May 19, 2025
S&P 500 futures are down 1.1% in early Monday trading after a strong rally last week, where the index climbed over 5%, leaving it up 19.5% from April lows and over 1% YTD. Tariff-exposed, most-shorted stocks, big tech, and semiconductors led the recent charge. Global markets are softer: Asian indices were mixed with South Korea and Taiwan lagging, while European markets are down ~0.8%. Treasuries are under pressure, with the 10-year yield rising ~10 bps to above 4.50%, and the 30-year yield up 12 bps to over 5%. The Dollar Index is off 0.9%, while gold rose 1.8%. WTI crude fell 0.7%, and Bitcoin futures edged down 0.5%.
Key Drivers:
The decline follows Moody’s downgrade of U.S. credit from Aaa to Aa1 (stable), the last major agency to do so. The move adds scrutiny to U.S. fiscal stability amid concerns about rising deficits and potential renewed tariffs. Tariff rhetoric remains cautious, with President Trump warning of higher tariffs and renewed reciprocal measures for uncooperative trade partners.
Fed and Economic Calendar:
The week starts quietly on the data front, with no major economic releases until Thursday’s initial claims, PMIs, and existing home sales. However, multiple Fed officials, including Bostic, Jefferson, Williams, and Kashkari, are scheduled to speak this week.
Corporate Updates:
- JPM reaffirmed 2025 net interest income and expense guidance at its analyst meeting.
- NVDA announced plans to license AI communication technologies.
- AAPL faced scrutiny over its AI plans in China.
- TSLA is offering discounts and incentives to boost U.S. sales.
- WMT was criticized by Trump for planning to pass tariff costs to consumers.
- BA awaits a Justice Department decision on a potential non-prosecution agreement over 737 Max-related charges.
- GM is lobbying against California’s EV mandate.
- ONON is expanding efforts in China.
- NVAX secured FDA approval for its COVID-19 vaccine for high-risk groups.
U.S. equities ended the week higher, with the Dow Jones Industrial Average rising 0.78%, the S&P 500 gaining 0.70%, the Nasdaq Composite adding 0.52%, and the Russell 2000 advancing 0.89%. For the week, the Nasdaq surged over 7%, while the S&P 500 closed just ~3% below its February record. Treasuries were mixed with some curve flattening, while the Dollar Index climbed 0.2%, reversing early weakness. Gold fell 1.2%, capping its worst week since June 2021, while Bitcoin futures edged up 0.6%. WTI crude gained 1.3%, recovering slightly from Thursday’s 2.4% drop.
Sector performance was broadly positive, with Healthcare (+1.96%) leading gains, followed by Utilities (+1.42%) and Real Estate (+1.26%). Defensive sectors like Consumer Staples (+1.08%) and Industrials (+1.04%) also outperformed. On the other hand, Energy (-0.18%) was the sole sector in negative territory, while Technology (+0.12%) and Communication Services (+0.65%) lagged despite modest gains.
Economic data played a key role in market sentiment. The preliminary May Michigan Consumer Sentiment index came in at 50.8, significantly below the consensus of 55.0, marking its second-lowest reading since 1952. Inflation expectations rose sharply, with 1-year projections reaching 7.3%—the highest since 1981—and 5-10 year forecasts hitting 4.6%. Housing data for April showed mixed results: housing starts increased 1.6% month-over-month to 1.361M annualized but missed expectations of 1.385M, while building permits fell 4.7%, hitting their lowest level since October 2024.
Investor optimism was bolstered by the easing of U.S.-China trade tensions after last weekend’s tariff agreement, which reduced tariffs on both sides for the next 90 days. However, concerns linger over elevated tariff levels, persistent inflation, and weakening consumer sentiment. Federal Reserve officials maintained a cautious tone, emphasizing the importance of anchoring inflation expectations despite cooling CPI data for April.
Company-Specific News by Sector
Healthcare (+1.96%)
- NVO fell 2.7% after CEO Lars Fruergaard Jørgensen announced plans to step down, citing market challenges.
- DOCS dropped 10.1% following weaker-than-expected FQ1 and FY26 guidance, despite exceeding FQ4 EPS and revenue estimates.
Utilities (+1.42%)
- VST gained 3.0% after announcing plans to acquire seven natural gas generation facilities for ~$1.9B, which is expected to enhance free cash flow immediately.
Consumer Staples (+1.08%)
- POOL rose 2.3% after BRK.B disclosed a 145% increase in its stake, as revealed in its latest 13F filing.
Consumer Discretionary (+0.84%)
- CAVA fell 2.3% despite raising FY adjusted EBITDA guidance and reporting strong comparable sales growth, as analysts flagged elevated expectations.
- CCL added 1.7% after being upgraded by HSBC, which cited resilient booking trends and robust debt reduction efforts.
Industrials (+1.04%)
- CHTR climbed 1.8% after confirming its $34.5B acquisition of Cox Communications, including $12B in assumed debt.
- TEX rose 2.4% following an upgrade to Neutral from UBS, which cited benefits from easing U.S.-China trade tensions.
Technology (+0.12%)
- META faced challenges as it delayed the release of its “Behemoth” AI model, raising questions about the company’s AI investment returns.
- AMAT dropped 5.3% after delivering mixed Q2 results and issuing cautious guidance, with weaker demand in China and mature logic markets highlighted as headwinds.
Energy (-0.18%)
- EOG gained as investors reacted positively to its new exploration concession in the UAE, though the broader sector lagged.
Communication Services (+0.65%)
- CRWV surged 22.1% after NVDA disclosed a 7% stake in the company, boosting sentiment.
Materials (+0.91%)
- VMC rose 1.6% after an upgrade to Buy by UBS, which highlighted strong pricing and volume growth as potential offsets to broader industry challenges.
Financials (+0.69%)
- EL climbed 2.4% after investor Michael Burry disclosed a 200,000-share position in the company, as per the latest 13F filing.
Eco Data Releases | Monday May 19th, 2025
S&P 500 Constituent Earnings Announcements | Monday May 19th, 2025
No constituents reporting today
Data sourced from FactSet Research Systems Inc.
