Market Overview
On May 5, 2025, global markets turned cautious as renewed uncertainty over U.S. tariff policy weighed on investor sentiment and ended the S&P 500’s nine-day winning streak. However, the recent data showing the U.S. services sector's resilience, despite the drag from tariffs imposed by President Donald Trump, is a reassuring sign.
Key Market Highlights
• The S&P 500 fell 0.64% to 5,650.38, the Nasdaq Composite dropped 0.74% to 17,844.24, and the Dow Jones Industrial Average declined 0.24% to 41,218.83, snapping the S&P 500’s longest rally since 20043.
• Oil prices slid to a four-year low, reflecting concerns about slowing global demand amid trade tensions3.
• Friday’s session closed positively, with all major U.S. indices up over 1%. The hope for a U.S.-China trade breakthrough, which could potentially lift the cloud of uncertainty, lifted sentiment, but the optimism faded as the week began.
Economic Data and Policy
• The ISM April Services PMI came in at 51.6, above expectations but below the first quarter average, indicating continued but slower growth in the sector that drives most of the U.S. economy23.
• The price component of the ISM survey jumped to 65.1, signaling a significant rise in input costs and potential inflationary pressures, which could be a cause for concern.
• These inflation signals, combined with robust labor market data, suggest the Federal Reserve is likely to keep rates on hold at its upcoming meeting, with Chair Jerome Powell expected to temper market expectations for rate cuts later in the year26.
Global Economic Impact of Tariffs
• The tariffs are already impacting multinational corporations and smaller businesses, with several major companies revising down sales targets and warning of possible layoffs1.
• The elimination of the “de minimis” duty-free threshold, which previously allowed small e-commerce shipments from China to enter the U.S. without tariffs, has hit smaller firms especially hard, leading some to exit the market1.
• The Bank of Japan and other central banks have lowered growth forecasts, citing trade disputes as a key factor.
• Factory surveys showed China’s manufacturing contracted at its fastest pace in 16 months, and U.K. exports dropped sharply, underlining the global reach of trade uncertainty1.
Disclosure
This article is provided for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation for any security, nor does it constitute investment advice, legal advice, or tax advice. All information, opinions, and analyses are based on publicly available sources as of May 5, 2025, and are believed to be accurate and reliable; however, no representation or warranty, express or implied, is made as to their accuracy, completeness, or correctness. The author does not hold any positions in the securities mentioned. Readers should consult their own financial, legal, or tax advisors before making any investment decisions.
Sources
- Reuters: Global economy already feeling drag from Trump tariffs
https://www.reuters.com/world/china/global-economy-already-feeling-drag-trump-tariffs-2025-05-05/ - TheStreet: Standouts From Latest Economic Data Will Drive Rate Cut Decision
https://pro.thestreet.com/portfolio/standouts-from-latest-economic-data-will-drive-rate-cut-decision - CNBC TV18: US Stock Market Highlights: S&P 500 snaps nine-day winning run
https://www.cnbctv18.com/market/us-stock-market-live-us-markets-dow-jones-snp-500-nasdaq-crude-crash-trump-china-tariffs-dollar-gold-impact-liveblog-19598820.htm - Nasdaq: Stock Market News for May 5, 2025
https://www.nasdaq.com/articles/stock-market-news-may-5-2025
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