What happened last week…
The three major indices notched back-to-back weeks in the green with last week’s performances as follows: DJIA (3.00%), S&P 500 (2.92%), NASDAQ (3.42%). Both the DJIA and the S&P 500 have made gains in nine straight sessions.
The GDP growth rate (first estimate) for Q1 2025 missed expectations (0.4%) as it decreased to -0.3% from the Q4 2024 rate of 2.4%, which was a decrease from the Q3 2024 rate of 3.1%. The Q2 2024 rate was 3.0% and the Q1 2024 rate was 1.6%. The current reading is the first contraction since Q1 2022.
The ADP employment change fell below expectations (120,000) as it decreased to 62,000 from the downwardly revised 147,000 (from 155,000). It is the lowest reading since July 2024 (42,000). The unemployment rate matched expectations as it remained at 4.2%. Nonfarm payrolls beat expectations (133,000) but decreased to 177,000 from the downwardly revised 185,000 (from 228,000). Average hourly earnings month-over-month landed below expectations (0.3%) as it decreased to 0.2% from 0.3%.
The manufacturing PMI for April beat expectations (48.0) but decreased to 48.7 from 49.0, which marks back-to-back contractionary readings (below 50).
According to FactSet, as of May 2, for Q1 2025, 72% of S&P 500 companies reported earnings with 76% having a positive EPS surprise and 62% having a positive revenue surprise. The blended earnings growth for the S&P 500 is 12.8%, which would be the second-straight quarter of double-digit growth. The blended revenue growth for the index is 4.8%, which would be the 18th consecutive quarter of growth for the index.
Happening this week…
On Monday, the non-manufacturing PMI for April is expected to decrease to 50.6 from 50.8, which marked nine straight months of expansion. The figure has expanded in 55 of the previous 58 months.
On Wednesday, the Federal Open Market Committee (FOMC) will make its interest rate decision. According to the CME FedWatch Tool, as of May 2, there is a 96.2% probability that rates will remain at 4.25% to 4.50%. The decision in March by the FOMC left rates unchanged for the second straight meeting.
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- The Rockline Team
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