Week (May 19-23, 2025) in Review: Financial Leaders

• The S&P 500 (SPY) declined by approximately 3.00% for the week, breaking a six-day winning streak.
• Bitcoin (BTC.X) hit new all-time highs above $111,000 but closed with a 1.92% gain.
• Gold (XAU/USD) prices rose by 3.13%, reaching $3,330.73 per ounce.
• The U.S. credit rating was downgraded by Moody’s from Aaa to Aa1, adding to market uncertainty.
• UK inflation surged to 3.5% in April, above expectations, while retail sales rose 1.2%, beating forecasts.

Overview

The week of May 19-23, 2025, was marked by significant volatility across financial markets. A U.S. credit rating downgrade by Moody’s, citing concerns over soaring budget deficits and high debt levels, contributed to a challenging environment for equities. Meanwhile, safe-haven assets like gold and high-growth assets like Bitcoin showed resilience, with the latter reaching unprecedented highs. In the UK, stronger-than-expected inflation and retail sales data supported the pound’s strength, influencing currency markets. These developments underscored the complex interplay of economic indicators, policy concerns, and market sentiment.

Financial Markets Weekly Recap

Equities

• S&P 500 (SPY): The index declined by approximately 3.00% for the week, closing at 5,784.49 on May 23, down from 5,963.60 on May 19. The index broke a six-day winning streak, with significant drops following the U.S. credit rating downgrade and souring market sentiment. Daily movements included a 0.39% drop on May 20, a 1.61% decline on May 21, a 0.04% decrease on May 22, and a 0.98% fall on May 23.
• Nasdaq Composite (QQQ): The Nasdaq faced pressure, with futures turning lower by 1.3% after the credit rating downgrade. Despite this, it stood as the only major index to post gains on some days, though overall performance was mixed due to heavy selling in tech stocks, particularly the "Magnificent 7" group, with Tesla (TSLA) being an exception.
• Individual Stocks:
  • Meta Platforms (META): Shares dropped 0.6% on Friday, extending a 2.4% loss from Thursday, closing at $640 per share. The decline was attributed to news of a delayed AI model.
  • Tesla (TSLA): Shares rose on Tuesday, bucking the broader tech slump, as CEO Elon Musk vowed to focus less on politics and more on business, with plans to remain CEO and launch the Cybercab in June.
  • Alphabet (GOOGL): Shares fell 1.5% on Tuesday after CEO Sundar Pichai announced a search overhaul, contributing to a year-to-date decline of roughly 13%.
  • Ralph Lauren (RL): Shares rose 1.2% on Thursday, driven by strong revenue of $1.7 billion, an 8% increase year-over-year, with earnings per share at $2.03 and adjusted EPS at $2.27.
  • Nvidia (NVDA): Shares remained 4% below the flatline for the year as of Thursday, ahead of an earnings report expecting $43.3 billion in revenue and $0.73 in earnings per share.

Currencies

• EUR/USD: The euro gained 0.54% against the dollar, closing at 1.1299 on May 23, up from 1.1238 on May 19. The dollar’s weakness was partly due to market reactions to the U.S. credit rating downgrade.
• USD/JPY: The yen strengthened, with the pair declining 1.69%, closing at 142.8360 on May 23, down from 145.2980 on May 19. Japan’s bond yields hitting an all-time high contributed to the yen’s gains later in the week.
• GBP/USD: The pound rose 1.55%, closing at 1.3512 on May 23, up from 1.3305 on May 19. Strong UK economic data, including inflation and retail sales, drove the pound to a three-year high.

Commodities

• Gold (XAU/USD): Prices rose by 3.13%, closing at $3,330.73 per ounce on May 23, up from $3,229.67 on May 19. The increase was driven by safe-haven demand amid market volatility and a weaker dollar, with a session high of $3,320 noted mid-week.

Cryptocurrencies

• Bitcoin (BTC.X): Bitcoin reached new all-time highs above $111,000, peaking at $111,673.28 on May 22, but closed the week with a 1.92% gain at $107,635.09, up from $105,606.18 on May 19. The cryptocurrency’s volatility underscored its appeal as a high-growth asset amid broader market uncertainty.

Economic Indicators and Policy Developments

• U.S. Credit Rating Downgrade: Moody’s downgraded the U.S. credit rating from Aaa to Aa1, citing financing challenges due to a nearly $37 trillion debt and a 124% debt-to-GDP ratio. This downgrade sparked market jitters, particularly impacting equities.
• UK Inflation: Inflation surged to 3.5% in April, above the expected 3.3%, with core inflation at 3.8%. This raised concerns about potential Bank of England policy tightening.
• UK Retail Sales: Retail sales rose 1.2% in April, significantly above the forecasted 0.2%, supporting the pound’s strength.
• U.S. Treasury Auction: A lackluster Treasury auction contributed to an 800-point drop in the Dow Jones Industrial Average on May 23, reflecting investor concerns about debt issuance.

Market Performance Summary

Summary

The financial markets navigated a turbulent week, with equities declining amid the U.S. credit rating downgrade and concerns over fiscal sustainability. The S&P 500 and Nasdaq faced significant pressure, while individual stocks like Meta and Alphabet struggled, though Tesla and Ralph Lauren posted gains. Currencies showed mixed performance, with the pound strengthening on robust UK economic data, and gold and Bitcoin both advanced, reflecting their roles as safe-haven and high-growth assets, respectively. The week highlighted the challenges of balancing economic growth with fiscal and monetary policy concerns, particularly in the U.S., while showcasing the resilience of certain asset classes in uncertain times.

Looking Ahead

Investors will likely focus on upcoming U.S. economic data, including GDP figures and Federal Reserve minutes, which could provide insights into monetary policy direction. Corporate earnings, particularly from Nvidia (NVDA), will be critical for gauging tech sector momentum. In the UK, the Bank of England’s response to rising inflation will be closely watched, as it could influence the pound’s trajectory. For cryptocurrencies, Bitcoin’s ability to sustain its recent gains will remain a key focus, with potential implications for broader market sentiment.

Disclaimers and Limitations