The Setup & Where to Focus

Stocks went up from Tuesday through Friday last week, led by gains in big-cap tech. 

• The S&P 500 climbed 4.6%—its fourth-best week going back to the bear-market lows of Q4 2022. The SPX also rose above the noted 5500 resistance level and is now at its highest level since Liberation Day. 

• The Nasdaq Composite inked a 6.7% advance, good enough for its second-best weekly ascent since October 2022. The tech-heavy index is now 18% above its April low. 

The Cboe Volatility Index (VIX) plunged for a third week in a row—recall it was above 60 just three weeks ago, but Wall Street’s fear gauge has collapsed to under 25, near its softest mark since Liberation Day. 

• Investors appear to be looking past the ebbs and flows with trade policy, but the S&P 500 is still 10% off its February 19th all-time high of 6147.

Zooming in on the 11 sectors, Information Technology (XLK) soared 8%, powered by the usual suspects. 

• NVIDIA (NVDA) rose 9.4% and is now back above $110 after falling under $90 at its April nadir. 

• Apple (AAPL) and Microsoft (MSFT) tacked on more than 6%. 

• The broader semiconductor industry was in full flight, helped by comments from Alphabet (GOOGL) that the search giant has no plans on veering from its $75 billion capex plans in 2025 despite tariff turmoil. 

• Moreover, at an energy conference last week, executives at Amazon (AMZN) and NVDA dismissed concerns over slowing demand for data centers providing AI. 

• The Mag 7 ETF (MAGS) leaped 9.4% for its best week since its April 2023 inception.

Strong earnings from GOOGL certainty helped, but perhaps more encouraging for tech bulls was the massive 18% rally in Tesla (TSLA) shares. 

• During its Q1 earnings conference call, CEO Elon Musk confirmed to investors that he intends to pull back from the Department of Government Efficiency (DOGE) to focus on leading the company. 

• The EV automaker reported downright weak first-quarter numbers, but TSLA jumped on the back of Musk’s decision to delegate DOGE duties. 

• This week, we’ll hear from MSFT, Meta Platforms (META), AAPL, and AMZN.

Back out big-cap tech, and stocks were still up. The S&P 500 Equal-Weight ETF (RSP) gained just shy of 3%, while the Vanguard US Large Cap Value ETF (VTV) added 2%. 

• It was indeed shades of 2023 and 2025 with the style breakdown, including soft performances from some of the market’s defensive niches, such as Consumer Staples (XLP), which was down 1.4%, along with Real Estate (XLRE) and Utilities (XLU) finishing flat during the data-light week.

While value stocks lagged growth shares sharply, small caps held up well compared with the S&P 500. 

• The Russell 2000 ETF (IWM) rose 4.1%, and the Vanguard Extended Market ETF (VXF), which holds all US stocks not in the S&P 500 Index, notched a 5% advance—its best week dating back to November. 

• Speculative biotech (XBI) and mid-cap Industrials helped the beaten-down group of domestic SMID caps. Sharp rallies in capital markets stocks, asset management firms, and regional banks were boons, too. 

• A busy past week of Financials sector earnings, FactSet noted investors reacted positively to bottom-line beats, perhaps a sign that sentiment was just too bearish coming into the Q1 reporting season.

The US Dollar Index (DXY) eked out a fractional gain last week after falling from 110 in January—right before Inauguration Day—to under 98 at last week’s low. 

• Reassuring words from Treasury Secretary Bessent may have had an effect, but resilient US economic data and corporate earnings guidance that was better than feared likely poo-pooed the extremely negative narrative put out by the mainstream media. 

• All eyes remain on US-China trade tensions—the current effective tariff rate between the world’s biggest economies is north of 100%, which we called out at the onset as being a de facto embargo. 

• It’s difficult to gauge which nation “has the cards,” so to speak, but China’s economic situation is precarious, while any hiccup in US supply chains would wreak havoc on domestic consumption. US consumer spending is, of course, vital to our economy. 

Amid much geopolitical drama, international stocks performed fine last week. The Vanguard FTSE All-World ex-US ETF (VEU) tacked on 3.4%, while the iShares China Large-Cap ETF (FXI) climbed 4.9% and is now positive by 12% in 2025. 

• Geo-momentum investors should eye price action in Latin America. Brazil (EWZ) is +20% on the year, while Mexico (EWW) is in full-fledged bull-market mode, up 23% since Jan 1. 

• More important for the global macro situation, the EURUSD currency pair paused near $1.15, resulting in the Vanguard Europe ETF (VGK) posting just a 3.5% rally last week, underperforming the S&P 500’s juicy return.

Over in the bond market, Treasuries were bid once again, which meant falling interest rates. 

• The yield on the benchmark 10-year Treasury note eased another 7 basis points to 4.27%. Its mid-April high of 4.59% drove President Trump to ease off the tariff gas pedal, but it’s important to call out that the 10-year rate has been merely rangebound since Q4 2022. 

• While the media drives a narrative of rising anxiety in the bond market, the benchmark rate is still almost three-quarters of a point below its Biden-era high of 5.0% notched in late 2023. 

• Last week’s yield dip resulted in a gain for the Aggregate Bond ETF (AGG). The 60/40 ETF (AOR) is back in positive territory for the year. Indeed, diversification continues to pay off in 2025 relative to a 100% S&P 500 allocation.

Gold has been diversification’s shining star year to date. 

• The Gold ETF (GLD) remains up 26% after falling modestly last week. Gold, the commodity, soared to a new all-time high of $3500 (precisely) last Tuesday. At the time, it was the precious metal’s best start to a year since 1974. Gold also made new highs on an inflation-adjusted basis. Support appears to be in play near $3,250.

• Elsewhere, WTI crude oil crept back up into the mid-$60s per barrel during the final full week of April, but sellers came about, pressuring Texas Tea back down to $63, below resistance in the $64-$65 zone. 

• As gold’s momentum eased, bitcoin came back to life. The iShares Bitcoin ETF (IBIT) jumped 14%--its best week of 2025. The cryptocurrency is up 27% from the month’s low. What’s notable for macro investors is that bitcoin has bucked the usual trend of tracking the Nasdaq 100. Rather, it has been behaving more like gold as trade-policy volatility persists.

Weekly Calendar Look Ahead

It was a light data deck last week, but macro updates come in fast and furious this week, with employment reports in focus. 

Monday’s slate is light, so eyes and ears will be on President Trump’s Truth Social and the White House after his return from Rome and meetings with foreign leaders overseas. The POTUS discussed policy with Ukraine's Volodymyr Zelenskyy and Italian Prime Minister Giorgia Meloni.

• The Dallas Fed Manufacturing Index prints at 10:30 a.m. ET with Treasury bill auctions later in the morning. 

• We’ll get the quarterly Treasury Refunding Financing Estimate in the afternoon, with the official Treasury Refunding Announcement crossing the wires Wednesday morning.

Tuesday begins the onslaught of labor market updates. 

• The March Job Openings and Labor Turnover Survey (JOLTS) comes at 10 a.m., and economists expect a small sequential drop in the number of available positions. 

• That shouldn’t move markets much, but trade data and housing market indicators could offer more real-time clues on the state of the economy. 

• The April Conference Board’s Consumer Confidence survey is released at the same time as JOLTS, and we expect more dismal figures. Of course, what people say often differs from what they do, and recent “hard” data has been much better than “soft” survey findings.

Wednesday’s employment briefing of note is the ADP Private Payrolls report. 

• Forecasters expect a solid +130,000 April non-government jobs gain, which would be slightly below 155,000 from March. 

• Fifteen minutes later, the first look at Q1 GDP hits the tape. The consensus calls for a 0.4% annualized real expansion pace, despite the Atlanta Fed’s GDPnow showing a negative US GDP estimate. Expect recession calls to grow louder if a sub-zero number is revealed, but with high consumer spending ahead of tariffs in March, we would not be surprised to see 0.5%-1.0% be the initial estimate. 

• Q1 Personal Consumption Expenditure (PCE) comes concurrent with the GDP update, a key inflation gauge for the Fed. Later in the morning, the full March PCE report is published, but with Q1 numbers in hand before that, economists will have a good beat on what the end-of-quarter inflation situation looked like. 

• As it stands, core PCE, which backs out food and energy, is seen as having risen by just 0.1% last month—very low. Of course, the Fed has made it clear that unless there’s a material deterioration in employment, they don’t intend to cut rates at the May 7 FOMC meeting. Odds remain elevated for a June ease, however.

Thursday is the first of the month, which means the ISM Manufacturing PMI is released. 

• Forecasters anticipate a second straight sub-50 headline number, which suggests contraction in that segment of the economy. The New Orders, Prices Paid, Employment, and Inventories sub-readings will be interesting; March’s Prices Paid component hit its highest mark since June 2022 (the height of Biden inflation), so the bulls will hope for a giveback there. Inventories, often an afterthought, may be in the spotlight this time, given the household and business stockpiling of goods before tariffs hit hard. 

• Away from the ISM Manufacturing PMI survey, Challenger Job Cuts comes in the premarket—that number spiked last month care of government layoffs. 

• Jobless claims come an hour later, and Initial Claims have been remarkably steady for the last few quarters, not sounding recession alarms.

Jobs Day is Friday. 

• The Nonfarm payrolls estimate is 130,000, which would be a steep fall from 228,000 in March, though there were weather impacts that likely benefitted hiring in the final month of the first quarter. The unemployment rate is expected to hold steady at 4.2%, while average hourly earnings is seen as having climbed by 0.3%, bringing the YoY figure to 3.8%. 

• We think it’d take a negative headline jobs print to rile the Fed up to cut rates in May, but there’s just not enough signs that the labor market has fallen much in recent weeks. 

• Factory Orders hits at 10 a.m., and April auto sales roll in during the day.

Fiscal Policy Framework

On the MacroScope Blog, we dove deep into the on-again, off-again angst President Trump has had with Fed Chair Powell. The POTUS now asserts he has no plans to fire the chairman, but we expect more public chastising of the FOMC chief the longer rate cuts are put off. If the economy weakens, Trump will likely use Powell as a macro scapegoat. 

As the jawboning comes and goes, Congress returns from recess. House Republicans face internal quarrels regarding spending and tax policies as they work to pass a reconciliation package ahead of Speaker Johnson’s Memorial Day deadline. We are now just eight months from the expiration of the president’s signature 2017 Tax Cuts and Jobs Act, so the clock is ticking. On the off chance that an extension is not passed, the stock market would likely plunge as the combination of tariffs and tax hikes would hit households hard, particularly if the jobs market keeps softening.

That’s all out in the open, behind closed doors, though, drama builds in the White House. The S&P 500 has done very well when Bessent is the center of policy attention, but when Commerce Secretary Lutnick or, worse yet, Peter Navarro is in front of the camera, stocks tend to puke. Last week, a Wall Street Journal report detailed that Bessent and Lutnick took advantage of Navarro’s absence to convince Trump to curb his tariff push. True or not, stocks reacted favorably to Bessent appearing to be the fiscal authority over the back half of April.

Trade policy now homes in on China. President Trump and Secretary Bessent have hinted at the possibility of reducing tariffs on Chinese goods, but for real headway to be made, sympathy moves would have to be signaled out of Beijing. While anything could happen at a moment’s notice, pressure could be building on Trump as China-to-US trade reaches a near standstill in shades of the COVID-19 supply-chain crunch. 

Over the weekend, China’s Politburo announced new financing and policy tools to boost economic recovery and prepare for external shocks. They plan to speed up ultra-long and local bond issuance, adopt a more proactive fiscal policy, and use moderately loose monetary measures. Interest rate and banking reserve requirement cuts will be timed as needed, according to reports, alongside new structural monetary tools to support growth and stability. More broadly, a potential US-South Korea pact could be a framework for deals with other allies.

Risks and Opportunities

• We are sort of where we were earlier this year—at a premium P/E multiple, given the macro backdrop. Even if trade tensions continue easing, it’s hard to conjure up a narrative asserting for an SPX earnings multiple above today’s 20x figure. So, while the risk premium was favorable earlier this month, we are turning more neutral. 

• More will be known after this week, given that it’s the busiest stretch for US large-cap earnings reports (36% of the SPX) and with the slew of jobs data set to be released.

• Our team would not be surprised to see a more tepid response to seemingly positive trade-deal reports in the weeks ahead now that stocks have retraced more than half of the peak-to-trough decline. Put simply, the bar has been raised, and fear has come out of the market; a mid-20s VIX suggests less protection is being demanded. 

• Keep your eye on the dollar—if it rallies back above 100 on the DXY, then that could spark a bullish false breakdown for the greenback, likely corresponding to more Mag 7 strength and less ex-US outperformance.

• Bitcoin may continue to work, too, given its significant alpha compared to the S&P 500 and Nasdaq; it has also hooked higher against gold.

• Treasury auctions and demand for US sovereign debt will be key—a steady yield curve (the 2s-10s spread now hovers near 50 basis points) would be encouraging in what has been a month of white-knuckle moments for bond investors.

Quick Hits

• A Zweig Breadth Trust triggered last week, a technical situation characterized by a sharp jump in the number of advancing stocks.

• Bearish sentiment is now at nine weeks running, the longest streak on record, per the weekly AAII survey.

• EPFR flow data reveal that investors have been net sellers of US Treasuries by the biggest amount since the March 2023 regional banking crisis.

• S&P 500 earnings revisions are at their worst level since 2020—another sign of negative sentiment, and further cuts would lead to a higher P/E ratio for US large caps.

• The Nasdaq rose 2% for three consecutive sessions last week—a feat last accomplished in 2001.