What we learned last week:
“Silence is a true friend who never betrays.” – Confucius
There was no shortage of headlines last week. Yet it may have been less about what made headlines and more about what didn’t that moved markets.
After hitting record highs – with the Dow closing above 50,000 for the first time, the three major indexes finished the week just about where it left off the prior week.
Led by the father of the AI mega trend, Nvidia, all three indexes finished Wednesday and Thursday at all-time highs. Nvidia became the first company in 2025 to cross the $4trillion market cap threshold, the first to reach $5trillion, and last Wednesday the company surpassed $5.5trillion in market cap for the first time.
Optimism on Wall Street was high as Nvidia’s CEO Jensen Huang joined other tech CEOs during the Trump-Xi summit trip in China. The CEO was a late addition to the trip sparking investors’ interest in the stock. Additionally, an announcement that the U.S. cleared Nvidia’s H200 chip for sale to 10 China firms – clearing national security walls for additional revenue sources for the company.
In today’s interconnected world, one day’s time can quickly change market outlook.
Missing from the Trump-Xi summit this past Thursday and Friday was any resolution, or indication of a resolution to Iran and lower energy prices.
Bond yields spiked Friday on concerns about oil prices and inflation, the tech-heavy Nasdaq Composite slid 1.5%, dragged lower by a 4% decline in Nvidia, the S&P 500 fell 1.2%, while the Dow Joines Industrial Average lost 1%.
With the prolonged rise in global oil prices, the energy sector was last week’s winner and is trouncing the other 10 sectors year-to-date.
Ending with a look at economic indicators, there was no indication inflation is slowing. Both inflation indicator reports last week, Core CPI and PPI, raised concerns about higher energy prices are raising prices of goods and services across all industries.
This dynamic of higher prices makes managing interest rates policy for the newly confirmed Fed Chairman, Kevin Warsh challenging. Investors started the year expecting rate cuts, those expectations have moved to no cuts or rate hikes at the Fed’s December meeting.
Nvidia stays in the headlines as the company reports first-quarter earnings after market hours this Wednesday. Their report and fiscal year outlook are slated to be market moving. The US consumer and price outlook will be in the spotlight as several of the countries’ largest retailers report earnings, potentially setting up investor sentiment for the short-term future.
What’s ahead this week:
Economic Events
- Quite week of economic indicators. Initial jobless claims change will continue to have investors’ attention.
- S&P services and manufacturing (Purchasing Managers’ Index) PMI will be looked at for signals on the health of the economy
Earnings
- Several significant consumer companies first quarter earnings report and fiscal year outlook will be of interest
- Home Depot
- Toll Brother, the nation’s largest home builder
- Lowes
- Target
- Walmart
- Most of the attention will be on AI leader Nvidia and their first quarter earnings report and outlook. Nvidia reports after hours Wednesday and we can safely anticipate the market’s reaction will ripple through many other stocks
My goal is for you to feel educated and informed about variables we do and don’t have control over and find ourselves working within. I hope to do it in an informative and relatable way. As always, I value your relationship and planning objectives – my door is always open for conversation.
