S&P 500 Falls Back into Negative Territory YTD
Market Recap for the Week of May 25, 2025
Last week was slightly negative for the U.S. stock market. The S&P 500 lost a bit more than 2.5% and slipped back into negative territory year-to-date. Last Monday, the Conference Board released its Leading Economic Indicators for the month of April, which showed a significant decline. This signals that the economy is likely to slow over the next six months. However, these indicators have been negative for more than two years, and the economy has yet to fall into a recession—calling into question the predictive power of this widely followed index.
Due to Memorial Day, this will be a shortened trading week, with markets closed on Monday. Markets might open negatively on Tuesday, as tariff rhetoric ramped up over the weekend. The president stated that trade talks with the EU are going nowhere, and the threat of a 50% blanket tariff on the EU is back on the table. There are likely two ways the market could respond. If market participants believe the threat is real, it may trigger selling. However, after all the back-and-forth we've seen on tariffs, the market might ignore this news, as the narrative from the White House seems to change weekly, if not daily. The coming months will also be crucial, as economic data will begin to reflect the impact of implemented tariffs. For now, there is a lot of speculation about their effects, but very little hard data.
“Leading indicators point to slower growth, but after two years of false alarms, markets remain focused on tariffs and uncertainty.”
Chart of The Week
Our chart of the week, provided by JPMorgan, offers insight into trade exposure. It shows the percentage of revenue that comes from foreign sales, broken down by sector. As you can see, the tech sector generates a significant portion of its revenue from international markets. The concern here is the potential damage caused by weakened trade relations. If we choose to make things difficult for the EU, they could, in turn, reduce their purchases of U.S. products and services—which are primarily services rather than goods. This chart serves as a warning that we should not sever relationships with key trading partners, as they purchase a substantial share of the services we produce.
The commentary in this blog is for informational purposes only and should not be taken as personalized investment advice
Source: FactSet, Standard & Poor’s, J.P. Morgan Asset Management. Guide to the Markets – U.S. Data are as of May 22, 2025.
