Weekly Market Update for May 23, 2025
Markets reversed some of the recent gains this week. Moody’s cut its US government bond credit rating from Aaa to Aa1, coming in line with its ratings peers. A weaker bond auction this week also pushed interest rates higher, and deficit concerns surrounding the potential reconciliation bill didn’t help either. The S&P 500 finished the week down -2.6%, while the Nasdaq fell -2.5%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.51%, up +8 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, rose +4 bps to 4.30%. The rise in long-term interest rates pressured Preferred securities lower.
New home sales in April were better than expected while existing home sales were less. Homebuilders have some tools to incentivize sales amidst high mortgage rates that existing home sellers do not. Steady earnings reports from both Home Depot and Lowe’s offset some worries over tariff headwinds to consumer spending. Both retailers reported sales picking up sequentially and re-iterated their full-year guidance. However, locally-based Target missed expectations and cut guidance. The silver lining was management unveiling turnaround efforts that include a multi-year merchandise revamp. Google announced a flurry of AI initiatives this week, including smart glasses to compete with Meta/Apple, an “AI mode” in Google search, and a premium AI chatbot plan. UnitedHealth ended the week higher after a series of stock purchases by directors, including $26 million by the new CEO. And lastly, shares of Apple were pressured this week on headlines that iPhones not made in the US could face a tariff of at least 25%.
Next week, Nvidia is on deck to report earnings after the market closes on Wednesday. Marvel Technologies and Dell Technologies will both report on Thursday. All three are major players in equipment for AI data centers and should provide updates of spending trends within chips and servers. Economic data points will include home prices, the revised estimate of Q1 GDP, consumer confidence, and PCE inflation.
Our office, and the markets, will be closed on Monday in observance of Memorial Day. We wish you a safe and enjoyable long weekend!
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