Weekly Investment Perspective

U.S. equities continued to rebound higher last week with support from solid corporate earnings reports, resilient labor market data, and rising optimism for a gradual de-escalation in trade tensions, though hard details on trade deals remain sparse and new tariff announcements are keeping a lid on investor enthusiasm. For the week, the tech-heavy Nasdaq Composite led the way with a 3.4% gain while the S&P 500 and Dow Jones notched strong returns of 2.9% and 3.0%, respectively. However, stocks are under pressure in this week’s early trading following an announcement from President Trump over the weekend that the U.S. will impose 100% tariffs on foreign-made films. Energy stocks are also slumping lower on news that OPEC members plan to hike output, which has sent the price of oil down even further with WTI crude oil prices now down over 20% so far on the year.

The new tariff announcement stands in contrast to other recent comments from the White House attempting to dial back trade rhetoric and shift the conversation toward tax cuts and deregulation. President Trump has hinted that trade deals may come as soon as this week and suggested that he would lower tariffs on China “at some point”, while also saying that he has no plans to meet with China’s President Xi over the near term. The mixed signals on trade will keep stocks in choppy waters near-term, while the effects of eroding consumer purchasing power and stalled business investment plans start to show up in the hard economic data.

Last week’s April job reports gave an important initial read on post-liberation day labor market dynamics. April’s job numbers came in better than feared with 177k net payrolls added to the economy, though the prior two month readings were revised down by 58k collectively. Unemployment stayed steady at 4.2%. Private service sectors drove the upside surprise, while goods producers and federal employment were weak as anticipated. While the headline numbers were reassuring, under the hood there are some signs of further softening including rising duration of unemployment for those looking for work as new job openings trend lower.

Aside from the labor market data, investors generally overlooked a weak initial read of first quarter U.S. GDP growth that was impacted by a surge in imports to front-run tariffs. U.S. GDP fell 0.3% in the first quarter, marking the first decline in economic growth in three years. The foreign trade deficit was the primary culprit as imports surged 41%, which took off 4.8% points from GDP. The negative trade impact will work the opposite way in the second quarter GDP, and this report may see material revisions yet.

While the headline GDP number is noisy and difficult to draw conclusions from, slowing consumer spending is worth watching as consumption growth fell from 4.0% in the fourth quarter to 1.8% in the first quarter. Consumers have yet to feel the impact of tariff-induced price increases, and they are also grappling with other headwinds such as the resumption of student loan payments following years of loan payment suspension in the wake of the pandemic.

Amid this cloudy economic backdrop, the Federal Reserve will be front and center this week with the central bank scheduled to give an update on its monetary policy plans on Wednesday. The Fed is expected to leave interest rates unchanged this week and reiterate a mantra of patience as the labor market data remains on firm footing and inflation is expected to tick higher. While the Fed is expected to hold pat at this week’s meeting, the market still reflects expectations for 3 to 4 rate cuts in 2025, likely starting in July.

Corporate earnings will also remain in focus this week with another busy reporting calendar before first quarter earnings season begins to wind down. To date, first quarter earnings season has settled some investor nerves with better than expected results as the S&P 500 is on track to post year-over-year earnings per share growth of 12.8%, compared with expectations of just 7.2% growth at the end of March. While first quarter results and management comments on the second quarter outlook were generally well-received, they may be bolstered by pulled forward demand to front run tariffs. The second half earnings outlook remains vulnerable if trade negotiations don’t start to yield more tangible progress soon.

As markets continue to navigate policy uncertainty and volatility, the announcement of Warren Buffett’s retirement marks the end of an era for investors. For nearly six decades, Buffett built Berkshire Hathaway into one of the most admired and successful companies in the world—not just through extraordinary returns, but by championing timeless investment principles: patience, discipline, and an unwavering belief in long-term value. His legacy reminds us that market noise is temporary, but sound judgment endures. In his own words, “The stock market is designed to transfer money from the Active to the Patient.” Amid today’s shifting headlines, that perspective may prove more valuable than ever.

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