Monday, May 19, 2025

Pre-market futures are down to start a new trading week, following five-straight up-sessions for the S&P 500. Last week, optimism on the tariff front took over, as talks between the U.S. and China appeared to be making progress. But over the weekend, Treasury Secretary Scott Bessent reminded us that if there are no trade deals after the 90-day pause, the reciprocal tariffs — many of them quite draconian — go back on.

Also, harkening back to Friday, Moody’s followed Fitch and S&P in downgrading U.S. credit — from AAA to AA1. Concerns over an increasing debt and larger fiscal deficits led to the move, and we now see bond yield rates going up as a result. Both 10-year and 2-year are up on the news — to +4.55% and +4.02%, respectively — as well as the 30-year yield, which has breached +5% for the first time since late 2023.

Thus, we are seeing some give-back in pre-market trading this morning. The Dow is currently -230 points, the S&P 500 is -60 and the Nasdaq -300. The small-cap Russell 2000 is -28 points at this hour. All four indexes are still up double-digits over the past month (off a low base) but are back into the red year-to-date.

What to Expect from the Stock Market Today

Compared to recent weeks, we quiet down on the economic report front. Today we’ll get a look at U.S. Leading Economic Indicators (LEI) after the market opens for the month of April. Expectations are for the fifth-straight down-month to -0.9%, from -0.7% reported a month ago.

What’s in Store for the Trading Week

We do see major retailers reporting earnings this week, as the final leg of calendar Q1 earnings season winds down. On Tuesday, we’ll get numbers from Home Depot HD, and Wednesday will bring us Target TGT, Lowe’s LOW and TJX Stores TJX. Also homebuilder Toll Brothers TOL and cybersecurity firm Palo Alto Networks PANW will report. Chip giant NVIDIA NVDA still doesn’t report until next week. (You can see the full Zacks Earnings Calendar here.)

This week will bring us, in addition to LEI, S&P flash Services and Manufacturing PMI for May come out. Also New and Existing Home Sales, and Thursday morning’s Weekly Jobless Claims will hit the tape. In addition, plenty of Fed members will be making appearances this week, including Vice Chair Philip Jefferson and Governors Adriana Kugler and Michelle Bowman, as well as Richmond President Tom Barkin, Boston’s Susan Collins and St Louis’ Alberto Musalem.

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