The S&P 500 rose every day this week as the major stock indices continue to rebound from their April lows. Stocks benefitted from some tariff relief and cooler inflation readings. Year to date, the major stock indices are returning to positive territory. The S&P 500 has risen +20% from its April 8^th low and is now up +1% on the year. The Nasdaq has risen +26% from its low and is nearly flat on the year. This week, the S&P 500 rose +5% while the Nasdaq rose +7%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.43%, up +5 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, rose +2 bps to 4.26%.

Stocks and Preferred securities jumped on Monday following a productive meeting between Treasury Secretary Bessent and representatives from China last weekend. Both countries agreed to a temporary tariff truce that would dramatically reduce tariff rates for the next 90 days. This de-escalation provided considerable relief to US retailers who were concerned about inventory levels and the risk of bare shelves during the second half of the year. Economic data was also positive this week. CPI inflation rose at a 2.3% pace while PPI rose at a 2.4% pace – both slower than prior months and cooler than anticipated.

In equity portfolio news, recently beleaguered holding UnitedHealth Group faced additional headwinds this week. The company rescinded their annual operating guidance on Tuesday while announcing the CEO would step down; then on Thursday the WSJ reported the company was under investigation for possible Medicare fraud. While the company has stated they have not received any notice of an investigation and stands by the integrity of their Medicare programs, the possibility has shaken investor trust. The company’s board of directors has installed former CEO Stephen Hemsley, who successfully led the company from 2006-2017 and who remained board chair, as the replacement CEO. While we are encouraged by Hemsley’s return to the helm and believe the stock’s valuation doesn’t reflect its earnings capacity today, the company may be in a penalty box for the next few months. Thus, we may look to realize some losses in taxable accounts which have higher cost bases to offset gains in other portfolio names, but generally we are holding UNH positions.

Looking ahead to next week, scheduled news flow should be rather quiet. Home Depot will report Q1 earnings on Tuesday with Lowe’s reporting the day after. Both companies are amongst the largest US importers of products from China, so commentary regarding tariffs will be noteworthy. Existing home sales for April will be released Thursday while new home sales come Friday. Mortgage rates above 6.5% still remain a headwind to any uptick in home sales activity.

Markets were little changed Friday after a framework trade agreement was announced with the UK on Thursday, and hopeful that some progress can be made with China when Treasury Secretary Bessent meets with representatives this weekend. The S&P 500 finished the week down 0.47%, while the Nasdaq fell 0.27%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.38%, up 6 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, fell 1 bps to 4.24%.

The Federal Reserve met this week and Chairman Powell expressed a continued “wait-and-see” approach to adjusting rates this year. We continue to expect two rate cuts this year and ultimately see the Fed Funds rate nearing 3.50% in 2026.

On the fixed income side, we have been “buying the dip” on big bank preferreds. Our favorites have been mega-cap banks like JP Morgan, Bank of America and Wells Fargo. We expect strong price appreciation over the next 12 months as the Fed continues to cut rates. The current yield on these top banks is +6.0% and the securities are priced below 80 cents on the dollar.

In equity portfolio news, body-camera manufacturer Axon reported strong revenue (+31% y/y) and EPS (+23%) growth, and raised its full-year guidance. The company hasn’t slowed down in signing new contract wins and is shifting more public safety officers to premium subscription plans with additional features. The stock responded accordingly to the good news, with shares rising 14% on Thursday. Non-portfolio company Disney also boasted a beat-and-raise quarter, showing strong growth in its streaming subscriptions as well as at domestic theme parks. Softness was seen amongst its Chinese consumers.

Looking ahead to next week, it quiets down on the earnings front while economic data flow picks up. Cisco Systems reports results on Wednesday and Walmart reports on Thursday. On Tuesday, the CPI inflation report for April will be released, with the PPI report out on Thursday. Both will be watched closely to determine what the initial effects of recent tariff policies are having on prices. Retail sales for April will be published Thursday and housing starts on Friday, with other data points sprinkled in throughout the week.

Here in MN the Summer weather has arrived. Get outside and enjoy the sunshine. And of course, Happy Mother’s Day!

The S&P 500 posted its longest winning streak in 20 years, led by strong reports from major tech companies and hopes for a trade deal with China. The S&P 500 finished the week up +2.85%, while the Nasdaq rose +3.37%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.32%, up 6 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended up 4 bps at 4.25%.

The initial first-quarter GDP estimate negatively surprised, showing -0.3% growth; however, a 40%+ surge in imports (ahead of tariffs) dragged the figure down by 5 percentage points. Not only could this dynamic reverse the next couple quarters, but it also masked healthy underlying economic growth, with personal consumption expenditures growing at a respectable 1.8% pace. On the labor front, job openings (JOLTS) for March remain above 7 million, and the employment report Friday showed that 177,000 jobs were filled in April, 44,000 more than expected.

On the fixed income side, securities prices continue to rebound from the April slide. We have rotated the vast majority of our fixed income portfolios towards fixed-rate securities that are trading below par, where we can lock in +6.0% yields and expect continued price appreciation as the market stabilizes. In our view, it is a great time to buy these deeply discounted preferreds.

In equity portfolio news, Facebook (META) reported impressive first-quarter results, growing revenues by 16% y/y and operating profits by 27%. Despite having over 3 billion daily users across its family of apps, the company continues to find ways to expand its user base, increase ads viewed, and better monetize user eyeballs. Microsoft also posted strong numbers, with their Azure cloud growth accelerating from 31% to 35% in Q1. Management dispelled the notion that they were cutting back on AI investments and data center capacity, noting continued capacity constraints and re-iterating guidance for $85 billion in capital expenditures.

This week brought the jobs report and Big Tech earnings. Looking ahead to next week, Axon is the major earnings report we will be watching on Wednesday evening, while Disney’s report that same morning may shed some light on changes in consumer behavior. Also on Wednesday, the Federal Reserve will release their updated policy statement at midday, with Chair Powell speaking in the afternoon. The Fed is not expected to change benchmark rates this month, but is expected to cut rates three times later this year, including once during the summer. We believe those cuts should benefit fixed income securities.

Stocks seemed to move in the opposite direction as last week. On Monday, the S&P 500 kicked things off falling -2.4% before pulling out an ‘Uno Reverse card’ on Tuesday, rising 2.5%. Investors turned hopeful that US-China tensions had potentially peaked and that some progress was being made with various countries toward striking trade deals. The S&P 500 finished the full week up +4.6%, while the Nasdaq rose +6.7%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.28%, down -5 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended unchanged at 4.20%. Preferred securities also rose this week in light of the more sanguine economic chatter.

One of the keys to investing is not letting one’s emotions get the best of oneself. Too many individual investors let volatility shake them out of the market. Believe it or not, for all the unsteadiness one may feel this year has brought thus far, the S&P 500 is only down 6% year to date. From the April 8^th low, the S&P 500 has bounced 10% higher. One of our priorities as an investment advisor is to help clients position appropriately and see through the volatile times – times which may continue until trade policy is ironed out.

In equity portfolio news, Google’s first quarter results surpassed analysts’ estimates, growing revenues by 12% y/y and operating profits by 20%. The company showed resilience in search advertising and Google Cloud services amidst the macro uncertainties, with management noting they had 1.5 billion users per month utilizing their AI Overview. The good results, along with a $70 billion share repurchase authorization, provided a boost to shares on Friday. The advertising result could also bode well for Meta.

Looking ahead to next week, many of the big technology companies’ earnings are on tap. This includes the likes of Microsoft, Meta (Facebook), Apple, and Amazon. These reports should provide insight into consumer spending and corporate capital investments. Additionally, a bevy of economic data points are slated to be released: job openings (JOLTS) for March and consumer confidence for April come Tuesday; CPE inflation and the initial estimate of Q1 GDP on Wednesday; some manufacturing data on Thursday; and then April’s employment report on Friday. Economists’ estimates for Q1 GDP growth vary widely, but are generally in the 0.0-1.0% range. Nonfarm payrolls are expected to have risen by 140,000 in April, after increasing by 228,000 in March.