Asset Management Weekly Market Commentary

Market updates for the week ending
April 25, 2025

Key observations

• U.S. stocks staged a broad-based rally despite continued saber rattling on the trade front between the U.S. and China. The S&P 500 was propelled by strength out of the ‘Mag 7,’ which led to outperformance out of the communication services, consumer discretionary, and information technology sectors, among others. Breadth, or participation, has improved meaningfully in recent weeks and trend following strategies, as well as an uptick in corporate buyback activity, could be supportive of further gains into May.
• The S&P 500 closed above 5,450, a closely watched technical level that provided a ceiling of resistance on April 9 when President Trump announced a 90-day hiatus on reciprocal tariffs. This level is worth watching as potential support, possibly providing a springboard for additional upside in the coming weeks. We are watching the S&P 500’s 200-day moving average around 5,650 which could provide resistance and cap upside in the near-term.
• Treasury yields closed out the week modestly lower, driving respectable gains for core, investment-grade bonds, but it was lower quality corporate bonds that were the big winner on the week. Credit spreads narrowed materially over the balance of the week as investors appeared eager to scoop up riskier, higher yielding credits even as issuance ticked up after coming to a standstill amid tariff uncertainty in early April. The rally in high yield bonds shows that risk appetite has returned in recent weeks, and further spread compression would likely provide a continued tailwind for U.S. stocks in the coming weeks.

What we're watching

• The Conference Board releases results from its April Consumer Confidence survey on Tuesday with the headline reading expected to fall to 87.0 from 92.9 in March. The Expectations component of the survey is worth watching for a reading as to how consumers expect tariffs to impact their spending habits.
• March Personal Consumption Expenditure (PCE), the FOMC’s preferred inflation gauge, is released Wednesday. Headline PCE is expected to be flat month over month and rise 2.2% year over year, which would be notable drops from 0.3% and 2.5% readings in February. Core PCE, which is more closely watched, is expected to rise 0.1% month over month and 2.6% year over year versus 0.4% and 2.8% readings the prior month. There will be little/no impact from tariffs included in the March PCE readings, and market participants could dismiss this release as a result, but it’s worth watching, nonetheless.
• April Nonfarm Payrolls are released Friday with the consensus estimate calling for 130k jobs to have been created during the month vs. 228k in March. The unemployment rate is expected to remain unchanged from the 4.2% reading in March. Average hourly earnings are expected to rise 0.3% month over month and 3.9% year over year, compared to 0.3% and 3.8% increases in March.