Market Data as of Week Ending: 5/23/2025 unless noted otherwise
Major U.S. indexes lost ground last week as Moody’s downgraded U.S. debt due to the continued rise of the fiscal deficit. Rising long-term rates and recent tariff rhetoric have diminished recent enthusiasm and weighed on investors’ minds. The S&P 500 snapped a six-day string of gains, ending the week -2.58% lower and fell back into negative territory for the year. Value stocks held up better than their growth peers as infotech, consumer discretionary and other rate-sensitive sectors lagged for the week. The traditionally defensive consumer staples sector held up best, giving up just -0.36%. Energy was the worst-performing sector as oil prices fell after reports that OPEC+ is raising outputs. Foreign stocks were mixed over the week, but both developed and emerging markets outperformed domestic equities as policy easing in China led to market optimism.
Longer-term U.S. Treasury yields rose over the week due to concerns over the U.S. fiscal deficit and weak demand for 20-year government debt. The 10year Treasury yield rose to 4.51%, while the 30-year Treasury yield shot up above 5.00% for the first time since 2023. The 2-year Treasury yield remained relatively flat, ending the week at 4.00%. Long-dated government bonds fared the worst, while high-yield debt was weakest across the board given the riskoff environment. Investment-grade corporate bond yields and high-yield bond yields finished the week higher with corporate yields landing at 5.35% while high yield rose to 7.88%.
Economic data for the week was largely overshadowed by political and government-related news. The Conference Board Leading Economic Index (LEI) fell sharply by 1.0% in April after declining by 0.8% in March, marking its largest monthly decline since March 2023. The flash PMI readings showed that U.S. business activity improved in May. The U.S. manufacturing PMI rose to a three-month high of 52.3 while the U.S. services PMI rose to a two-month high of 52.3. U.S. existing home sales fell to a seven-month low in April as buyers have pulled back due to elevated mortgage rates and rising home prices. New home sales were stronger in April, rising by 10.9%, marking the highest level of sales since February 2022.