Weekend Update - 5|18|25

We saw a fantastic week for the U.S Stock Market last week. The S&P 500: Up 5.3% for the week, Dow Jones Industrial Average (DJIA): Up 3.4% for the week and Nasdaq Composite was up a humongous 7.2% for the week. The rally was driven by primarily by U.S.-China tariff reductions and moderating inflation (CPI at 2.3% in April). The Tech and consumer discretionary sectors led gains, while healthcare lagged. The tariff news has been the main bouncing factor. The S&P 500 is back into positive territory for the year, as investors extended the sharp gains for the week.


Let's see some of the Economic news last week

  • The consumer price index (CPI), which measures the costs for a broad range of goods and services, rose a seasonally adjusted 0.2% for the month, putting the 12-month inflation rate at 2.3% vs. 2.4% expected. Please note that the inflation has been going down for the last 3 months.
  • The Producer Price Index (PPI) came at  2.4% (vs. expected 2.5%). So, both CPI and PPI were really good as inflation came down both at consumer level producers level.
  • April 2025, US retail sales rose by 0.1% month-over-month, which was slightly higher than the 0% expected by economists. Year over year it increased 5.2%.
  • The consumer sentiment dropped to 50.8, down from 52.2 in April and hitting its second-lowest reading on record as inflation expectations jump after tariffs.
Economic News this week
  • Existing Home Sales report on Thursday, 5/22
  • New Home Sales on Friday, 5/23.
Earnings this week
  • TUE, 5/20: Palo Alto Network (PANW)
  • WED, 5/21: Snowflake (SNOW)

What to expect this week?

Last Friday after the close of stock market Moody's financial company who provides ratings for countries cut the United States’ sovereign credit rating down one notch to Aa1 from Aaa, the highest possible, citing the growing burden of financing the federal government’s budget deficit and the rising cost of rolling over existing debt amid high interest rates. Also, the Congressional Budget Office (CBO) rejected the offer for Trump Tax cut proposal citing that it will further increase the debt burden. Obviously, it was a blow to the Trump administration. We will see how it goes. But these two factors may impact the stock market to pullback. When market has gone up so much, it makes sense to see some pullbacks and that's healthy for the stock market. If history is any evidence, the U.S. stock market may see a short-term dip of 1-2% when trading resumes Monday, based on similar downgrades in the past (e.g., S&P 2011, Fitch 2023). The Volatility could increase, but a sustained selloff is unlikely unless broader fiscal concerns escalate. I also expect that any such pullback maybe a buying opportunity as we are in the bull market. But let's not forget that volatility may persist, so we should consider the risk tolerance and timing. As I say, market never go straight up on a straight line, so if such pullback happens then we should not be panicked. SO, let's be prepared for the worst and emotionally keep ourselves ready for such phenomena.


Stocks to watch this week

META, NVDA, AVGO, NFLX, TSLA, PANW, SNOW, SOXL, TQQQ, UNH, CRWV, TEM, FAS


Other News
  • Microsoft (MSFT) which is cutting 3% of its headcount, had 228,000 employees as of last June.
  • Nvidia (NVDA) sending 18,000 of its top AI chips to Saudi Arabia.
  • Quantum Computing Company QUBT came with reasonably good earnings sending its stock 40% last Friday.




Comments

Post a Comment

Popular Post

Shesa's SEPTEMBER 2025 - Investment Blog

  By Shesa Nayak Welcome to Shesa’s Blog U.S. Stock Market Update   The stock market had a reasonably good August despite some pullback at the end of the month. For the month of August, NASDAQ was up 1.6% for the month, S&P 500 was up 1.53% , fourth straight positive month and DOW soared 3% for the month. Though September is the worst month in the stock market, so far the S&P 500 is up 0.33%, and Nasdaq is up 1.14%. The Q2 earnings season is over. Nvidia and AVGO had another great quarter and fabulous guidance. It reminds us that AI is well and alive and will remain so in the foreseeable future . Having said that, it makes sense to be vigilant in September and possibly early October. September in general does not have good history for the stock market, so we have to strategize our investment decision.  Economic Gross domestic product ( GDP ) jumped 3.3% for the second quarter. All the inflation numbers viz. CPI, PPI and PCE have gone up, consumer spending...
Read more

Shesa's Weekend Update - 9|14|25

Welcome to Shesa's weekend update Last week, the U.S. stock market indexes  posted gains despite mixed economic data. The S&P 500 rose  1.75% , closing at 6,584.29, with a record high of 6,587.47 on Thursday, NASDAQ surged  2.92% , ending at 22,141.10, achieving five consecutive record closes, driven by AI optimism and big run on  Oracle  and  Tesla  stock, followed by anticipations of Fed rate cuts this week. The Dow gained 1.02%. Weak labor market data, including a  911,000 downward revision   in jobs  from April 2024 to March 2025 was a big blow. The jobless claims reached 263,000 (highest since October 2021). Despite these bad data the stock market had a fantastic week fueled by rate-cut hopes. Inflation data was mixed: August  CPI rose 2.9%  year-over-year, above the Fed’s 2% target, but  PPI  unexpectedly declined 0.1% month-over-month, up  2.6%  YoY.  Gold hit a record $3,681 per ounce, up 10...
Read more

Stock Market Weekly Updates 9|21|25

Welcome to Shesa's weekly Stock market updates This September has been fabulous thus far reversing the trend of the worst month. Last week, the indexes posted strong gains. The S&P 500 and Dow are up 1.2% and 1%, respectively, while the Nasdaq is up 2.2% . The Russell 2000 gained 2.2% , notched its seventh weekly advance all-time high first time since 2021. The Nasdaq has gone up 5.48% and S&P has gone up 3.16% this month.  Why did the market go up?  On Wednesday, 9/17, the Federal Reserve did cut its key interest rate by 0.25% for the first time since December, targeting labor market weakness like rising unemployment. The Fed fund rate stands at 4%-4.25% . Also Fed Chairman indicated that more cuts expected in 2025 ; economy growth forecast up to 1.6%; one dissent on policy; signals easing cycle amid steady inflation. Intel (INTC) shares rallied about 26% after   Nvidia  ( NVDA )  said it   will invest $5 billion in the chipmaker ...
Read more