Market Data as of Week Ending: 5/16/2025 unless noted otherwise
Major U.S. indexes returned to their winning ways as the S&P 500 finished the week up more than 5% and now sits positive for the year. Investors welcomed news of a 90-day tariff reduction between the U.S. and China, easing trade tensions. The Nasdaq led major indexes for the week, rising over 7%, as growth stocks were boosted by an agreement allowing Saudi Arabia to buy advanced AI chips from U.S. companies. Info tech, consumer discretionary and communication services were the best-performing sectors, led by NVIDIA and Apple, which surged 16% and 6.5%, respectively. Health care, while still positive, was the worst-performing sector as UnitedHealth (UNH) was a huge laggard, dropping 23.3%, and weighed on the sector. Foreign stocks were positive over the week, but both developed and emerging markets underperformed domestic equities.
U.S. Treasury yields rose over the week on various economic data. The 10-year Treasury yield reached 4.5% this week before settling in at 4.43%, which was six basis points higher than last week. The 2-year Treasury yield rose by 0.1%, ending the week at 3.98%, narrowing the 2s10s spread. Government bonds lagged across the board this week due to heavy issuance. Longer duration corporate and high-yield bonds were the best-performing segments in the bond market, benefiting from the risk-on environment. Investment-grade corporate bond yields and high-yield bond yields finished the week lower. Corporate yields ended slightly lower at 5.29%, while high-yield shed 21bps to end the week at 7.7%.
Economic data for the week was mixed, but investors found solace in cooling inflation data. The Consumer Price Index showed that consumer prices rose a mild 0.2% in April, bringing the 12-month increase down to 2.3% from 2.4%, the lowest level in four years. The Producer Price Index also reported an unexpected decline, dropping 0.5% in April, led by a 0.7% decline in the index for final demand services, which was the largest drop since December 2009. U.S. retail sales rose a meager 0.1% in April, down from the 1.7% increase in March, reflecting the tariff front-running and now cautious consumer mindset. Initial jobless claims last week remained unchanged at 229,000, reflecting a solid labor market. The Empire State and Philly Fed Manufacturing Indexes remained in contraction territory at -9.2 and -4.0, respectively. Industrial production was stagnant in April, marking the second straight weak report as manufacturing alone fell 0.4%. May’s preliminary consumer sentiment reading fell to 50.8, marking the fifth straight monthly drop as consumer expectations and views of their current personal finances weighed heavily.