Wall Street Rallies on Big Tech and Trade Optimism

Summary – US Weekly Recap: Dow +3.00%, S&P +2.92%, Nasdaq +3.42%, Russell 2000 +3.22%
Friday, May 02, 2025 (GMT)

Underperformers: Energy (0.65%), Healthcare +0.32%, Consumer Spls. +1.14%, Consumer Disc. +1.57%, Utilities +1.94%, Materials +2.77%

Overview:

US equities were higher for the week, with the S&P 500 notching its first back-to-back weekly advances since January and the index ending the week on a nine-day streak of gains (the longest since November 2004). The S&P is now back to levels above the early April drop following Trump’s “Liberation Day” tariff announcements.

Big tech was mostly higher. MSFT +11.1% and META +9.1% were boosted by well-received reports while AAPL (1.9%) underwhelmed. Other outperformers included software, semis, banks, credit cards, IBs, asset managers, insurers, exchanges, transports, machinery, building products, and China tech. Most-shorted names also rallied this week. To the downside, managed care, pharma, HPCs, paper/packaging, and energy were among the laggards.

Treasuries were weaker across the curve, reversing some Monday/Tuesday weakness as solid economic data helped trim the market’s rate-cut expectations. As expected, Treasury’s quarterly refunding announcement made no change to issuance plans and continued to assert these are unlikely to change for the next several quarters. The dollar was better on the major crosses, paring some of its WTD gains on Friday; DXY +0.5%. Gold declined 1.7%, its second consecutive weekly drop. Oil was notably weaker, with WTI dropping 7.5% and ending the week back below the $60/barrel mark (Saudi Arabia indicated this week it could live with lower prices for some time).

What happened?:

This week’s market mood was helped by further signs of deescalating trade/tariff tensions. On Tuesday, President Trump signed an order confirming some expected temporary relief for US automakers. Treasury Secretary Bessent and Commerce Secretary Lutnick this week both talked up ongoing negotiations, with the latter telling CNBC one trade deal was done and just awaiting final approval. Mexico’s Sheinbaum said she had a very positive conversation with Trump and that work on improving her country’s trade relationship with the US will continue. And while the are they/aren’t they debate about US-China talks continued to play out, China said it was “evaluating” recent US overtures, and media reports Friday suggested Beijing may be considering opening talks on fentanyl as a way to jump-start broader negotiations.

It was a big week of largely better-than-feared economic data. April nonfarm payrolls were stronger than expected (though the previous two months were revised down). ISM manufacturing was firmer than consensus. March core PCE was cooler, and March pending-home sales printed at their strongest since 2023. The market even looked past the first q/q decline in GDP since Q1’22, with the headline seeing a big impact from a huge surge of imports from those front-running tariffs. Nevertheless, April’s consumer confidence report continued to reflect unease, printing at its lowest level since spring 2020; initial and continuing jobless claims also moved higher.

Overall, the week’s bullish mood was helped by continued signs of tariff-tension off-ramps and prospects for further progress. Moreover, the Q1 earnings season continued to outperform expectations, with the blended EPS growth rate for the S&P 500 now sitting at 12.8% (in contrast to the 7.2% expected on 30-Mar). Corporate commentary has also been constructive, helping to illustrate consumer resilience, tariff-mitigation efforts, and a still robust AI secular growth theme. And while “soft” data such as sentiment and regional manufacturing surveys continue to suggest anxieties and uncertainty, these have not yet translated into a slowdown in many hard-data releases. All that said, some corporate reports have underwhelmed, Trump has continued to lob criticism at the Fed, Republicans’ tax-cut bill still faces a complicated path forward, and some commentators believe it is only a matter of time before uncertainty translates into an economic downturn.

Earnings highlights:

It was one of the peak weeks of the Q1 earnings season, with multiple Mag 7 names reporting. AAPL (1.9%) iPhone revenue was a bright spot, though Services missed and growth guidance underwhelmed. MSFT +11.1% report saw broad-based strength, with some focus on Azure growth acceleration and increasing AI contribution. AMZN +0.5% revenue was largely in line, though analysts flagged AWS deceleration and tariffs tempering the profitability outlook. META +9.1% revenue was a strong beat, with takeaways focused on the company’s AI roadmap, improved AI monetization/engagement, and upwardly revised capex guidance.

Among the other big names, LLY (6.9%) beat but lowered FY EPS guidance on a one-time charge; there was also note of a CVS +3.3% preference deal for NVO’s Wegovy. MA +4.9% was upbeat on consumer-spending trends while cross-border volumes were strong. KO (0.4%) results were better than feared, though North America underperformed. BKNG +7.5% earnings and revenue beat, with analysts positive on cost management and few signs of Europe strain. SPGI +5.6% beat though guidance was lower; also announced the spin-off of its Mobility business. QCOM (5.9%) revenue was better though there was some disappointment around licensing and expected content in the iPhone 17. CAT +5.6% results were light but company said tariff headwind is smaller than expected. HON +7.5% beat and raised.

Coming next week:

The Fed will hold its May FOMC meeting next week, though there are broad expectations that rates will remain unchanged. Fedspeak will restart after the blackout, with NY Fed’s Williams set to deliver remarks on Friday while Governor Cook and regional presidents Musalem and Hammack will participate in a panel discussion. Next week will also see the release of the Fed’s latest Senior Loan Officer Opinion Survey (SLOOS).

It will be a fairly light week on the economic front, with the big reports April ISM Services (Monday); March US trade balance (Tuesday); and weekly jobless claims and Q1 productivity (Thursday).

There will be $125B in new Treasury issuance next week, with $58B in 3s auctioned Monday, $42B in 10s on Tuesday, and $25B in 30s on Thursday.

It will be another big week of Q1 earnings reports (92 S&P constituents), though we are now past most of the megacap names; NVDA, the last of the Mag 7 names to report, will not release until 28-May. Among the larger companies reporting next week are PLTR, UBER, DIS, MCK, FTNT, EMR, KVUE, F, and EA.

S&P 500 Sector Performance:

Outperformers: Industrials +4.32%, Communication Svcs. +4.19%, Tech +4.01%, Financials +3.60%, Real Estate +3.44%

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