Market Recap- Week of Apr. 28 through May 2, 2025
- Gordon Achtermann, CFP®, CSRIC®, MBA
- May 5
- 3 min read
The S&P 500 index rose 2.9% this week as April jobs data came in above expectations. The market benchmark ended Friday's session at 5,686.67.
However, the S&P slipped 0.8% in April, marking its third consecutive monthly decline. The index is down 3.3% for the year on worries about the impacts of the Trump administration's economic policies, particularly the ongoing trade war with several countries including China.
Data released Friday by the Bureau of Labor Statistics showed total nonfarm payrolls rose by 177,000 in April, surpassing the consensus estimate compiled by Bloomberg for a 138,000 increase. The unemployment rate was steady at 4.2% in April, in line with the market view.
By sector, industrials had the largest percentage increase of this week, climbing 4.3%, followed by a 4.2% rise in communication services and a 4% advance in technology. Financials and real estate were also strong, up 3.6% and 3.4%, respectively.
Energy was the lone sector that posted a weekly decline, slipping 0.7%. The sector's drop came as crude oil futures fell on the week.
Key data last week
· Real GDP fell 0.3% during 1Q25. (2 consecutive quarters of decline usually means there is a recession.)
· Nonfarm payrolls rose by 177k.
· Consumer confidence fell to 86.0, down sharply from 92.9 last month. (Anything below 100 indicates pessimism.)
S&P 500 Sector and Stylebox Returns
Thought of the week
Last week’s busy slate of data helped give investors a better idea of how the economy is faring amid policy uncertainty. The 1Q25 GDP report revealed the U.S. may be closer to recession than expected, with a tariff-driven spike in imports dragging real growth down 0.3% annualized. The labor market, however, continued to look solid. The April Jobs report showed that businesses added 177k jobs during the month and 398k during the first quarter. Taken together, this data suggests that we may be in the early innings of a policy-induced productivity slowdown.
Productivity measures the efficiency of U.S. workers and is derived by dividing real output by total hours worked. It is inherently cyclical, often weakening alongside economic activity. This is because firms may be hesitant to reduce the size of their workforce, even as the economy contracts. For management teams, this decision is even more complex today than in previous cycles, as growth prospects hinge on policy, which remains unclear.
Why should investors care about productivity? It is a key driver of profit margins, as greater productivity allows companies to increase revenues without a proportional increase in costs. Margin expansion has been the key driver behind earnings growth in recent quarters. However, inefficiencies induced by tariffs and restrictive immigration could hurt productivity. Indeed, companies have expressed concerns about maintaining margins during the 1Q25 earnings season. So far, over 60 companies have revised down EPS guidance, the most since 1Q 2014. Should companies have difficulty expanding margins, they may fall short of analyst estimates for 9% earnings growth this year.
Source: JP Morgan
Up Next
Economic data will include the March trade deficit, consumer credit, wholesale inventories, and Q1 productivity. Also, the Federal Reserve's Federal Open Market Committee will hold a two-day meeting, concluding with a press conference.
All the Best,
Gordon Achtermann, CFP®
703-573-7325
Your Best Path Financial Planning
