Global markets experienced a rollercoaster week as trade tensions between the United States and China resurfaced, influencing investor sentiment. President Donald Trump's accusation that China breached their recent trade agreement unsettled the market, causing fluctuations in indices such as the S&P 500. Despite these challenges, the index managed to post gains both for the week and the month of May, defying traditional Wall Street adages like "sell in May and go away." The week was marked by significant earnings reports from tech giants, including Nvidia and Salesforce, which influenced stock performances variably.
On Friday, President Trump accused China of violating the initial trade deal reached earlier in the month, casting a shadow over global markets. This accusation coincided with Bloomberg reporting plans within the Trump administration to impose broader restrictions on Chinese technology firms, further exacerbating market volatility. However, later in the day, Trump announced his intention to discuss matters with Chinese leader Xi Jinping, leading to a partial recovery in stock prices. During the holiday-shortened week, the S&P 500 climbed nearly 2%, bolstered by a substantial rally on Tuesday following Trump's delay of tariffs on European Union goods. For the month, the S&P 500 surged over 6%, marking its best performance since November 2023.
In the realm of corporate earnings, Nvidia shone brightly after delivering an impressive quarter and providing optimistic guidance, despite export constraints on artificial intelligence chips destined for China. Shares initially surged but gave back some gains amid market downturns. Meanwhile, Salesforce reported better-than-expected quarterly results, yet its stock fell due to concerns about CEO Marc Benioff's focus on AI rather than core operations. Costco impressed with what was described as a "perfect quarter," showcasing improved margins and same-store sales growth amidst tariff impacts on other retailers. Its stock rebounded strongly after an initial dip.
Broadcom became a focal point this week, with our team trimming positions and booking profits of 170% on shares purchased in August 2023. Despite downgrading Broadcom to a 2 rating, indicating interest in buying more during pullbacks, the stock still gained nearly 6% for the week and almost 26% in May. GE Vernova also performed well, reaching record highs, prompting us to adjust its price target upwards to reflect positive business momentum. Inflation dynamics added another layer of complexity, with cooler-than-expected figures in April sparking debates about future monetary policy decisions by the Federal Reserve.
The week concluded with mixed sentiments as markets absorbed various geopolitical and corporate developments. While trade uncertainties lingered, strong earnings reports provided some stability. The Federal Reserve remained cautious about inflation prospects, especially given unresolved tariff issues. Investors now look ahead to Broadcom's upcoming earnings report, hoping for clarity amidst ongoing economic uncertainties. Overall, the resilience shown by major indices underscores the adaptability of investors in navigating complex market environments.