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Last Week on Wall Street – April 26th, 2025

  S&P 500: 4.59%      DOW:  2.48%       NASDAQ:  6.73%      10-YR Yield: 4.25%

What Happened?

Wall Street rebounded this week, buoyed by President Trump’s softened stance on trade and monetary policy. After weeks of market turbulence driven by escalating tariffs and political uncertainty, the S&P 500 and Nasdaq posted their longest winning streaks since January. The rally was fueled by Trump’s announcement that the 145% tariffs on Chinese imports would be “substantially” reduced, though not eliminated, signaling a potential de-escalation in the ongoing trade war . Additionally, Trump’s assurance that he has “no intention” of firing Federal Reserve Chair Jerome Powell, despite previous criticisms, helped alleviate investor concerns about the Fed’s independence and future monetary policy.​

These developments provided a much-needed boost to investor confidence, which had been shaken by fears of a prolonged trade conflict and potential disruptions to the central bank’s leadership. Analysts suggest that while the market’s recovery is encouraging, sustained gains will depend on concrete progress in U.S.-China trade negotiations and clarity on the Federal Reserve’s policy direction. Nonetheless, the week’s positive momentum reflects a cautious optimism that the worst of the recent volatility may be behind us.

Below we will dive deeper into the U.S. and Chinese trade war, as well as recent hard data on the health of the US economy through housing sales reports and durable goods data.

Scott Bessent says US will not make unilateral offer to China on tariffs

  • Treasury Secretary Bessent warned that China’s export-driven economy is creating global imbalances.
  • Markets shifted focus from economic data to geopolitical risks this week, with investors closely watching signs of progress on U.S.–China trade talks

The key takeaway – The trade winds are shifting once again. In a recent twist, the Trump administration appears to be walking back parts of its previously announced tariff agenda on Chinese goods, though details remain opaque. This move comes on the heels of a notable speech by U.S. Treasury Secretary Bessent, who emphasized the pressing need to “rebalance” global trade dynamics, with a particular focus on China.
Bessent pointed to China’s longstanding export-driven economic strategy as a key source of global imbalance. While that model has propped up Chinese domestic growth, it has also fueled a trade surplus that, according to Bessent, is now hurting not just China, but the global economy. The underlying message? The current trade “war” may be painful, but it’s necessary. Necessary for the U.S. to reset its global trade posture and recalibrate export taxes; necessary for China to decelerate its industrial overcapacity and focus inward on domestic challenges.

And yet, despite the rhetoric, markets are latching onto any signs for clarity. The White House suggests progress is being made behind closed doors, while Chinese officials insist that no formal dialogue has occurred. In other words: classic geopolitical chicken. No brakes, no blinker, just two economic juggernauts accelerating toward an uncertain middle.

The global markets? Watching every move. Major indices have been treading water, reacting not just to economic data, but to podiums and posturing. Until there’s a tangible agreement (or breakdown), volatility remains the baseline. The stakes are high, the headlines louder, but the strategy, on both sides, still seems murky.

New-home sales jump in March despite economic headwinds

  • New-home sales increased by 7.4% month-over-month, a 6.0% rise compared to March 2024.
  • Median home price decreased to $403,600, down 1.9% from February.
  • Inventory levels increased slightly representing a 8.3-month supply at the current sales pace.

The key takeaway – In contrast to the sluggish existing-home market, new home sales experienced a notable uptick in March 2025. This surge is attributed to builders offering more affordable housing options and incentives to attract buyers amid high mortgage rates and economic uncertainty. The decline in median new home prices reflects this strategic shift, making new constructions more accessible to a broader range of buyers. ​

The increase in new home inventory to a balanced 8.3-month supply indicates that builders are responding to market demands without oversaturating the market. This equilibrium suggests a healthy dynamic between supply and demand, which could stabilize prices and provide more options for prospective buyers. ​

While the existing-home market continues to grapple with affordability challenges and hesitant sellers, the new home sector’s adaptability offers a silver lining. If mortgage rates stabilize or decline, and economic conditions improve, the momentum in new home sales could bolster the broader housing market and contribute positively to the economy.

Durable Goods Data Report Surged in March

  • Treasury Secretary Bessent warned that China’s export-driven economy is creating global imbalances.
  • Markets shifted focus from economic data to geopolitical risks this week, with investors closely watching signs of progress on U.S.–China trade talks

The key takeaway – The robust headline figure in March’s durable goods report is largely attributed to a surge in commercial aircraft orders, particularly for Boeing. However, analysts are saying this spike may be misleading, as it masks underlying weaknesses in other sectors. Core capital goods orders, a key indicator of business spending plans, rose only 0.1%, suggesting that companies remain hesitant to invest amid ongoing trade tensions and economic uncertainty. ​

The modest increase in core capital goods orders reflects a cautious approach by businesses, possibly due to the impact of tariffs and the broader economic environment. While the transportation sector showed significant growth, other areas such as computers and electronic products experienced declines. This mixed performance indicates that, despite the impressive overall growth in durable goods orders, the underlying economic momentum may be weaker than the headline number suggests.

From Around the Watercooler