframes of our Type 1s + the Russell 3000 + our four most ‘pro-cyclical’ Type 3s, vs. Cash.

The big picture:
The ‘big picture’ is the (typically) years-long timeframe, the same timeframe in which Cyclical Bulls and Bears operate.
>> The Sherman Portfolios DELTA-V Indicator measuring the Bull/Bear cycle finished the week in BEAR status at 45.62, up 5.48% from the prior week’s 43.25. It has signaled Bear since April 4, 2025.
>> The Sherman Portfolios DELTA-V Bond Indicator measuring the Bull/Bear cycle finished the week in BULL status at 60.87, up 1.06% from the prior week’s 60.23. It has signaled Bull since December 15, 2023. 

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THIS WEEK IN THE MARKETS

U.S. Markets:
Markets continue up as trade tensions ease:
U.S. stocks ended the week on a high note, with the S&P 500 Index marking its second consecutive week of gains—the first such streak since January—and closing Friday with a nine-day winning streak. The Nasdaq Composite jumped 3.42%, buoyed by better-than-expected earnings from several large-cap tech companies, while small- and mid-cap indexes posted gains for the fourth straight week. Early optimism stemmed from easing trade tensions, as President Trump scaled back tariffs on cars and auto parts, and Commerce Secretary Howard Lutnick suggested a major trade agreement was nearing completion. As the week progressed, attention turned to earnings, with nearly 40% of the S&P 500’s market cap reporting first-quarter results, including four of the Magnificent Seven. Despite ongoing uncertainty around trade policy and limited forward guidance from companies, investor sentiment remained upbeat, with many confident that businesses could navigate slower economic growth and trade-related challenges.

Looking at the US Indexes:

U.S. Commodities/Futures:

THE VOLATILITY INDEX (VIX) closed at 22.68 this week, an 8.7% decrease vs last week’s close of 24.84.

International Markets:

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THIS WEEK’S ECONOMIC NEWS

U.S. Economic News:
Mixed Economic Data: This week’s economic data presented a mixed view of the U.S. economy, with job openings declining but hiring remaining resilient. The Bureau of Labor Statistics reported that job openings fell to 7.2 million in March—the lowest since September—indicating potential softening in labor demand amid economic uncertainty. ADP’s report showed private payrolls increased by just 62,000 in April, a sharp drop from March’s revised 147,000. However, Friday’s BLS payrolls report offered a more optimistic signal, with 177,000 jobs added in April—well above expectations—while the unemployment rate held steady at 4.2% and wages rose modestly. Stocks responded positively to the upbeat labor data. Meanwhile, the Bureau of Economic Analysis announced that GDP contracted at an annual rate of 0.3% in the first quarter, marking the first decline since 2022, driven by increased imports, slower consumer spending, and a drop in government outlays—likely influenced by companies accelerating purchases ahead of new tariffs. On a brighter note, the PCE Price Index was flat in March and consumer spending rose 0.7%, suggesting economic resilience and easing inflation pressures, though the full impact of recent tariffs has yet to be reflected.

International Economic News:
EUROPE: European stocks climbed as easing tariff concerns lifted investor sentiment, with the pan-European STOXX Europe 600 Index gaining 3.44% in local currency terms. Major indexes also advanced, including Germany’s DAX, Italy’s FTSE, France’s CAC 40, and the UK’s FTSE 100 Supporting the rally, eurozone GDP growth accelerated to 0.4% in the first quarter—double the previous quarter’s pace and above economists’ expectations. Spain and Italy exceeded forecasts with growth of 0.6% and 0.3%, respectively, while Germany and France returned to modest expansion; Ireland posted a standout 3.2% increase, though its data can be skewed by multinational activity. However, inflation remained stubborn, with headline CPI holding at 2.2% in April and core inflation rising to 2.7% from 2.4%. Despite the improved economic performance, business and consumer sentiment weakened following the U.S. announcement of reciprocal tariffs in early April. The European Commission’s economic confidence indicator fell to 93.6, its lowest since December, and consumer sentiment remained subdued at -16.7, reflecting growing pessimism and caution in household spending.

JAPAN: Japanese stock markets rose over the week, with the Nikkei 225 gaining 3.15%, supported by signs of easing global trade tensions, while the yen weakened to around the mid-143 range against the U.S. dollar and the 10-year Japanese government bond yield climbed to 1.34% from 1.29%. A stronger-than-expected Tokyo-area inflation reading, with core CPI rising 3.4% year over year in April, bolstered the case for further Bank of Japan (BoJ) rate hikes, although BoJ Governor Kazuo Ueda emphasized that monetary policy normalization would proceed cautiously amid uncertainties surrounding the economic impact of U.S. tariffs. Inflation acceleration was mainly driven by food price increases and cuts to government energy subsidies. Meanwhile, Japan’s government announced emergency economic relief measures, including support for corporate financing and efforts to stimulate consumption, to counter the effects of higher U.S. tariffs, as bilateral trade talks continued without Japan yet securing exemptions; Prime Minister Shigeru Ishiba warned that key domestic industries like automobiles and steel could face significant challenges under the current tariff regime.

CHINA: China’s Politburo announced plans to “fully prepare” emergency responses to external shocks and unveiled intentions to develop new monetary tools and policy financing instruments aimed at boosting technology, consumption, and trade, according to Bloomberg and state media reports. The Politburo, led by President Xi Jinping, signaled a measured and patient approach to supporting the economy amid the trade war with the U.S., even as analysts expect the effects of the Trump administration’s April tariff hikes—which raised total tariffs on most Chinese goods to 145%—to soon materialize. Nevertheless, China’s stronger-than-expected first-quarter growth and the early March stimulus measures have given Beijing more flexibility in timing additional economic support.

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Sources:
>> All index and returns data from Norgate Data and Commodity Systems Incorporated and Wall Street Journal.
>> News from Reuters, Barron’s, Wall St. Journal, Bloomberg.com, ft.com, guggenheimpartners.com, zerohedge.com, ritholtz.com, markit.com, financialpost.com, Eurostat, Statistics Canada, Yahoo! Finance, stocksandnews.com, marketwatch.com, visualcapitalist.com, wantchinatimes.com, BBC, 361capital.com, pensionpartners.com, cnbc.com, FactSet, Morningstar/Ibbotson Associates, Corporate Finance Institute.
>> Commentary from T Rowe Price Global markets weekly update — https://www.troweprice.com/personal-investing/resources/insights/global-markets-weekly-update.html

Disclosures: This material and any mention of specific investments is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any action. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.