Week (May 5-9, 2025) in Review: Financial Leaders

Key Points

• Equity Markets: The S&P 500 (SPY) achieved its longest winning streak in 20 years earlier in the week but booked back-to-back losses midweek as traders awaited the Federal Reserve’s rate decision. Futures steadied after President Trump urged investors to “buy stocks now.”
• Gold Surge: Gold (XAUUSD) prices jumped nearly 5% to around $3,465 per ounce, driven by safe-haven demand ahead of the Fed’s meeting, before stabilizing as trade tensions eased.
• Cryptocurrency Surge: Bitcoin (BTC.X) broke past $104,000, fueled by optimism around a potential U.S.-China trade deal and Fed Chair Powell’s comments. Ethereum (ETH.X) surged 25% to $2,300.
• Currency Movements: The U.S. dollar strengthened, with the EUR/USD pair retreating as the dollar gained post-Fed decision. The USD/JPY pair snapped a three-day losing streak as the Fed held rates steady.
• Corporate Earnings: Disney (DIS) shares rallied 6% after strong earnings, while Tesla (TSLA) stock fell due to a 37% drop in European market share.

Overview

The week of May 5-9, 2025, was marked by heightened market activity driven by the Federal Reserve’s interest rate decision, President Trump’s ongoing policy rhetoric, and optimism surrounding U.S.-China trade negotiations. Equity markets experienced volatility, with the S&P 500 navigating a historic winning streak before midweek losses. Safe-haven assets like gold saw sharp gains early in the week, while cryptocurrencies, particularly Bitcoin and Ethereum, surged on trade deal hopes. Corporate earnings provided mixed signals, with strong performances from Disney contrasting Tesla’s challenges. The week underscored the market’s sensitivity to monetary policy and geopolitical developments.

Financial Markets Weekly Recap

Equities

Market Indices: The S&P 500 (SPY) marked a historic milestone early in the week, achieving its longest winning streak in 20 years. However, it recorded back-to-back losses midweek as traders adopted a cautious stance ahead of the Fed’s rate decision. By Friday, futures stabilized following President Trump’s public encouragement to “buy stocks now.” The Nasdaq Composite (QQQ) and Dow Jones Industrial Average (DIA) followed similar patterns, with tech-heavy indices showing resilience despite midweek dips.

Sector Performance: Technology and entertainment sectors outperformed, driven by strong corporate earnings. Semiconductor and AI-related stocks remained focal points for investors, while automotive stocks faced pressure due to Tesla’s declining European market share.

Corporate Highlights:

• Disney (DIS): Shares surged 6% after reporting a surprise earnings beat, with Q1 revenue exceeding expectations and strong performance in its streaming and theme park divisions.
• Tesla (TSLA): Stock declined after reports highlighted a 37% year-over-year drop in European market share, raising concerns about competitive pressures despite optimism for its low-priced electric vehicle.
• Berkshire Hathaway (BRK.A): Warren Buffett announced plans to step down as CEO, with key takeaways from the company’s annual meeting emphasizing succession planning and continued focus on long-term value creation.

Currencies

• U.S. Dollar: The dollar gained strength post-Fed decision, with the EUR/USD pair retreating as Fed Chair Powell reiterated that rates would remain unchanged, despite President Trump’s public criticism labeling him a “fool.” The USD/JPY pair snapped a three-day losing streak, supported by stabilizing market sentiment.
• Euro: The euro weakened against the dollar, reflecting reduced safe-haven demand as trade tensions eased.
• Yen: The Japanese yen saw early safe-haven inflows but later stabilized as risk-on sentiment returned with trade deal optimism.

Commodities

• Gold (XAUUSD): Gold prices surged nearly 5% to $3,465 per ounce early in the week, driven by safe-haven demand ahead of the Fed’s meeting. Prices later moderated as trade deal optimism reduced the need for hedges, ending the week around $3,400 per ounce.

Cryptocurrencies

• Bitcoin (BTC.X): Bitcoin rallied from $95,000 to break $104,000 by week’s end, fueled by Fed Chair Powell’s press conference and growing optimism for a U.S.-China trade deal. Traders are eyeing $100,000 as a key psychological level.
• Ethereum (ETH.X): Ethereum surged 25% to $2,300, reflecting broader crypto market enthusiasm tied to improved risk sentiment.

Economic Indicators and Policy Developments

• Federal Reserve Decision: The Fed held interest rates steady, ignoring President Trump’s calls for rate cuts. Powell’s press conference emphasized data-driven policy, sparking renewed crypto enthusiasm while equities erased daily gains.
• Trade Developments: Optimism for a potential U.S.-China trade deal gained traction, boosting risk assets like cryptocurrencies and equities while reducing demand for safe-haven assets like gold and the yen.
• Economic Data: Investors awaited upcoming releases, including the Personal Consumption Expenditures (PCE) inflation gauge and nonfarm payrolls, for further insights into inflation and labor market trends.

Market Performance Summary

The week was a dynamic mix of volatility and recovery, with the Federal Reserve’s rate decision and U.S.-China trade deal optimism shaping market movements. Equities navigated midweek losses but stabilized by Friday, while gold and cryptocurrencies reflected shifting risk sentiments. Corporate earnings provided key highlights, with Disney outperforming and Tesla facing challenges. The U.S. dollar’s strength underscored the Fed’s steady policy stance, despite political pressures.

Looking Ahead

• Economic Data: Upcoming PCE inflation and nonfarm payrolls reports will be critical for gauging inflation and labor market health, potentially influencing Fed policy expectations.
• Corporate Earnings: Continued focus on tech and consumer discretionary sectors, with additional earnings reports expected to drive stock-specific movements.
• Policy Developments: President Trump’s ongoing commentary on trade and monetary policy remains a key driver of market sentiment.
• Central Bank Actions: The Federal Reserve’s next moves will be closely monitored, particularly for signals on future rate adjustments amidst political pressures.

Disclaimers and Limitations