What happened last week…
Moody's, a credit rating agency, downgraded US debt from AAA status to Aa1 on Friday citing increased spending and mounting debt as potential issues for one of the worlds most trusted debt issuers.
A trade deal between the United States and China has been reached. Both countries agreed to a 90-day pause that will lower tariffs on imports, bringing the current tariff on imports from China down to 30% from 145% and lowering the tariff on U.S. imports down to 10% from 125%. The 20% tariff on Chinese imports due to the country’s alleged role of brining fentanyl into the U.S. will remain. The deal, which went into effect on May 14, came together after representatives from both countries held trade talks over a weekend in Switzerland. Treasury Secretary Scott Bessent said the expectation is to meet with Chinese officials again in the next few weeks “to get rolling on a more fulsome agreement.”
After the trade deal announcement, the three major indices finished Monday’s session with performances as follows: DJIA (2.81%), S&P 500 (3.26%), NASDAQ (4.35%). The DJIA and the S&P 500 landed back in positive territory for the year where year-to-date performances for the three major indices are as follows: DJIA (0.26%), S&P 500 (1.30%), NASDAQ (-0.52%).
President Donald Trump was in Saudi Arabia at the U.S.-Saudi Investment Forum when the White House announced that Saudi Arabia made a commitment to invest $600 billion in various deals with the United States, including a $142 billion defense deal. It was also announced that Nvidia (NVDA) will sell more than 18,000 AI chips to Saudi company Humain for the purpose of a new data center project. Trump also signed an executive order that seeks to lower the cost of U.S. drug prices and be more similarly priced to those found abroad.
The inflation rate year-over-year for April beat expectations (2.4%) as it decreased to 2.3% from 2.4%, making it the lowest reading since February 2021 (1.7%). The rate peaked at 9.1% in June 2022. Meanwhile, the core inflation rate year-over-year for April matched expectations as it remained at 2.8%, which remains the lowest reading since March 2021 (1.6%).
Happening this week...
On Thursday, existing home sales for April are expected to increase to 4.10 million from 4.02 million, which would be the lowest reading since October 2024 (3.96 million). On Friday, new home sales for April are expected to decrease to 700,000 from 724,000, which would be the highest reading since September 2024 (726,000).
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- The Rockline Team
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