Posted by:
Comments:
Post Date:
Table of Contents
Equity Markets End the Week Flat as Investors Digest FOMC Comments and Trade News
Equity markets ended the week relatively flat, as investors digested comments from Fed Chairman Powell and continued trade discussions. Global equities (represented by the MSCI All Country World Index) finished down 0.19%, while domestic stocks (represented by the S&P 500 Index) were negative 0.45%. Despite the flat week, the United States and the United Kingdom announced that a framework was in place to reach a comprehensive trade agreement, which helped lift stocks in the middle of the week. We would expect the market to continue to respond positively as more trade deals are worked out.
Q1 Earnings
We are in the ninth inning when it comes to Q1 earnings season, with 90% of S&P 500 companies having reported their results. The Mag 7 names (6 of the 7 reported) have posted another strong quarter, with earnings coming in 11.3% above consensus estimates. This is the largest surprise in earnings growth since 3Q23. For the remaining 493 names, analysts have revised up their full-year earnings estimates by 1.8% versus down 0.8%.
Federal Open Market Committee (FOMC) Meeting
The Federal Open Market Committee (FOMC) concluded its May meeting on Wednesday, with the Fed maintaining its target range for the federal funds rate at 4.25-4.50%, as expected. This marks the third meeting in a row where the Fed has paused cutting rates further. As seen below, the expectation for the remainder of the year is an additional 2 cuts.
Looking Ahead
Looking ahead, we have a Consumer Price Index (CPI) report scheduled to be released on Tuesday. This will be an important report showing whether the recent trend of moderating inflation extended into April as tariffs and trade tensions rose. Last month’s report showed an annual rate of inflation of 2.4% in March, down from the 2.8% posted in February.
As Always
I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
Financial planning and Investment advisory services offered through Diversified, LLC. Diversified is a registered investment adviser, and the registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC. A copy of Diversified’s current written disclosure brochure which discusses, among other things, the firm’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. Diversified, LLC does not provide tax advice and should not be relied upon for purposes of filing taxes, estimating tax liabilities or avoiding any tax or penalty imposed by law. The information provided by Diversified, LLC should not be a substitute for consulting a qualified tax advisor, accountant, or other professional concerning the application of tax law or an individual tax situation. Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.