What happened last week…
A few headlines that the markets kept a close eye on last week included Moody’s downgrade of the United States’ credit rating, a proposed tax bill, and a tariff threat on the European Union. The three major indices finished with weekly performances as follows: DJIA (-2.47%), S&P 500 (-2.61%), NASDAQ (-2.47%).
The United States’ credit rating was reduced to Aa1 from the highest rating of Aaa, with Moody’s citing, “The increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.”
President Donald Trump’s tax bill passed in the House of Representatives by a vote of 215-214. The bill will go to the Senate for another vote. Included in the tax bill is an increase in the federal deduction limit for state and local taxes (SALT), which would rise to $40,000 from the current limit of $10,000.
On Friday, Trump said he is “recommending a straight50% Tariff on the European Union” that would go into effect on June 1. Trump voiced his displeasure about trade talks with the European Union “going nowhere.” The tariff threat came shortly after Trump stated that Apple(AAPL) would have to pay a 25% tariff on iPhones that were manufactured outside of the United States.
In a video interview at the Qatar Economic Forum, Tesla(TSLA) CEO Elon Musk said he will remain the head of the company for the next five years and wants “sufficient voting control” so he cannot be removed by activist investors. In a CNBC interview, Musk said the company will have robotaxis in Austin, Texas by the end of June, with planned robotaxis in Los Angeles and San Francisco at a later date.
Existing home sales for April missed expectations (4.10 million) as it decreased to 4.00 million from 4.02 million. It is the lowest reading since October 2024 (3.96 million).New home sales for April beat expectations (692,000) as it increased to 743,000 from the downwardly revised 670,000 (from 724,000). It is the highest reading since February 2022 (788,000).
Happening this week…
On Thursday, the GDP growth rate(second estimate) for Q1 2025 is expected to match the first reading of -0.3%, which was a decrease from the Q4 2024 rate of 2.4%. The Q3 2024 rate was 3.1%, Q2 2024 was 3.0%, and Q1 2024 rate was 1.6%. The current reading is the first contraction since Q1 2022.
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- The Rockline Team
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