Last week had a keen focus on the weekend.
On Saturday, Warren Buffett, the long-time CEO of Berkshire Hathaway (BRK-B, BRK-A), mentioned that he would recommend Greg Abel as his successor by year’s end. Abel was designated as Buffett’s successor back in 2021.
This announcement followed another annual meeting where Buffett voiced concerns about Trump’s extensive tariff plans and various market volatilities noted this year.
Regarding the future of Berkshire, Buffett clarified that there are no immediate plans to sell shares based on these changes, asserting they’re not far from action if it becomes necessary.
“I’m still around and perhaps useful for some tasks, but ultimately, Greg will have the final say in operations and capital development,” said Buffett.
On Friday, Berkshire Hathaway shares closed at record highs, showcasing an increase of over 17% this year, contrasting with a 3% drop in the S&P 500.
The market’s response to this weekend’s developments could shape investor discussions from the previous week and impact stock trading dynamics since Berkshire is the seventh largest firm in the S&P 500, boasting a market cap of $1.1 trillion.
Last week also saw stock markets ending on a high note. The S&P 500 (^GSPC) achieved its longest winning streak since November 2004, recovering all pre-liberation losses while gaining momentum from a solid April employment report and renewed optimism regarding US-China trade talks.
The Dow Jones Industrial Average (^DJI) climbed 3% over the week, while the tech-heavy Nasdaq Composite (^IXIC) increased by 3.4%.
This surge in the market and the positive investor sentiment will now face scrutiny from the Federal Reserve.
The central bank is set to reveal its latest policy decision on Wednesday, but any changes from Fed Chair Jerome Powell are not expected to be the week’s focus against the backdrop of shifting economic outlooks.
Scheduled updates include Thursday’s unemployment claims and Monday’s manufacturing activity reports.
The earnings season is bustling, with significant results anticipated from companies like Ford (F), Palantir (PLTR), Disney (DIS), and AMD (AMD).
Interestingly, analysts have trimmed the S&P 500 firms’ second-quarter earnings estimates by 2.4% this season, attributing the adjustments to tariffs and fears of potential economic slowdowns, as reported by FactSet.
The Fed’s upcoming rate announcement will be crucial as policymakers weigh the economic effects of Trump’s tariff strategies, although these impacts are not fully discernible in existing data.
Amidst conflicting economic indicators, including some soft consumer confidence survey data, central banks are staying vigilant, maintaining a more hopeful viewpoint based on solid employment and spending trends.
Friday’s April employment report indicated the addition of 177,000 jobs last month, with the unemployment rate stabilizing at 4.2%, supporting the Fed’s case for keeping interest rates unchanged.
It’s still uncertain what directions policymakers might take as they strive to balance maintaining stable prices with achieving maximum sustainable employment.
As pointed out by Yahoo Finance’s analysts last week, the Federal Reserve faces a challenging situation. GDP figures released on Wednesday showed a contraction in growth during the first quarter, coinciding with rising inflation. In such a scenario, the central bank will have to prioritize one of its two main goals: ensuring full employment or maintaining price stability.
“For the Fed, I believe we might see a restart of the mitigation cycle in September,” remarked JP Morgan economist Michael Ferroli in a note.
With the April employment data in, market expectations for significant interest rate cuts in June have diminished; traders are currently estimating just a 37% likelihood of a 25-basis-point cut at next month’s meeting compared to 55% previously.
Interestingly, President Trump seems enthused by the potential changes, taking to social media to assert there’s no inflation and urging the Fed to lower rates.
As the market evolves, Wall Street strategists are reassessing conventional wisdom, asserting that the policy-driven markets today don’t align with typical seasonal trends.
Economic unpredictability, fragile market conditions, and crucial geopolitical factors, particularly related to US-China trade discussions, contribute to the cautious stance many strategists have taken.
“This year, we’re in a unique market,” remarked Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, expressing doubts about the usual efficacy of May sales based on historical trends.
LPL Financial’s data indicates that the S&P 500 (^GSPC) has historically seen the lowest average return (only 1.8% since 1950) from May to October compared to the performance from November to April.
While summer returns have generally been favorable 65% of the time, their relative underperformance has somewhat cemented the theme of the “sell in May” adage.
“Seasonal patterns offer valuable insights, yet they don’t necessarily dictate the current market climate,” noted Adam Turnquist, chief technical strategist at LPL Financial, emphasizing the significance of tariff uncertainty and monetary policy as key influencers today.
Economic data: S&P Global US Services PMI for April (forecast: 51.2, previous: 51.4); S&P Global US Composite PMI for April (forecast: 51.2, previous: 51.2); ISM Service Index for April (forecast: 50.3, previous: 50.8).
Revenue: Ford (F), Palantir (PLTR), HIMS & HERS HEALTH (HIMS), Tyson (TSN), BioNTech (BNTX), Clorox (CLX); TG Therapeutics (TGTX), CNA Financial Corp. (CNA).
Economic data: No notable datasets are released.
Revenue: AMD (AMD), CelH, Super Micro (SMCI), Marriott International (MAR), Constellation Brands (STZ), Wynn, Rivian (RIVN), Lucid Group (LCID), Ferrari (Race), Datadog (DDOG), DigitalOcean Holdings (DOCN), Arista Networks (ANET), Global Payments (GPN), Archer-Daniels-Midland (ADM).
Economic data: FOMC rate decision (no changes anticipated); MBA mortgage applications for the week ending May 2nd (previous: -4.2%).
Revenue: Disney (DIS), Uber (UBER), ARM Holdings (ARM), Occidental Petroleum (OXY), Novo Nordisk (NVO), Unity Software (U), DoorDash (DASH), Dutch Bros (BROS), Oscar Health (OSCR), Teva Pharmaceutical Industries (TEVA), Carvana (CARS), Apple (AAPL).
Economic data: Initial unemployment claims for the week ending May 3rd (expected: 230,000, previous: 241,000); continuing claims for the week ending April 26th (previous: 1.89 million); NY one-year inflation expectations for April (previous: 3.58%); non-farm productivity for Q1 (expected: -0.7%, previous: 1.5%); unit labor costs for Q1 (expected: 5.2%, previous: 2.2%); wholesale trade sales for March (previously released); wholesale inventories for Q1 (expected: 0.5%, previous: 0.5%).
Revenue: Peloton, Shopify, Warner Bros. Discovery (WBD), Crocs (CROX), The Trade Desk (TTD), Coinbase (COIN), Marathon Digital Holdings (MARA), MercadoLibre (MELI); Cloudflare (NET), SoundHound (SOUN), DraftKings (DKNG), Affirm (AFRM), D-Wave Quantum (QBTS).
Economic data: No significant datasets scheduled for release.
Revenue: No major earnings to report.
