S&P 500 Rises on Encouraging Data, Still Trails Global Stocks
Market Recap for the Week of May 4, 2025
Last week showed continued signs of recovery for the U.S. stock market. The S&P 500 gained 2.78% for the week. While it remains negative year-to-date, the index now sits more than 15% above the low point reached on April 8. A couple of economic data releases likely spurred optimism. Inflation, as measured by the PCE, was flat in March, rising 0% for the month. In addition, Friday’s jobs report showed that 177,000 jobs were added in April—significantly higher than the consensus estimate of 133,000.
Still, there remains a great deal of uncertainty regarding future economic data. At the Port of Los Angeles, imports last week were down 31% compared to the previous week. According to Gene Seroka, Executive Director of the Port of Los Angeles, some major American retailers have halted all shipments from China. It will take time for the full impact of the trade war to show up in the hard economic data. While the recent performance of the stock market suggests that the worst may be behind us, that outlook could change quickly once the effects of tariffs begin to hit the real economy. Despite the recovery in U.S. stocks, international stocks continue to outperform the U.S. market by about 15% year-to-date.
“Encouraging inflation and jobs data fueled a market rebound, but trade risks remind us that recovery remains fragile.”
Chart of The Week
This week’s chart, from Torsten Slok at Apollo Asset Management, shows the percentage of U.S. jobs in the manufacturing sector. Contrary to the narrative that NAFTA and China joining the World Trade Organization destroyed U.S. manufacturing, the chart reveals that manufacturing jobs were already in decline well before those events. Meanwhile, employment in service sectors—such as retail trade, finance, restaurants, and hospitality—has increased dramatically.
This rise in service-sector employment coincides with a significant increase in the percentage of the U.S. population that is college-educated, a trend that has accelerated since the 1940s. Bottom line: far fewer people work in manufacturing jobs today, but this isn’t necessarily negative. Our economy has transitioned from primarily producing goods, to producing services, and the overall unemployment rate remains low at 4.2%.
The commentary in this blog is for informational purposes only and should not be taken as personalized investment advice
Sources: BLS, Macrobond, Apollo Chief Economist
