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Weekly Market Recap: Markets Rally into Month-End as Trade Optimism and Fed Signals Lift Sentiment Thumbnail

Weekly Market Recap: Markets Rally into Month-End as Trade Optimism and Fed Signals Lift Sentiment

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Market Overview

Markets snapped back sharply this week as easing trade tensions and dovish Federal Reserve commentary fueled investor confidence. The S&P 500 advanced 4.60%, the Dow rose 2.52%, and the Nasdaq led with a 6.73% surge, recouping much of April's earlier losses. Growth sectors dominated, with the Russell 1000 Growth Index up 6.78%, while small-caps also participated, with the Russell 2000 rising 4.10%.

Positive headlines around U.S.-China negotiations, potential tariff rollbacks, and progress with Japan, India, and South Korea buoyed sentiment. President Trump’s assurance of Fed independence further stabilized markets. Thin trading volumes amplified moves, while strong earnings reports from Alphabet, General Electric, and Lockheed Martin helped equities rally. Notably, Alphabet reiterated its $75 billion AI investment for the year, boosting tech sentiment despite Tesla missing expectations.

Internationally, European stocks climbed following earnings strength from Adidas, Sanofi, and Safran, even as services sector PMIs softened. Asian markets rebounded as trade hopes stabilized fragile confidence. The Hang Seng led gains, while Japan saw a tech-driven rally to close the week.

In fixed income, Treasuries rallied for a second consecutive week, supported by renewed hopes for a Fed rate cut and softer trade rhetoric from Washington. The Bloomberg U.S. Aggregate Index rose, while two- and ten-year Treasury yields fell by 4 and 6 basis points, respectively.

Commodities were mixed. Oil prices slid on potential OPEC+ output increases and diplomatic progress on Iran and Ukraine, while gold retreated as investors rotated back into risk assets. The U.S. dollar sealed its first weekly gain of April, reversing the recent “sell America” trend.

 

Federal Reserve Insights and Economic Roundup

Federal Reserve officials struck a cautiously dovish tone this week, rekindling market expectations for a rate cut as early as June. Governor Christopher Waller indicated the Fed would act if the labor market deteriorated meaningfully, while Cleveland Fed President Beth Hammack suggested upcoming data could justify easing. As a result, Fed funds futures now price a roughly 60% chance of a June cut.

Economic data was mixed. In the U.S., existing home sales in March remained below pandemic lows, constrained by affordability issues. However, new construction provided some relief, as builders like PulteGroup posted strong results, aided by in-house financing offers.

In the Asia-Pacific, Tokyo’s inflation climbed 3%, the fastest in two years, reinforcing the Bank of Japan’s tightening stance. Meanwhile, Japan’s PMI readings signaled relative strength compared to its regional peers.

Across Europe, U.K. consumer confidence and business outlook continued to erode in April under the weight of trade uncertainty, while Germany’s export dependence remains a critical vulnerability amid shifting global dynamics.

In the Americas, Mexico’s industrial production rebounded as companies positioned ahead of anticipated trade policy changes. With the U.S. dollar showing early signs of peaking, some market watchers see growing opportunity in emerging markets for 2025.

The Week Ahead

A busy week of economic data could test the market’s resilience, with several key inflation, housing, and labor market reports on deck:

  • Monday: Dallas Fed Manufacturing Activity (Apr)
  • Tuesday: Advance Goods Trade Balance (Mar), Retail Inventories (Mar), FHFA House Price Index (Feb), S&P Case-Shiller Home Price Indexes (Feb), JOLTS Job Openings (Mar), Consumer Confidence (Apr)
  • Wednesday: ADP Employment Change (Apr), First Estimate of Q1 GDP and Core PCE, Personal Income and Spending (Mar), Pending Home Sales (Mar)
  • Thursday: Challenger Job Cuts (Apr), Weekly Jobless Claims, ISM Manufacturing Report (Apr), Construction Spending (Mar), Vehicle Sales (Apr)
  • Friday: April Jobs Report, Factory Orders (Mar), Durable and Capital Goods Orders (Mar final)

Markets will be watching closely for any signals that confirm—or challenge—the Federal Reserve's cautious pivot.