Weekly Market Update – May 19, 2025

Taylor Champion
2 days ago
3 min read

Price Return Last Week

S&P 500 +5.3% S&P Mid Cap +4.8% Russell 2000 +4.5%

MSCI EAFE +1.0% MSCI EM +3.1%

10 Yr US Treasury Rate – rose from 4.38% to 4.44%

Source: Refinitiv Eikon

Recent News

Tax Plan Proposal – House Republicans released their initial proposal for a new tax plan and hope to gain passage by Memorial Day. Among the key provisions in the nearly 400-page bill include extending the Trump tax cuts from his first term beyond their scheduled expiration at the end of the year, raising deductions for state and local taxes from $10,000 to $30,000, ending taxes on tips and overtime pay, and adding corporate incentives for making business investments. The proposal also raises the estate tax exemption amount to $15 million and makes it permanent. To pay for these and other items, cuts to Medicaid, ending electric vehicle credits, and reducing nutrition assistance were proposed. The Joint Tax Committee estimated the cost for the tax cuts to be $3.7 trillion over 10 years with Republicans aiming for $1.5 trillion in spending cuts to partially offset the reduction in revenues.

Source: Strategas, The Wall Street Journal, Politico, RSM

U.S. Debt Downgrade – Moody’s downgraded United States debt from AAA to AA1. They noted that they don’t expect long-term growth to be severely impacted by tariffs but do not expect any material multi-year reductions in mandatory spending based on current proposals. They now anticipate debt-to-GDP to increase from 98% to 134% in 2035. Moody’s was the last major ratings firm to hold a triple-A rating for the United States.

Source: Thomson Reuters, The Wall Street Journal

Core CPI – Apr: 0.2% (Reuters Poll est. 0.3%) Mar: 0.1%

Core inflation was reported slightly lower in April than economists had expected. This reading was particularly notable as it incorporates many of President Trump’s tariff announcements. However, analysts note that it could still take several months for tariff changes to show up in prices as recent sales most likely reflect items imported several months ago. The year-over-year change in core inflation was reported at 2.8%. Walmart stated on Thursday that they intend to raise prices this month as tariff-impacted merchandise hits their shelves. Walmart CFO John David Rainey stated that “the magnitude and speed at which these prices are coming to us is somewhat unprecedented.”

Source: Refinitiv Eikon, The Wall Street Journal

Q1 Earnings – Through Friday, 92% of companies in the S&P 500 had reported Q1 earnings. Of the companies that have reported, the blended year-over-year growth rate was 13.6%. This is the second consecutive quarter with double-digit earnings growth. Despite this strong performance, analyst estimates for earnings growth next quarter are just 4.8% as more of the impact from tariffs will likely be felt. Of the companies that reported earnings between March 15 and May 15, 411 used the word “tariff” or “tariffs” during their earnings call, setting a new high. In addition, 84% of companies cited “uncertainty” on their earnings call, the highest percentage since Q1 2020.

Source: FactSet

Ease His Pain – After being banned from baseball for over 100 years, Shoeless Joe Jackson was reinstated by Commissioner Rob Manfred. Manfred stated that he believed that a permanent ban ends once an individual passes away. With this change in interpretation, Joe Jackson and Pete Rose will become eligible for the Hall of Fame in 2028. While Jackson took money from gamblers to throw the 1919 World Series, one might not have known as he hit the only home run for either team, had no errors, and collected twelve hits, setting a new World Series record that would stand for nearly 50 years.

Source: The Associated Press, Shoeless Joe Jackson Museum, Society for American Baseball Research

Weekly Market Update – May 19, 2025

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