Investment Update June 3, 2025

Last Week on Wall Street

On a holiday-shortened week, economic data included a slight upgrade to Q1 U.S. economic growth (as measured by Gross Domestic Product), and improvement in personal income, spending, and consumer sentiment, while durable orders fell back.

U.S. stocks saw a positive week, outperforming the rest of the world, due to variety of trade-related news items. Bonds fared positively as interest rates fell back in the U.S. Commodities fell across the board, with crude oil prices remaining range-bound.

U.S. equity prices ended positively, after having started off strongly on Monday following the announced one-month reprieve of the 50% European Union tariff, in addition to an improvement in consumer sentiment. Over the past few weeks, markets have already appeared to discount the worst of the tariffs, celebrating the pauses, and assuming deals will be made in coming months to lower the overall punitive rate. By Friday, trade tensions with China had again ramped up with Treasury Secretary Bessent noting that U.S.-China trade talks were “a bit stalled.”

Most sectors ended in the positive for the week, led by technology and communications; energy was the sole exception, losing some ground along with oil prices. Real estate actually fared best of all, gaining nearly 3% as long-term interest rates fell back. A closely-watched market highlight was Nvidia’s quarterly results, which were positive, although operating margins had fallen back a bit from highs to ‘just’ 50% (margins for the broader S&P 500 are just under 13%, per FactSet).

Foreign stocks lagged U.S. stocks for the most part, with only Japan coming close, followed by gains in Europe and the United Kingdom. European results were driven by mixed economic and inflation data but helped by the U.S.-EU tariff news. Emerging markets were pulled down by a -3% decline in China, along with a re-emergence of U.S. trade frictions later in the week.

Bonds gained, along with the court decision on tariffs, some pushback against the Congressional tax bill, and continued slowing in PCE inflation, which helped ease long-term U.S. Treasury rates. A strong auction for 7-year Treasury notes also helped sentiment, in contrast to the weaker 20-year auction the prior week. Investment-grade corporate bonds fared best, and floating rate bank loans lagged, despite all falling in a narrow band of returns. Foreign bonds were largely positive as well, despite the U.S. dollar ending up slightly.

Commodities were down across the board, with declines of over a percent in industrial metals all the way to several percent for the other groups. Crude oil fell over a percent last week to $61/barrel, with prices bouncing around between a narrow band of $61-62 for most of the week. Energy markets remain stuck with concerns over still-lackluster demand along with high OPEC+ production.

(Source LSAConnect)

Fact of the Week

At least 62% of all outstanding mortgages have yields of less than 4%. The states of California, Utah and North Dakota have the highest share of sub-4% mortgages (71%), but in all 50 states, at least half of outstanding mortgages have rates of less than 4%. 

(Source: Bloomberg)