CWS Market Review – May 27, 2025

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The stock market got a nice bounce today after President Trump said he’s going to delay the 50% tariffs on the EU.

It’s interesting how any news of a tariff pause sends the bulls charging but any warning of tariffs to come brings out the bears. It’s clear that Wall Street doesn’t like tariffs.

At one point, the Dow was up more than 740 points today. The S&P 500 was up by 2.0% while the Nasdaq was up by 2.5%. I talk a lot about the 200-day moving average. This is a good example of why. The S&P 500 bounced almost perfectly off its 200-DMA. The Russell 2000 was particularly strong today.

President Trump said he’ll push the EU tariffs back to July 9. He’s making the move as part of a request from Ursula von der Leyen who is the president of the European Commission. The original date for the tariffs was for June 1.

President Trump took to Truth Social: “This is a positive event, and I hope that they will, FINALLY, like my same demand to China, open up the European Nations for Trade with the United States of America.” The EU said it will fast-track trade talks with the U.S.

Through May 19, the S&P 500 had put together a very nice run of 17 up days in 20 sessions. That came to an end last week as the index fell on Tuesday, Wednesday, Thursday and Friday. Today’s rally is walking back most of last week’s damage.

The 30-year Treasury yield fell back below 5%. There were some concerns last week when a Treasury auction showed unusually light interest. This was particularly worrying to some because it shortly followed the credit downgrade from Moody’s.

Interestingly, shares of Tesla (TSLA) got a nice boost today after Elon Musk said he’s going to pull back on his political endeavors. Tesla sold only 7,261 cars in Europe in April. That’s down 49% from last year. The overall EV market saw an increase of 34.1%. Shares of Tesla have lagged the market for more than three years.

When a stock goes up, shareholders will forgive most anything. But when a stock starts to slide, their patience wears thin. All things being equal, I prefer to invest in a company whose CEO keeps a low profile.

We’re not quite done with earnings season, but we’re getting very close. So far, 95% of the companies in the S&P 500 have reported results. Of those, 78% have topped estimates. This week, we’re getting Nvidia’s (NVDA) earnings report which will be very closely watched. The report is due out after tomorrow’s closing bell. Wall Street expects earnings of 75 cents per share. That’s up from 61 cents per share for last year’s fiscal Q1.

The other earnings report to look out for will come from Costco (COST). I highlighted the company last week and explained why I’ve been such a big fan over the years. Last time, Costco had a rare earnings miss ($4.02 versus $4.10 per share). This time, Wall Street expects earnings of $4.23 per share. Costco’s earnings report is due out after the closing bell on Thursday.

We also had good economic news this morning. It seems that consumers are in a much better mood. This morning, the Conference Board’s Consumer Confidence Index came in much stronger than expected. For May, Consumer Confidence was 98.0. That’s an increase of 12.3 points over April. For May, Wall Street had been expecting 86.0.

This snaps a streak of five straight monthly declines. What caused the surge? It seems that President Trump’s decision on May 12 to hold back on the most severe tariffs certainly played a role.

The present situation index increased to 135.9, up 4.8 points, and the expectations index posted a major surge to 72.8, a 17.4-point gain. Investors also showed more optimism, with 44% now expecting stocks to be higher over the next 12 months, up 6.4 percentage points from April.

Views on the labor market also improved, with 19.2% of respondents expecting more jobs to be available in the next six months, compared with 13.9% in April. At the same time, 26.6% expect fewer jobs, down from 32.4%. However, the level of respondents saying jobs were “plentiful” edged higher to just 31.8%, while those saying employment was “hard to get” increased to 18.6%, up 1.1 percentage points.

Consumer confidence was higher for every income bracket. Consumer confidence is an interesting metric to watch because it’s not visible and it’s hard to measure, but if you don’t have it, it can be terrible.

Last week, we had a great earnings report from one our Buy List stocks. Intuit (INTU), the TurboTax people, reported earnings of $11.65 per share. That was up 18% over last year, and it beat Wall Street’s consensus of $10.91 per share.

The CEO said Intuit is “becoming a one-stop shop of AI-agents and AI-enabled human experts to fuel the success of consumers and small and mid-market businesses.”

But the best news is that Intuit raised its full-year guidance. Intuit now see its profits ranging between $20.07 and $20.12 per share. That’s a growth rate of 18% to 19%. The previous guidance had been for 13% to 14%.

Shares of Intuit jumped 8.1% on Friday, and another 3.4% today. The shares hit a new 52-week high today. I won’t give you the “hard sell,” but you can sign up for our premium newsletter here. This is where we discuss our Buy List in greater detail.

The Federal Reserve doesn’t meet for another three weeks, but tomorrow the Fed will release the minutes of its last FOMC meeting. At that meeting, the Fed decided against raising interest rates, which was widely expected, but I’ll be curious to see what the reasoning was inside the Fed.

Over the last few weeks, the market has gradually changed its outlook for the Fed. Wall Street no longer sees the Fed as being willing to lower rates so aggressively.

Futures traders currently see the Fed lowering interest rates in September, but even that’s not an overwhelming proposition. The current probability of a September rate cut is 62%. The market only expects two rate cuts for the rest of this year.

Also today, the Atlanta Fed’s GDPNow model sees Q2 growth of 2.2%. That’s down a little from the prior forecast of 2.4%. The estimate for real gross private domestic investment growth fell from +0.7% to -0.2%. Today’s Case-Shiller Index on home prices showed the first monthly decline in home prices since 2023. The data is seasonally adjusted.

On Thursday, the government will update its report on Q1 GDP growth. The initial report said that the economy grew by only 0.3% for the first three months of this year. I don’t expect to see much of a change.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on May 27th, 2025 at 5:51 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.