Markets Surge as S&P 500 Marks Longest Winning Streak in Two Decades Amid Strong Jobs Report and Easing Trade Tensions | Weekly Market Analysis

Key events this week:

Monday, May 5, 2025

• USA - S&P Global Services PMI (Apr)
• USA - ISM Non-Manufacturing PMI (Apr)
• USA - ISM Non-Manufacturing Prices (Apr)

Tuesday, May 6, 2025

• USA - 10-Year Note Auction

Wednesday, May 7, 2025

• USA - Crude Oil Inventories
• USA - FOMC Statement
• USA - Fed Interest Rate Decision
• USA - FOMC Press Conference

Thursday, May 8, 2025

• UK - BoE Interest Rate Decision (May)
• USA - Initial Jobless Claims
• USA - 30-Year Bond Auction

Wall Street closed the week with a strong rally as the S&P 500 extended its winning streak to nine consecutive sessions, marking the index’s longest run of gains since late 2004. Investors welcomed signs of resilience in the labor market and were encouraged by hopes that ongoing tensions between the United States and China might finally be starting to ease, particularly on the trade front.

The benchmark S&P 500 climbed 1.4% by the close of Friday’s session, while the Dow Jones Industrial Average added 564 points, also a 1.4% increase. The tech-heavy NASDAQ Composite rose even higher, advancing by 1.5%.

Investor sentiment was lifted notably after the latest employment data surpassed forecasts. The US Bureau of Labor Statistics reported a net gain of 177,000 jobs in April, outperforming the 138,000 figure predicted by economists. Although the previous month's job growth was revised downward from 228,000 to 185,000, the April report underscored a labor market that remains surprisingly sturdy despite ongoing concerns related to protectionist policies and shifting global trade dynamics. The unemployment rate held steady at 4.2%, and average hourly earnings posted a modest 0.2% increase, a slight slowdown from March’s 0.3% rise.

The employment report added to the narrative that employers continue to hold on to workers, reluctant to downsize after facing persistent labor shortages during and after the COVID-19 crisis. However, beneath the surface, certain red flags have begun to emerge. US GDP data indicated that the economy unexpectedly contracted in the first quarter, a reminder that broader macroeconomic challenges remain present despite a resilient labor market.

Not all major stocks shared in the enthusiasm. Apple shares fell over 3% after the company disclosed it anticipates approximately $900 million in added costs in the upcoming quarter due to newly imposed tariffs. While Apple’s second-quarter earnings topped analysts’ expectations thanks to strong iPhone sales, worries surrounding the long-term impact of trade disputes weighed on investor confidence. Meanwhile, Amazon shares closed marginally lower after the company issued underwhelming guidance and reported slowing growth in its cloud computing division, which is typically seen as a key revenue driver.

In currency markets, the Australian Dollar continued to advance against the US Dollar for a second straight session on Monday. The AUD/USD pair climbed as investors reacted positively to news that Australian Prime Minister Anthony Albanese secured a second three-year term in office following a decisive electoral victory over the weekend. Albanese’s Labor Party claimed a majority, marking the first time in decades that a sitting Australian prime minister has won back-to-back elections. The political stability, coupled with encouraging economic data such as the Judo Bank Composite PMI holding at 51.0 in April, bolstered optimism for continued growth in the Australian economy.

Elsewhere, the Canadian Dollar remained firm against the US Dollar, with USD/CAD holding close to the 1.3800 level in early Asian trade on Monday. The loonie drew support from easing recession fears and stable domestic growth data. Canada’s GDP showed modest gains in March despite the headwinds of falling commodity prices and concerns over trade relations with the United States. The Canadian economy’s resilience has helped support its currency even as global trade anxieties continue to simmer.

Meanwhile, the Japanese Yen edged higher against the US Dollar for the second session in a row as demand for safe-haven assets showed signs of recovery. Although there are tentative signs of a thaw in US-China trade tensions, President Trump’s unpredictable approach to international policy remains a significant source of uncertainty. Despite this, the Yen's upward momentum was modest, restrained by the Bank of Japan’s recent decision to hold off on raising interest rates and to cut its growth and inflation forecasts. With the BoJ signaling a more dovish stance, traders have become hesitant to place strong bullish bets on the Yen, especially ahead of the upcoming Federal Reserve policy meeting.

The Euro began the week slightly on the back foot, trading near 1.1320 during the Monday Asian session. On Friday, stronger-than-expected inflation figures from the Eurozone had briefly lent support to the single currency. The Harmonized Index of Consumer Prices came in at 2.2% year-over-year for April, beating expectations. Services inflation surged to 3.9%, and core inflation - which strips out volatile food and energy prices - rose to 2.7%. These numbers have contributed to market speculation that the European Central Bank could deliver up to 60 basis points in rate cuts by the end of the year, a scenario that’s still keeping traders cautious despite the elevated inflation readings.

The British Pound also started the week on a cautious note, trading around 1.3260–1.3265. Market participants appeared reluctant to take new positions in the GBP/USD pair ahead of several critical risk events this week. The Bank of England is widely expected to announce a 25 basis point interest rate cut at its policy meeting on Thursday, likely accompanied by dovish commentary as policymakers grapple with the impact of a potential slowdown in growth stemming from trade-related issues. In addition, traders are keeping a close eye on Wednesday’s outcome of the US Federal Open Market Committee’s two-day policy meeting, which could have significant implications for the Dollar’s direction and, by extension, the broader forex landscape.

In other developments, President Trump announced that he would push for a 100% tariff on foreign-produced films, a move that reignited concerns about a potential escalation in trade hostilities. Still, he confirmed that Federal Reserve Chair Jerome Powell would remain in his role until his term concludes in 2026, despite Trump’s criticism of Powell’s performance and repeated calls for lower interest rates.

As the trading week kicks off, attention is firmly focused on a series of high-stakes events including central bank decisions, updated economic indicators, and developments in trade policy. With sentiment finely balanced between optimism and caution, the markets continue to reflect a complex interplay of robust labor dynamics, political outcomes, and policy uncertainty. For now, the impressive winning streak in US equities serves as a bullish marker, though many traders remain wary of potential volatility ahead.