US stocks have rebounded and are down just -4% year-to-date after a nearly -20% decline from their highs in February.  US stocks are blue and bonds are red (corporate) and green (government).

The world has changed a lot since the beginning of the year.  Is a 4% decline in line with the additional risks that have emerged since then?  That’s impossible to know – only time will tell.  However, this is a great reminder that the stock market is not the economy.  While we are seeing weakness in recent economic numbers, 1^st quarter earnings for US companies have been better than expected.  And it’s earnings, or corporate profits, that ultimately drive the markets.  We generally watch interest rates and economic numbers for hints about how consumers will spend money in the future, which will potentially impact corporate profits and stock prices.

The Fed met this week and left rates unchanged as expected.  Previously forecasted rate cuts are on hold, pending further data on inflation and the effect of tariffs on the US economy.

Wall Street celebrated the first trade deal negotiated since sweeping tariffs were imposed earlier this year.  The Trump administration announced Thursday that it had reached an understanding with the UK that would ultimately be finalized in the months ahead.

https://www.cnbc.com/2025/05/08/trump-uk-trade-deal-tariffs.html

https://www.bbc.com/news/articles/cp8dnm4dv2zo

 

There is still much work to be done, as the UK is our 11^th largest trading partner totaling 3.0% of all US trade in goods.  Additionally, the US is currently sending more goods to the UK than we import from them (a trade surplus for the US).

https://www.census.gov/foreign-trade/statistics/highlights/topcm.html

 

Have a great weekend.

 

Jack C. Harmon II, CFP^®, CIMA

Principal, Harmon Financial Advisors

Registered Principal, Raymond James Financial Services

 

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