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Market sentiment seemed more positive this week as Trump announced the possible easing of tariffs imposed on China. There was also an announcement of a trade deal between the United States and United Kingdom as well as the promise of more deals to come. However, trade talk wasn’t the only big news item this week as the Fed made its May rate decision on Wednesday.

The ISM Services PMI was released on Monday, which came in at 51.6 compared to an expected 50.2. This means that demand for services is still strong, which may play a role in how quickly inflation falls back toward 2 percent. This month’s figure was also higher than the April reading of 50.8.

On Wednesday, the Fed announced that it was holding the nation’s key interest rate at 4.5 percent. This was a widely expected outcome as most predicted that the Fed would stand pat until there was more certainty regarding Trump’s trade policy. In the FOMC statement, Jerome Powell noted that there was still a possibility of higher inflation and the potential for stagflation. Stagflation is the combination of inflation and stagnant growth, which means that the Fed must choose which problem is most important to address.

There is still a strong chance that the Fed will cut interest rates later in the year as more data becomes available regarding tariffs and their impact on the economy. It’s worth noting that other major central banks have begun or continued an easing cycle, so the United States is bucking the global trend by retaining the status quo.

On Thursday, Trump announced that he would be holding talks with China about a trade deal. He acknowledged that tariffs couldn’t go much higher than the 145 percent level, so it was only natural that they come down even if talks don’t necessarily lead to a deal right away.

On Friday afternoon, a slew of FOMC members gave talks around the country. The general message was that most of the data used to evaluate economic conditions came with a lag. Therefore, it’s still too early to determine how tariffs or other changes to policy might impact the economy going forward.

The S&P 500 finished the week slightly higher closing up .3 percent to finish at 5,659 on Friday afternoon. This represents a gain of 16.79 points for the index that is up 13 percent over the past month. The weekly low of 5,588 was established on Tuesday morning while the high of the week of 5,717 was established on Thursday afternoon.

The Dow was also up this week finishing .33 percent higher to close at 41,429. The Dow is now up about 10 percent this month after dropping significantly in April. On Tuesday morning, the index made its low of the week dipping to 40,822 while it made its high of the week of 41,739 on Thursday afternoon.

Finally, the Nasdaq finished the week up .53 percent to close at 17,928. The index is now up slightly more than 16 percent over the past month after gaining just over 94 points over the past five trading days. For the week, the index made a low of 17,530 on Wednesday and a high of 18,082 on Thursday.

In international news, Great Britain announced on Thursday that it was going to reduce its key interest rate from 4.5 percent to 4.25 percent. On Friday, Canada announced that its economy added 7,400 jobs over the past month.

On Tuesday, CPI figures are set to be released while Thursday sees a number of items on the calendar such as the Price Producers Index (PPI) and retail sales data. Unemployment claims and a speech from Jerome Powell are also on the schedule for Thursday. On Friday, the University of Michigan is set to release its consumer confidence and inflation expectation reports.

As April transitions into May, market participants got their first clear insight into how the new tariffs are impacting the economy. The Friday report from the Bureau of Labor Statistics offered some optimism as employers added 177,000 jobs over the past month. This was more than the projected 138,000 new jobs and was only slightly below last month’s figure of 185,000.

On Tuesday, the CB Consumer Confidence Report and the JOLTS Report were released. The consumer confidence reading was 86, which was lower than the March reading of 93.9, which had been revised upward prior to Tuesday’s release. We will have to wait to see if there will be revisions to the most recent number. There were 7.19 million positions available in the United States in April, compared to an expected 7.49 million openings. Last month, there were 7.48 million jobs available.

The Core PCE Price Index came in flat, which means that prices remained stable over the past month. Over the past few years, this has been the Federal Reserve’s preferred method of tracking inflation. A flat reading brings more speculation that rate cuts will be forthcoming.
Unemployment claims for the past week were higher than expected. There were 241,000 requests for benefits compared to an expected 224,000.

The ISM Manufacturing PMI reading came in at 48.7, which was slightly higher than expected. It was believed that the April reading would come in at 48.

On Friday, average hourly earnings as well as the unemployment rate for the past month were released. Average hourly earnings went up .2 percent compared to an expected .3 percent while the unemployment rate remained at 4.2 percent. A slower wage growth is considered less inflationary and should make it easier for the Fed to continue its easing cycle.

The S&P 500 was up 147 points this week to close at 5,686, which was a gain of 2.47 percent over the past five trading days. On Wednesday morning, the index made its weekly low of 5,452 before reversing and gaining ground the rest of the week. The market made its weekly high of 5,697 late Friday afternoon.

The Dow also finished the week in positive territory gaining 1,091 points to close the week at 41,317. This represented a gain of 2.71 percent for a market that had been particularly hard hit by the recent sell-off. As with the S&P 500, the Dow made its low of the week on Wednesday and closed near its weekly high. The low of the week was 39,843 while the high was 41,341.

Finally, the Nasdaq finished up 566 points to close the week at 17,977. This was a gain of 3.25 percent for the week. As you may expect, the index made its weekly low on Wednesday before reversing and closing near the weekly high. The weekly low for the Nasdaq was 17,021 while the weekly high was 18,042.

In international news, Mark Carney was elected to a full term as Canada’s head of state. He recently took over for Justin Trudeau who resigned after polling indicated that he had lost the confidence of his party and voters. Also this week, the Bank of Japan (BOJ) announced that it would take a more dovish approach to inflation, vowing to wait until 2027 to take more aggressive moves.

The upcoming week should be an interesting one as a couple of key reports are set to be released. On Tuesday, the ISM Services PMI will come out while the FOMC releases its May rate decision on Wednesday. It’s expected that rates will remain unchanged in May before a possible cut in June.

The final full trading week in April was yet another consequential one as markets continued to grapple with tariff implications. This week, it was revealed that tensions with China could ease as both sides understand that a protracted trade war could lead to long-term damage.

There were several scheduled announcements that also contributed to market volatility over the past few days. On Monday, the Flash Manufacturing PMI report came in at 50.7, which was slightly higher than the expected reading of 49. It also indicates that the manufacturing sector is in a period of expansion, which has been a rare sight over the past few years.

On Wednesday, the Flash Services PMI came in at 51.4, which was slightly lower than the expected 52.2. Despite the miss, the reading says that the service sector is also expanding. While an increase in manufacturing may be the result of companies trying to buy products before tariffs fully go into effect, the same can’t be said of services. Instead, it may indicate a source of economic strength going forward.

Also on Wednesday, it was revealed that new home sales were higher than expected in March. In that month, there were 724,000 new homes sold compared to an expected 684,000. Home buying can also be seen as a positive sign for the economy as new homeowners generally spend money on furniture, home maintenance projects and other items.

However, this may be tempered by the results of the existing home sale report. On Thursday, it was revealed that 4.02 million such properties were sold compared to 4.27 million a month ago.

On Friday, the University of Michigan revealed its consumer sentiment and inflation expectations data. Consumer sentiment rebounded slightly to 52.2 from 50.8 last month. Respondents expect the inflation rate to be 6.5 percent a year from now, compared to 6.7 percent last month.

The S&P 500 made up some of its losses for the year as it finished up 5.72 percent for the week. The market made its low of the week on Monday when it dipped to 5,104 and closed the week at its highest point. Despite the rally during the last five trading days, the index is still down 4.13 percent in April.

As with the S&P 500, the Dow was also higher this week closing up 1,422 to finish at 40,113. This was a gain of 3.68 percent for the last five trading days during a week that saw the market start near its low and gain ground as the week progressed. On Monday afternoon, the Dow made its low of the week at 37,952 while it closed at its highest point of the week on Friday afternoon.

Finally, the Nasdaq also saw significant gains this week as the index surged 8.22 percent to finish at 17,382 at the close of trading on Friday. As with the other two major indexes, the Nasdaq started at the low of the week and closed near the highs on Friday. On Monday, the market dipped to 15,741 before reversing.

In addition to news in the United States, there were a few major new items that were released by other nations. On Friday, it was revealed that retail sales in Great Britain were up .4 percent over the past month compared to an expected drop of .3 percent. On that same day, Canada announced that retail sales dipped .4 percent, which was in line with expectations. However, core retail sales were up .4 percent compared to an expected dip of .3 percent.

The upcoming week should be another interesting one as there will surely be more fallout and uncertainty regarding tariff implementation. For instance, the JOLTS report is scheduled for Monday while the nonfarm payroll reports are expected to come out on Wednesday and Friday.