Markets had a relatively smooth start to the week but finished a bit shaky. Has the foundation been laid for another growth cycle?
Monday
S&P 500 0.09% | NASDAQ 0.31%
Markets came off the weekend with a sense of calm. Looking back to the 3rd week of May, the Volatility Index has maintained at 20 or below (except for May 22nd). This mark indicates whether there is a sense of stability versus uneasiness about daily trading and markets have enjoyed over 3 weeks at these levels. On another positive note, the Atlanta Fed GDPNow forecast has GDP estimated for the 2nd quarter at 3.8%.
Tuesday
S&P 500 0.55% | NASDAQ 0.63%
After a warmup lap on Monday, markets started picking up the pace on Tuesday as more confidence in US-China trade talks helped indexes move higher. Semiconductor companies got a bid as investors waited for more details to emerge.
Wednesday
S&P 500 0.27% | NASDAQ 0.50%
Consumer Price Index data came out on Wednesday, which measures the rate at which prices increase or decrease. The release has been under the microscope so far in 2025 as tariffs have contributed to concern for increases in CPI. Although little changes in prices are usually celebrated, indexes moved lower as inflationary concerns remain top of mind.
Thursday
S&P 500 0.38% | NASDAQ 0.24%
Treasury yields fell to their lowest level for the week as jobless claims remained in check and producer price increases remained subdued. Hopes for a rate cut in September have started to rise.
Friday
S&P 500 1.13% | NASDAQ 1.30%
All data dependent trading can be thrown out the window when markets are jolted by world conflict. Amid the escalation between Israel-Iran, markets felt better trimming risk. Oil prices exploded higher on the uncertainty of the scale of the conflict.
Conclusion
S&P 500 0.39% | NASDAQ 0.63%
Except for a conflict-induced selloff and migration to safe-haven assets on Friday, markets enjoyed a calm, data-dependent style of trading for most of the week. Tech companies rebounded early as relations with China seem to be improving from where they were two months ago. Energy markets were thrown a curve ball with the escalation of activity between Israel and Iran. Heightened geopolitical issues, although isolated, do send ripples through world markets as traders speculate on the extent of the damage to world trade. U.S markets saw a softening in treasury yields through Thursday. As the week ended, eyes were glued to developments in the Middle East. Closer to home, the Federal Reserve will begin their two-day meeting next week to give better guidance on the direction of interest rates. The Federal Funds Rate is still considered in restrictive territory with rates at 4.25-4.5% and have held steady since the last rate cut in December 2024. Signs of a changing policy would emerge if financial markets looked unstable or job losses begin to increase—both of which have not been evident so far in 2025.
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