Memorial Day is so much more than a long weekend.
It is a chance for us to remember those who gave all for this great nation and the freedoms it offers.
This Memorial Day, we pay tribute to the lives and legacies of those who made the ultimate sacrifice in serving our country, and we honor their courage.
Wishing you and yours a peaceful Memorial Day.
The Markets
Last week, the U.S. stock market showed why it’s a good idea to stay invested through bouts of volatility.
Major U.S. stock indices notched sizeable gains as investors celebrated a trade truce with China and better-than-expected inflation numbers, while brushing off a tepid consumer sentiment reading. Here’s what happened:
The administration negotiated a trade truce with China. The United States and China agreed to reduce tariffs for 90 days. U.S. tariffs on Chinese imports will fall to 30 percent, while China’s tariffs on U.S. imports will drop to 10 percent. The Wall Street Journal reported, “The agreement lowered tariff levels far more than Wall Street had expected, with one analyst…calling the deal a ‘best-case scenario’ for investors. Goldman Sachs cut its U.S. recession odds to 35 [percent] from 45 [percent] and boosted its growth forecast.”
Inflation is closing in on the Federal Reserve’s target. Prices increased by 2.3 percent year over year in April. That put headline inflation just a smidge above the Fed’s two percent target. When the volatile categories of food and energy were excluded, prices were up 2.8 percent year over year. The price of eggs fell by 13 percent month to month leading a decline in the cost of food. Five of six major grocery store food group indexes moved lower in April.
Consumers were concerned about inflation. While the Consumer Price Index’s April inflation numbers were encouraging, the inflation numbers in the University of Michigan’s Consumer Sentiment Survey were less so. “Year-ahead inflation expectations surged from 6.5 [percent] last month to 7.3 [percent] this month…Long-run inflation expectations lifted from 4.4 [percent] in April to 4.6 [percent] in May…,” reported Surveys of Consumers Director Joanne Hsu.
The U.S. bond market was in a less cheerful mood than the U.S. stock market last week. On Friday, Moody’s lowered the rating for U.S. government bonds on concerns about the deficit (the difference between how much the government spends each year and how much it takes in through taxes) and rising interest costs. The rating service explained:
“Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs. We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”
Over the week, U.S. stock markets saw solid gains with the Standard & Poor’s 500 Index moving into positive territory for the year to date. U.S. Treasury yields ended the week near where they started.
WHAT DO YOU KNOW ABOUT MEMORIAL DAY? Memorial Day offers a blend of celebration and remembrance. It’s the time when we honor the men and women who bravely sacrificed their lives in service to the United States of America. The holiday reminds us that freedom is not free and gives us an opportunity to remember those who fought and died defending our country. See what you know about Memorial Day by taking this brief quiz.
How do you celebrate Memorial Day?
Weekly Focus – Think About It
“Heroism doesn’t always happen in a burst of glory. Sometimes small triumphs and large hearts change the course of history. Sometimes a chicken can save a man’s life.”
– Mary Roach, Author
Answers: 1) d; 2) b; 3) c; 4) b
Sources:
https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-19-25-Barrons-DJIA-S&P-Nasdaq%20-%201.pdf
https://www.wsj.com/livecoverage/stock-market-today-tariffs-trade-war-05-12-2025 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-19-25-WSJ-US-China-Agree-to-Large-Tariff-Cuts%20-%202.pdf
https://www.bls.gov/news.release/pdf/cpi.pdf [report and Table 2]
https://ratings.moodys.com/ratings-news/443154
https://www.memorialdayfoundation.org/education/how-to-observe-memorial-day/
https://www.rd.com/article/memorial-day-poppies/
https://www.cmohs.org/recipients/lists/double-recipients
https://dma.mt.gov/MVAD/MVAD-Images/Coins-on-headstones-meaning.pdf
https://www.goodreads.com/quotes/7682393-heroism-doesn-t-always-happen-in-a-burst-of-glory-sometimes
|
Stocks roared higher last week, powered by upbeat trade news and tame inflation reports. The Standard & Poor’s 500 Index rose 5.27 percent, while the Nasdaq Composite Index spiked 7.15 percent. The Dow Jones Industrial Average added 3.41 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 0.80 percent.1,2 S&P, Dow Erase YTD LossesStocks pushed higher on Monday as investors cheered weekend news that the U.S. and China temporarily agreed to back off steep reciprocal tariffs.3 Then, a mild inflation report for April—the slowest annualized Consumer Price Index (CPI) reading in four years—boosted markets on Tuesday. Tech stocks powered the rally as the S&P 500 closed trading in the green for the year.4,5 Markets closed the week with modest gains, largely looking past weak consumer sentiment data released on Friday. Friday was the Dow’s turn to erase year-to-date losses and get back in the green while the Nasdaq and S&P notched a five-day winning streak.6 |
 |
All Eyes on Economic Data
The retail (CPI) and wholesale inflation reports (Producer Price Index) were mild, although most economists didn’t expect tariffs to impact prices in the first month of implementation. Retail sales ticked up slightly (as expected), while industrial production and housing starts showed signs of tariff impact.7,8 Expect traders to continue to closely watch economic reports to better understand whether tariffs are showing up in the data. This Week: Key Economic DataMonday: New York Fed President John Williams, Dallas Fed President Lorie Logan, and Atlanta Fed President Raphael Bostic speak. Leading Economic Indicators. E-Commerce Retail Sales. Tuesday: Richmond Fed President Thomas Barkin, Raphael Bostic, and Fed Governor Adriana Kugler speak. Financial Markets Conference. Wednesday: Thomas Barkin speaks. 20-Year Treasury Bond Auction. Thursday: Existing Home Sales. Jobless Claims (weekly). PMI Composite—Services and Manufacturing. John Williams speaks. Fed Balance Sheet. Friday: New Home Sales. Kansas City Fed President Jeff Schmid and Fed Governor Lisa Cook speak. Source: Investors Business Daily – Econoday economic calendar; May 16, 2025 This Week: Companies Reporting EarningsTuesday: The Home Depot, Inc. (HD), Palo Alto Networks, Inc. (PANW) Wednesday: The TJX Companies Inc. (TJX), Lowe’s Companies, Inc. (LOW) Thursday: Intuit Inc. (INTU), Analog Devices, Inc. (ADI), The Toronto Dominion Bank (TD), Workday, Inc. (WDAY) Source: Zacks, May 16, 2025. Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice. |
 |
|
“People always call it luck when you’ve acted more sensibly than they have.” – Anne Tyler |
 |
The IRS May Send You One of Two Notices If Your Filed Returns Don’t Match Their RecordsHave you wondered what happens if the information on your tax return doesn’t match the IRS records? The IRS mails out two notices, CP2100 and CP2100A, to banks, credit unions, businesses, and payers who may have made a mistake on their return. The IRS mails these notices out twice yearly, in September/October and April of the following year. Payers may receive a notice if their return lacks a Taxpayer Identification Number, has an incorrect name, or both. The notices also tell payers that they are responsible for backup withholding. This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional. Tip adapted from IRS9 |
 |
This Cognitive Behavioral Exercise Can Help Quiet Your Negative Self-TalkWe all have that little negative voice in our heads, and one way to combat it is to change how we think about situations. Stressful things will always happen, but the goal is to change your feelings about those stressful situations. To practice this exercise, separate a piece of paper into three columns. One is for your negative thoughts, one is for the cognitive distortion at play, and one is for your rational response (thinking logically about your feelings). Here’s an example: Negative thought: I did horribly on my presentation today and am getting fired. These cognitive exercises take a lot of practice but can help silence your inner critic. Tip adapted from Healthline10 |
 |
|
What can go down a chimney when it is down but can’t go up through a chimney when it is up?
Last week’s riddle: What always shows up in the middle of March and the middle of April? |
 |
 |
|
Ring-neck Pheasant |
1. WSJ.com, May 16, 2025
2. Investing.com, May 16, 2025
3. CNBC.com, May 12, 2025
4. WSJ.com, May 13, 2025
5. CNBC.com, May 15, 2025
6. MarketWatch.com, May 16, 2025
7. WSJ.com, May 13, 2025
8. MarketWatch.com, May 16, 2025
9. IRS.gov, September 11, 2024
10. Healthline, December 12, 2024
The Markets
The winds of uncertainty are blowing, and the waters are choppy.
In recent weeks, United States stock markets saw steady gains, recovered from the April downturn as investors set aside uncertainty,” reported Connor Smith of Barron’s.
Last week, investors became more cautious as they considered:
Trade successes and negotiations. Last week, President Trump announced a trade deal with the United Kingdom and, over the weekend, U.S.-China trade negotiations began. “With talks between the US and China about to start, trillions of dollars are hanging in the balance for American companies. The average member of the [Standard & Poor’s 500 Index] made 6.1 [percent] of its revenue from selling goods in China or to Chinese companies in 2024, according to an analysis from Bloomberg Intelligence’s Gina Martin Adams and Gillian Wolff,” reported Rita Nazareth of Bloomberg.
The outlook for the economy. Last week, the Federal Reserve left rates unchanged. Fed Chair Jerome Powell offered assurances that the economy is solid, the unemployment rate remains low, and inflation is closer to the Fed’s two percent goal but not there yet. In a post meeting press conference, Powell stated,“…we’ve judged that the risks to higher employment and higher inflation have both risen [compared to March]…there’s a great deal of uncertainty…”
The outlook for company earnings. Companies in the S&P 500 Index performed well in the first quarter. Overall, the earnings growth rate for companies that have reported so far is 13.4 percent, reported John Butters of Factset. However, as Butters explained, analysts lowered [earnings per share] estimates more than normal for S&P 500 companies because of uncertainty, including a possible economic slowdown or recession.
Last week, major U.S. stock indexes finished flat to slightly lower. Yields on many maturities of U.S. Treasuries moved slightly higher over the week.
NO, YOU DON’T NEED TO STOCK UP ON TOILET PAPER. During the pandemic, concerns about supply chains and shortages led some people to stock up on items like toilet paper. As it turns out, the frenzied buying may have been the cause of those shortages.
Today, people are concerned about items that are typically imported from other countries becoming scarce. Last week, Bloomberg published the “Ultimate Tariff Buying Guide” to help people understand “what to purchase right now, what to skip and what’s a maybe.” Claire Ballentine and Will Kubzansky of Bloomberg advised that “right now” purchases may include:
Kid stuff. A lot of the equipment parents rely on – car seats, strollers, cribs, toys – are made in China so prices may rise significantly. Parents don’t have to worry about disposable baby care items as “diapers, wipes and most infant formulas won’t see a huge impact from tariffs because the majority of these products are manufactured domestically.”
Computers, smart phones, and electronics. While these goods currently are exempt from reciprocal tariffs, they are subject to other types of tariffs. If you have a student headed to college in the fall who will need electronics or you’re considering replacing your current smartphone, tablet, or computer, you may want to accelerate the purchase.
Automobiles. “If you already planned to buy a car sometime in 2025, bringing your purchase forward a few months could save you thousands of dollars,” according to a source cited by Ballentine and Kubzansky.
It’s a good idea to be prepared for higher costs if you’re planning to travel outside of the United States, too. “Due to tariffs shaking global markets, the [U.S.] dollar has weakened this year. That downward trend shows no signs of subsiding, so international travelers should expect worse deals when scoping out a trip or traveling abroad,” reported Ballentine and Kubzansky.
Weekly Focus – Think About It
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained, you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
– Sun Tzu, Military strategist
Sources:
https://www.barrons.com/livecoverage/stock-market-today-05092025/card/the-market-had-a-banner-two-weeks-now-things-get-dicey–rHXi6aRToipIR0drAYQ2 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-12-25-Barrons-Market-Banner-Two-Weekds%20-%201.pdf
https://www.whitehouse.gov/fact-sheets/2025/05/fact-sheet-u-s-uk-reach-historic-trade-deal/
https://www.bloomberg.com/news/articles/2025-05-08/stock-market-today-dow-s-p-live-updates?srnd=undefined or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-12-25-Bloomberg-S&P-500-Wavers%20-%203.pdf
https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20250507.pdf
https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-12-25-Barrons-DJIA-S&P-Nasdaq%20-%207.pdf
https://cnr.ncsu.edu/news/2020/05/coronavirus-toilet-paper-shortage/
https://www.bloomberg.com/news/articles/2025-05-08/what-to-buy-before-tariffs-take-effect?embedded-checkout=true or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-12-25-Bloomberg-Ultimate-Tariff-Buying-Guide%20-%2010.pdf
 |
||||||||||||||||
|
1. The Wall Street Journal, May 9, 2025
2. Investing.com, May 9, 2025
3. CNBC.com, May 5, 2025
4. CNBC.com, May 6, 2025
5. The Wall Street Journal, May 7, 2025
6. CNBC.com, May 8, 2025
7. The Wall Street Journal, May 9, 2025
8. IRS.gov, November 11, 2024
9. NDPA.org, December 12, 2024
