Weekly Market Insights | Fed Talk Calms Volatility for the Week

The S&P 500 Index fell 0.5% this week as declines led by health care and communication services outweighed gains paced by industrials.

The S&P 500 ended the week at 5,659.91, up 1.6% in May and down 3.8% this year.

Concerns about the Trump administration's tariff policies have weighed on the stock market. Those worries were underscored on Wednesday as Federal Reserve Chair Jerome Powell, speaking after the central bank's policy-setting committee left interest rates steady, said: "If the large increases in tariffs that have been announced are sustained, they're likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment."

A bit of optimism emerged Thursday after a trade deal between the US and the UK was announced. On Friday, President Donald Trump indicated in a social media post that an 80% tariff on Chinese imports, which would reflect a cut from 145%, may be under consideration as Chinese and US officials prepare to meet this weekend. Many analysts still consider 80% as a high tariff rate, and no further deals have been announced.

Stocks Went Sideways

This week among sectors, health care posted the largest drop, falling 4.3%, followed by a 2.4% decline in communication services. Consumer staples, real estate and materials also declined.

Vertex Pharmaceuticals (VRTX) shares fell 15%. The company reported Q1 adjusted earnings and revenue that trailed estimates by analysts. At least two analysts downgraded their ratings on the stock.

In communication services, Match Group (MTCH) shares shed 11%. The company plans to cut its workforce by 13%.

Among the sector rallies in the week, industrials climbed 1.1%, followed by a 0.8% gain in consumer discretionary, a 0.5% rise in utilities and a 0.4% advance in energy. Technology and financials eked out small increases.

Rockwell Automation (ROK) shares jumped 16% this week. The company reported fiscal Q2 results that topped Wall Street projections and raised full-year earnings guidance.

Next week's earnings calendar features Cisco Systems (CSCO), Walmart (WMT), Deere (DE) and Applied Materials (AMAT).

Economic data will include the April consumer and producer price indexes, two closely watched inflation readings. April retail sales, industrial production and housing starts, as well as May consumer sentiment, are expected next week.

The Fed Fans Out

The Federal Reserve wanted to get its message out last week. Within 48 hours of the Fed’s decision to leave interest rates unchanged, nearly every Fed governor gave a solo speech or discussed the decision on a panel.

One Fed official spoke about the benefits of long-term stability from an independent Fed. At the same time, another said the Fed was paying close attention to what consumers did—and not just what they said, suggesting that flagging consumer sentiment didn’t necessarily mean a slowdown in spending.⁷

The Fed seemed to focus on managing expectations. Perhaps more importantly, Fed officials spoke from a coordinated playbook, possibly designed to help settle financial markets.

This Week: Key Economic Data

Monday: Federal Budget.

Tuesday: Consumer Price Index (CPI). NFIB Small Business Optimism Index.

Wednesday: San Francisco Fed President Mary Daly speaks.

Thursday: Retail Sales. Jobless Claims (weekly). Producer Price Index (PPI). Industrial Production. Business Inventories. Home Builder Confidence Index.

Friday: Import Price Index. Housing Starts. Building Permits. Consumer Sentiment.

^{Source: Investors Business Daily - Econoday economic calendar; May 9, 2025
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Wednesday: Cisco Systems, Inc. (CSCO)

Thursday: Walmart Inc. (WMT), Deere & Company (DE), Applied Materials, Inc. (AMAT), NetEase, Inc. (NTES)

^{Source: Zacks, May 9, 2025. Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

"Innovation is saying ‘no’ to 1,000 things."

– Steve Jobs

Don’t Forget to Take Advantage of the Work Opportunity Tax Credit

The work opportunity tax credit is a federal tax credit for business owners who have hired individuals from target groups that would have otherwise faced significant barriers when looking for a job. Some target groups include summer youth employees, those receiving Supplemental Security Income, or qualified long-term unemployment recipients. There are ten targeted groups in total.

The work opportunity tax credit equals 40% of up to $6,000 in wages paid or incurred, with a maximum credit of $2,400. The WOTC may consider up to $24,000 in wages for certain qualified veteran-targeted groups. The restrictions are on the IRS website.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional. 

Tip adapted from IRS⁸

Stay Safe This Summer With These Open Water Safety Tips

Summer is the perfect time to spend at the beach, lake, or river. But unfortunately, these natural bodies of water can also be hazardous if you don’t know how to stay safe. Here are some tips to help you and your family stay safe in the water this summer:

• Only swim in the designated swimming area. Take note of flags and buoys that mark where you can and can’t swim.
  
• When in doubt, get out! If something doesn’t feel suitable, such as a current picking up, it’s better to use caution and get out.
  
  
• Know the conditions before you swim. The more you know about water levels, temperature, and current, the better.
  
  
• Never swim alone when in open water. Always swim with a buddy who can look out for you, and you can look out for them.

Tip adapted from National Drowning Prevention Alliance⁹

What always shows up in the middle of March and the middle of April?

Last week’s riddle: A word appears, and six letters it contains. Subtract only one, then twelve remains. What is this word?
Answer: Dozens.

Golden Temple
Laojunshan, Luoyang, China

Footnotes and Sources

^{1. The Wall Street Journal, May 9, 2025}

^{2. Investing.com, May 9, 2025}

^{3. CNBC.com, May 5, 2025}

^{4. CNBC.com, May 6, 2025}

^{5. The Wall Street Journal, May 7, 2025}

^{6. CNBC.com, May 8, 2025}

^{7. The Wall Street Journal, May 9, 2025}

^{8. IRS.gov, November 11, 2024}

^{9. NDPA.org, December 12, 2024}

^{10. Provided by MT Newswires & Ycharts.com, May 5 - 9, 2025}