This week on 7 Market Movers, Portfolio Consulting Director Aya Yoshioka dives into the latest news on tariffs, taxes, and economic indicators. While the S&P 500 is back into positive territory for the year, Aya discusses the potential future impacts of tariffs on consumers and businesses and what to expect with interest rate cuts.
If you have further questions about how the current economy and market environment could affect your financial plan, reach out to a Wealth Enhancement advisor today.
TRANSCRIPT:
Hi there. My name is Aya Yoshioka, and I'm a portfolio consulting director and senior investment strategist here at Wealth Enhancement. Thanks so much for joining me today.
Well, the S&P 500 is back in positive territory, up 0.6% year to date through May 15th. Stocks have rebounded from the lows, and we are now less than 4% away from the February 19th highs.
Tariff talk has deescalated. We're getting some positive movements on the tax front. Sentiment has come back to slightly positive. And, additionally, we're at the tail end of earning season, and we saw S&P 500 companies grow first quarter earnings by twelve percent year over year, a solid showing.
This week, we got economic data that moved markets, including data mostly on the inflation front. We saw CPI data come in at 2.3% helped by lower energy prices. However, if you exclude food and energy and look at those core CPI numbers, we're looking at a number closer to 2.8%, which is probably closer to what we're all feeling. But it was consistent with what we saw in March as well.
We also got data on the producer price index or PPI which tracks price changes for businesses and at the producer level. And PPI for April came in at 2.4%, down from the March reading of 2.7%.
And this can indicate that perhaps some businesses may be absorbing some of those extra cost associated with tariffs at least on some level in order to avoid a bigger pull back in demand at a time when you know consumers and, buyers are already, feeling really uneasy about making purchasing decisions.
We may have seen we may not have seen the full impact of these tariffs just yet. We know we're, on a pause, some have been delayed, and we don't know if there'll be, you know, further escalation at some point or changes, to a lot of the details here. We may get additional, positive announcements in the coming weeks as well.
But we do know that at least for now, the effective tariff rate is looking to be closer to that low to mid teens level relative to about the 28% that was being anticipated at the height of the trade war.
We also got retail sales data this week, and that showed a contraction in April down 0.2% and seven out of the thirteen retail categories, reported declines including apparel, and gasoline. The one area that we did see a nice increase was, restaurants and bars.
Lastly, we're closely watching the labor market. It is our belief that as long as the labor market remains relatively healthy, the economy can experience more of a gradual slowdown. Just reflecting the lack of demand related to this supply shock given the tariff situation.
On the labor front, we did see the announcement that Microsoft was reducing their labor force by 3%. But we also saw initial jobless claims, that were in line with last week.
Looking at interest rates, the two year is just under four percent. And we're back to pricing in two rate cuts, for 2025 from the Fed versus the 3.5% that was getting priced in, at the peak of market turmoil.
The ten year is also back to where it started the year, near 4.5%. And gold is no longer making new highs every day and it's bouncing around at $3,200 level per troy ounce.
I think this indicates that uncertainty is no longer getting elevated on a daily basis. We're sort of finding our footing here, but it hasn't been eliminated altogether.
We do think that perhaps the worst might be behind us at least for now, but we know that things can change, with one tweet or a new news headline.
That's all I have for you today. Thank you so much for listening. And if you have any questions, please reach out to your financial advisor, and an investment team member would be happy to discuss markets with you. Thanks so much.
This information is not intended as a recommendation. The opinions are subject to change at any time and no forecasts can be guaranteed. Investment decisions should always be made based on an investor's specific circumstances. Investing involves risk, including possible loss of principal.
2025-7843
