The Market Update

The Markets – April 28, 2025

IN THE MARKETS

U.S. stocks rose over the week, boosted by encouraging reports suggesting a possible easing of trade tensions between the U.S. and China, as well as speculation about near-term agreements with other trading partners. Positive sentiment was further supported by President Donald Trump’s comments that appeared to soften his earlier threat to fire Federal Reserve Chair Jerome Powell. The Nasdaq Composite led the major indexes with a sharp rebound from the prior week, while small- and mid-cap stocks posted gains for a third straight week. Better-than-expected corporate earnings also fueled optimism, with FactSet data showing that 73% of companies reporting first-quarter results through Friday morning had exceeded consensus expectations. Despite the gains, market activity and trading volumes remained light, staying below year-to-date averages.

U.S. MARKETS

DOW & TECH

The Dow ended the week up 2.48% at 40,113.50 vs the prior week of 39,142.23.

The tech-driven Nasdaq ended the week up 6.73%, closing at 17,382.94 vs. the prior week of 16,286.45.

BY MARKET CAP

• Large-Cap: The S&P 500 ended the week up 4.59%, closing at 5525.21 compared to last week’s 5282.70.
• Mid-Cap: The S&P 400 mid-cap ended the week up 3.18%, closing at 2831.67 compared to last week’s 2744.39.
• Small-Cap: The Russell 2000 ended the week up 4.09%, closing at 1957.62 compared to last week’s 1880.62.

U.S. COMMODITIES / FUTURES OVERVIEW

THE VOLATILITY INDEX for 2025 (VIX)

VIX closed at 24.84 this week, a 16.2% decrease vs last week’s close of 29.65.

INTERNATIONAL MARKETS

U.S. MARKET NEWS

Consumer sentiment and housing sales down:

U.S. business activity growth slowed to a 16-month low in April, according to S&P Global’s Flash PMI survey, with services activity weakening sharply despite a slight uptick in manufacturing, dragging the overall index down to 51.2 from 53.5 in March. Prices for goods and services rose at the fastest pace in over a year, largely due to tariffs, while business optimism slipped to its lowest level since July 2022, though manufacturers remained somewhat more hopeful due to expected benefits from government policies. Meanwhile, the Census Bureau reported that durable goods orders climbed for a third straight month in March, surging 9.2% largely on the back of soaring transportation equipment orders, particularly a 139% jump in commercial aircraft purchases aimed at beating future tariffs; excluding transportation, orders were flat, signaling caution among businesses. In the housing market, the National Association of Realtors announced that existing-home sales plunged 5.9% in March, the steepest monthly decline since November 2022, driven by high mortgage rates and affordability challenges, though NAR’s chief economist highlighted that low mortgage delinquencies keep the market fundamentally stable. Adding to concerns, the University of Michigan reported that consumer sentiment fell for a fourth consecutive month in April, with the index slipping 8% from March and inflation expectations for the year ahead jumping to 6.5%, the highest level since 1981, amid persistent uncertainty around trade policy and inflation risks.

INTERNATIONAL MARKET NEWS

Europe

In local currency terms, the pan-European STOXX Europe 600 Index rose 2.77% after U.S. President Trump signaled a willingness to ease trade tensions with China and retracted threats to fire Federal Reserve Chair Jerome Powell, while major European stock indexes also posted gains, with Germany’s DAX climbing 4.89%, France’s CAC 40 up 3.44%, Italy’s FTSE MIB advancing 3.80%, and the UK’s FTSE 100 adding 1.69%. European Central Bank Chief Economist Philip Lane stated that while tariff uncertainty would weigh on economic growth, a recession in the eurozone was unlikely due to its diversified trading ties, though ECB President Christine Lagarde acknowledged the possibility of revisiting growth forecasts at the June policy meeting. Meanwhile, Germany’s government lowered its GDP forecast for 2025 to stagnation from the previously projected 0.3% growth, following the introduction of new U.S. trade tariffs in April, and Bundesbank President Joachim Nagel warned that the country’s export-driven economy could slip into a slight recession, after already contracting for the past two years.

Japan

Japanese stock markets rose over the week, with the Nikkei 225 gaining 2.81%, supported by signs of easing global trade tensions, while the yen weakened to around the mid-143 range against the U.S. dollar and the 10-year Japanese government bond yield climbed to 1.34% from 1.29%. A stronger-than-expected Tokyo-area inflation reading, with core CPI rising 3.4% year over year in April, bolstered the case for further Bank of Japan (BoJ) rate hikes, although BoJ Governor Kazuo Ueda emphasized that monetary policy normalization would proceed cautiously amid uncertainties surrounding the economic impact of U.S. tariffs. Inflation acceleration was mainly driven by food price increases and cuts to government energy subsidies. Meanwhile, Japan’s government announced emergency economic relief measures, including support for corporate financing and efforts to stimulate consumption, to counter the effects of higher U.S. tariffs, as bilateral trade talks continued without Japan yet securing exemptions; Prime Minister Shigeru Ishiba warned that key domestic industries like automobiles and steel could face significant challenges under the current tariff regime.

China

Mainland Chinese stock markets advanced over the week on expectations that the government would introduce more stimulus to offset the economic impact of U.S. tariffs, the Shanghai Composite Index gaining 0.56%. On Friday, China’s Politburo announced plans to “fully prepare” emergency responses to external shocks and unveiled intentions to develop new monetary tools and policy financing instruments aimed at boosting technology, consumption, and trade, according to Bloomberg and state media reports. The Politburo, led by President Xi Jinping, signaled a measured and patient approach to supporting the economy amid the trade war with the U.S., even as analysts expect the effects of the Trump administration’s April tariff hikes—which raised total tariffs on most Chinese goods to 145%—to soon materialize. Nevertheless, China’s stronger-than-expected first-quarter growth and the early March stimulus measures have given Beijing more flexibility in timing additional economic support.

HIGHLIGHTED STORY

https://www.visualcapitalist.com/charted-corporate-bankruptcies-in-the-u-s-2010-2024/
April 21, 2025

What We’re Showing:

U.S. corporate bankruptcies surged in 2024, hitting a 14-year high as businesses grappled with high interest rates, tighter credit conditions, and slowing consumption. According to data from S&P Global, 694 companies filed for bankruptcy protection in 2024, making it the most active year since 2010, when companies were dealing with the aftermath of the 2008 financial crisis. This infographic shows the annual number of corporate bankruptcies in the U.S. from 2010 to 2024, including both liquidations and debt restructurings.

Key Insights:

U.S. corporate bankruptcies hit record highs during the 2008 Financial Crisis, with more than 4,000 companies filing for bankruptcy annually in 2007, 2008, and 2009. Since then, bankruptcies declined sharply and stabilized in the 2010s, before rising again during the pandemic in 2020. The table below shows the number of U.S. corporate bankruptcies in each year from 2010 to 2024:

After hitting a nine-year high of 638 in 2020, U.S. corporate bankruptcies fell significantly during the economic rebound in 2021 and 2022, with stimulus measures and low interest rates helping businesses. However, higher inflation, interest rate hikes, and an overall economic slowdown led to a sharp rise in bankruptcies in 2023. The trend continued in 2024 with 694 bankruptcies, surpassing pandemic figures to hit the highest levels since 2010. Yet not all companies filing for bankruptcy are looking to shut down. According to S&P Global, over 60% of bankruptcy filers in 2024 sought to restructure their debt and continue operations. The consumer discretionary sector, which includes companies providing non-essential goods and services, had the most bankruptcies in 2024 (109 filings) as it suffered from tightened consumer spending. The industrials and healthcare sectors followed next, with 90 and 65 bankruptcies, respectively.

Interestingly, the consumer discretionary sector was also the worst-performing sector of the S&P 500 in Q1 2025, delivering a -14% return through March.  According to the latest data from S&P Global, 188 U.S. companies filed for bankruptcy in Q1 2025, marking the highest first-quarter level since 2010. The largest bankruptcies of this year so far include F21 OpCo, which owns the Forever 21 fashion brand, and EV manufacturer Nikola Corporation. As borrowing costs remain high and corporate spreads widen, business solvency is a key area to watch in 2025 amidst looming recession risks.

Best Regards,

Cliff M. Robello, CFP®, ChFC

Sheri Cabral, President

 

CMR Financial Advisors | (808) 537-2912

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