Weekly Market Recap: Markets Rebound on Trade Hopes and Earnings Strength Amid Growth Jitters
Market Overview
Equities rebounded decisively, recapturing much of April’s losses as investor sentiment brightened on encouraging trade headlines and strong tech earnings. The S&P 500 climbed 2.94%, extending a nine-day winning streak, while the NASDAQ surged 3.43% on the back of upbeat AI-related commentary from Microsoft and Meta. Even small-cap stocks, which had lagged for much of the year, staged a comeback with the Russell 2000 gaining 3.24%.
Trade optimism was a key driver, with U.S. officials signaling progress on new bilateral deals and China hinting at reengagement. President Trump’s discussions with Mexican President Sheinbaum also reassured markets. International equities participated in the rally—European markets rose for a ninth straight day, and Asian stocks ticked higher despite mixed macro updates and a shortened trading week. Taiwan outperformed, while mainland China was modestly lower.
Fixed income markets, however, lost some ground as investors reduced rate cut expectations. The Bloomberg U.S. Aggregate Index declined, with the 10-year Treasury yield rising to 4.31%. Notably, municipal bonds posted a strong weekly gain of 0.76%. Global corporate bond demand remains resilient, particularly among foreign investors, even as questions swirl around the long-term role of Treasuries as a safe haven.
Commodity markets remained under pressure. Crude oil dropped over 7% amid signals of increased OPEC+ supply and weaker Chinese demand, while gold softened as haven demand waned. The U.S. dollar inched higher late in the week following strong labor market data that tempered Fed rate cut expectations.
Federal Reserve Insights and Economic Roundup
April’s jobs report showed payrolls rising by 177,000—another sign of resilience. Health care, transportation, and financial services continued hiring, while the unemployment rate held at 4.2%. Still, rising long-term unemployment and multi-job trends hint at growing pressure on households.
Meanwhile, the Q1 GDP report disappointed, showing a 0.3% annualized decline driven largely by a surge in imports of medical goods and electronics. Consumer spending on services rose 2.4%, and real final sales to domestic purchasers gained 2.3%—suggesting core economic strength beneath trade distortions.
The Week Ahead:
Monday, May 5: Final readings of April’s Services and Composite PMIs, along with the ISM Services Index, will offer a clear view of U.S. service sector momentum.
Tuesday, May 6: March’s Trade Balance report will be closely watched amid ongoing global trade negotiations.
Wednesday, May 7: Markets await the Fed’s rate decision, consumer credit data, and weekly mortgage application trends.
Thursday, May 8: A heavy data day featuring Q1 productivity and labor cost estimates, jobless claims, wholesale data, and inflation expectations from the NY Fed.
Friday, May 9: No major economic releases are scheduled, giving investors time to digest the week’s events.
The Weekend Ahead
Overall, despite GDP volatility, strong household demand and stable job creation continue to support the economy. A resolution to trade uncertainty could significantly stabilize business investment and consumer sentiment moving forward.