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Last Week on Wall Street – May 3rd, 2025

  S&P 500: 2.89%      DOW:  2.96%       NASDAQ:  3.42%      10-YR Yield: 4.24%

What Happened?

Wall Street concluded the week on a high note, with the S&P 500 achieving its longest winning streak in over two decades. The index rose for nine consecutive days, climbing 10.2% and marking its best rally since 2004 . This surge helped recoup losses incurred since the escalation of the U.S.-China trade war in April.

Much of the optimism was driven by a mix of stabilizing economic signals and a corporate earnings season that continues to defy expectations. While the jobs data showed enough resilience to ease retail investor fears of a recession, it was interpreted as a “just right” outcome, strong enough to support growth, but not so hot that it pressures the Fed to pivot back to hikes. Analysts were quick to note the broader theme: the economy may be slowing, but not breaking.

Meanwhile, geopolitical tailwinds emerged as U.S.-China trade representatives signaled progress toward rolling back certain tariffs imposed under the Trump Administration. While no final agreement has been reached, both sides hinted at a phased easing that could revive cross-border capital flows and supply chain confidence, a subtle but important boost to risk appetite.

Earnings were the real engine behind the rally. Over 80% of S&P 500 companies that reported this week beat consensus estimates, with standout performances from chipmakers, software platforms, and industrial exporters. As margins hold and forward guidance remains constructive, while many companies are optimistic about beating expectations, many analysts note key effects of tariff have yet to be seen.

U.S. economy went into reverse in the first quarter, new GDP data shows

  • Headline GDP contracted by 0.3% in Q1, the first decline in several years, largely due to a surge in imports ahead of anticipated tariffs, which negatively impacts GDP calculations.
  • Core GDP (excluding trade and inventories) grew 3%, supported by strong consumer spending and business investment.
  • Personal consumption rose 2.5%, showing that U.S. consumers remain resilient despite elevated inflation and borrowing costs.

The key takeaway – The first-quarter GDP report landed with a thud: headline growth came in at -0.3%, marking the first contraction in years. Naturally, that raised some eyebrows. But before jumping to recession conclusions, it’s worth noting that the drop was largely driven by a surge in imports, specifically, companies racing to stockpile goods ahead of anticipated tariffs. Since imports are subtracted from GDP calculations, this inventory build created an artificial drag on the data.

Beneath the surface, the economy is still moving. Core GDP, which strips out trade and inventories, grew at a healthy 3%, driven by resilient consumer spending and solid business investment. In fact, personal consumption rose 2.5%, signaling that U.S. households are still opening their wallets despite inflation staying sticky and borrowing costs remaining high. That’s not exactly the behavior of a consumer on the brink.

If anything, this report may be more of a trade-timing story than a macro slowdown. With tariffs not yet implemented, analysts expect the import distortion to unwind in the next print, possibly flipping GDP back into positive territory. Bottom line: the headline may have turned red, but the engine underneath is still humming.

Number of Americans filing for jobless claims jumps last week

  • Initial jobless claims rose 18,000 to 241,000, marks the highest level since February
  • Continuing claims increased to 1.92M, the highest levels since November 2021.
  • The unemployment rate stayed steady at 4.2%

The key takeaway – New jobless claims rose last week, signaling potential cracks in what has been one of the economy’s most resilient pillars. While some of the increase can be chalked up to seasonal distortions, spring break schedules and holiday timing, markets are starting to pay closer attention. The real concern isn’t just the number of new claims, but the steady rise in continuing claims, which suggests unemployed workers are finding it harder to land new roles.


Under the hood, this shift matters. The labor market has been the firewall against a broader economic slowdown, fueling consumer spending and keeping recession fears at bay. But as hiring cools and corporate layoffs begin to ripple out, from tech to consumer-facing giants—that firewall looks a little less solid. Elevated jobless claims are often one of the earliest indicators in the recession playbook, typically rising months before a broader downturn sets in.


For now, the trend isn’t enough to call a recession, but it’s enough to warrant watching. If claims continue to drift higher and job creation softens, it could mark the beginning of a transition from soft landing to something bumpier. With the Fed walking the tightrope between easing and inflation control, the labor market may be the deciding factor in what comes next.

China says ‘door is open’ for trade talks with U.S.

  • China’s Commerce Ministry stated this week that “the door remains open” to trade talks with the U.S.
  • U.S. officials responded cautiously optimistic, noting renewed backchannel discussions on key tariff disputes.
  • Markets rallied on the news, with equity futures jumping in the immediate aftermath of the headlines.

The key takeaway – After months of escalating rhetoric and tariff threats, Wall Street finally caught a breeze of optimism. The mere suggestion that China and the U.S. might return to the negotiating table was enough to fuel investor risk appetite, especially after signs of stress from companies stocking up ahead of expected import duties. For a market increasingly sensitive to macro headlines, this wasn’t just noise, it was relief.

Analysts were quick to point out that while no hard commitments were made, the shift in tone matters. Easing trade tensions could help unwind distortions in inventory and trade flows that have weighed on recent GDP figures. More importantly, it offers hope that global supply chains, still fragile from pandemic aftershocks, might avoid another round of disruption.

For now, it’s more diplomatic flirtation than firm handshake. But in a market that’s been running on hope, this was exactly the kind of headline that can keep the rally alive a little longer.

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