Global Market News
Global Equities Lower
Global equities were modestly lower on the week. The S&P 500 and Nasdaq lost 0.47% and 0.27%, respectively, and the Dow Jones lowered by 0.16% on the week. The U.S. 10-year Treasury note rose several basis points, closing the week at 4.38%. Meanwhile, oil prices increased, with a barrel of West Texas Intermediate crude rising nearly 5% to close Friday at $61.02. Over the last five days, volatility, as measured by the CBOE Volatility Index, dropped more than 9% to end the week at 21.90.
US Federal Reserve Holds Rates Steady
As expected, the Federal Reserve held rates steady at the meeting on Wednesday, citing concerns that unemployment and inflation have risen. During his press conference Fed Chairman Jerome Powell noted, “the economy itself is still in solid shape” but economists are beginning to raise concerns of a potential stagflationary scenario. Powell indicated the central bank is waiting for much needed clarity amidst an uncertain backdrop, particularly in trade policy. Markets will be watching for glimmers of clarity as the Trump administration continues with its 90-day negotiating period with top trading partners, with all eyes on the trade talks between US and China next week.
International Developments
Missile and Drone Strikes Escalate India-Pakistan Tensions
On May 8th, India announced it had intercepted missiles and drones launched by Pakistan targeting military sites, amid the worst cross-border escalation between the two nuclear powers in years. The exchange follows India’s April 22 accusation that Pakistan-backed militants killed 26 tourists in Kashmir, prompting Indian retaliatory strikes on nine locations across Pakistan. Pakistan reported 31 civilian deaths from those strikes and claimed to have downed Indian jets, while both countries accused each other of deploying drones, including India’s alleged use of Harop loitering munitions. Shelling from Pakistan has reportedly killed 16 and injured 59 on India’s side, and though both governments claim to avoid full-scale war. Early this morning, President Trump announced the U.S. mediated a ceasefire between the two countries, though Indian officials say India worked directly on a truce with Pakistan. The ceasefire came into effect at 7:30 AM EDT this morning, and peace talks between India and Pakistan will continue on Monday.
The First American Pontiff, Pope Leo XIV
Robert Francis Prevost, a Chicago-born polyglot and former Augustinian superior who spent two decades serving as a missionary, bishop, and naturalized citizen in Peru, was elected the 267th pope on May 8th after 133 cardinals cast ballots over two days in the Sistine Chapel. The 69-year-old’s selection—announced in a plume of white smoke at the end of the second voting round—defied centuries-old expectations by elevating an American from a global superpower to the papacy. Prevost, ordained in Rome in 1982 and later appointed in 2023 to run the Vatican’s powerful bishops’ office, takes the name Leo XIV in honor of his commitment to the poor and migrants. His ascent underscores a shift toward geographic diversity in the Church hierarchy and positions him to balance Pope Francis’s progressive legacy with the Curia’s call for institutional stability.
Albanese Secures Second Term as Australian PM
Last weekend, Australian Prime Minister Anthony Albanese won re-election with a commanding majority—at least 85 of 150 seats—marking the first time in 20 years a PM has secured a second term and signaling a break from Australia’s cycle of short-lived leadership. His center-left Labor Party’s resurgence was aided by voter concerns over cost of living and climate change, while his opponent, Peter Dutton of the Liberal Party, lost both the national race and his long-held Queensland seat to Labor’s Ali France. The result mirrors a broader “Trump effect” seen in Canada and Australia, where conservative leaders linked to U.S.-style culture wars faltered amid shifting public sentiment. As Albanese promised tax relief, affordable housing, and climate action, voters rejected Dutton’s anti-immigration rhetoric and ideological tone, embracing instead a message of stability, inclusivity, and “kinder” politics.
US Social & Political Developments
U.S.-U.K. Trade Deal Unveiled with Limited Gains
President Trump and U.K. Prime Minister Keir Starmer announced a U.S.-U.K. trade deal promoting agricultural access and limited tariff reductions, including duty-free U.K. steel exports and lowering U.S. tariffs on up to 100,000 British cars. The agreement allows each country to export 13,000 metric tons of beef, eliminates U.K. ethanol tariffs up to 1.4 billion liters, and paves the way for a $10 billion Boeing plane order. Despite its “historic” branding, economists called the deal modest, noting the U.K. represents just 4.5% of U.S. exports and that many key trade disputes—such as the U.K.’s digital tax and U.S. film tariffs—remain unresolved. Trump’s 10% universal tariff on nearly all U.K. goods remains in place, limiting the deal’s impact and reinforcing its largely symbolic nature.
Medicaid Cuts Threaten GOP Swing Seats
On Thursday, House Republicans advanced a plan to cut $880 billion from Medicaid over 10 years to fund Trump’s tax agenda, putting swing-district lawmakers like Rep. Gabe Evans (CO) and Rep. Mariannette Miller-Meeks (IA) at political risk. With votes expected next week, Republicans face backlash in districts where tens of thousands rely on Medicaid, even as President Trump publicly opposes cuts. Speaker Mike Johnson has already dropped some proposals amid party divisions and polling showing 60% of Trump voters support Medicaid. Democrats are targeting vulnerable GOP members with ads accusing them of choosing billionaire tax cuts over healthcare access.
Corporate/Sector News
Trump Tariffs Trigger Broad Export Slump Across U.S. Ports
As of early May, U.S. export volumes have plummeted across nearly all major ports and sectors, especially agriculture, following President Trump’s new round of tariffs, with overall container bookings down sharply since January and agricultural exports from Portland and Tacoma falling by 51% and 28%, respectively. Trade tracker Vizion reported a 43% week-over-week drop in import containers by April 28th, while retailers brace for lean holiday inventories amid slashed shipping volumes and port activity. Matson, a major freight carrier, has seen container volumes drop 30% year-over-year, citing tariff uncertainty and shifting manufacturing strategies as key drivers. Economists and logistics firms warn that unless trade disruptions ease by June, consumers could face limited product choices and higher prices during the critical end-of-year shopping season.
Apple Exec Says AI Will Replace Search; Alphabet Shares Drop 7%
Alphabet shares fell over 7% on Wednesday after Apple’s services chief, Eddy Cue, testified in a Washington federal court that AI search tools could eventually replace traditional engines like Google. Cue, appearing in the Justice Department’s antitrust case against Alphabet, revealed Apple plans to integrate AI services from OpenAI, Perplexity, and Anthropic into its Safari browser. The case focuses on Google’s multibillion-dollar payments to Apple—up to $20 billion annually—to remain Safari’s default search engine, a deal Cue admitted he is anxious to preserve. Apple shares also declined 2% following Cue’s statement that Safari searches dropped in April due to increased AI usage.
U.S. Corporations Launch Record $500B Buyback Wave Amid Trade Uncertainty
On May 7th, S&P 500 companies announced a record $192 billion in share repurchases for the week, part of a broader $518 billion three-month buyback spree—fueled by strong Q1 earnings and lingering uncertainty over President Trump’s tariff policies. Firms like Apple ($100B), Alphabet ($70B), Wells Fargo ($40B), and Visa ($30B) are leading the surge, opting to return cash to shareholders as capital investment planning grows riskier. Buybacks, which boost earnings per share by reducing share count, are seen as an attractive use of capital while stocks remain below early-year highs. Analysts attribute the buying spree to both opportunistic valuations and solid earnings beats (up 7.8% over estimates), even as critics argue the funds could better support wages or long-term investment.
Corporate Profile
Disney’s Next Frontier: Theme Parks and Streaming Fuel Turnaround
On May 7, 2025, Disney stock surged 9.7% to $101.15 after beating earnings expectations with adjusted EPS of $1.45 and $23.6 billion in revenue, up 7% year-over-year. A major growth driver is its experiences segment—including theme parks—which brought in $8.9 billion in revenue, boosted by the announcement of a new licensed park in Abu Dhabi, its first in the Middle East. Disney’s IP (intellectual property)-driven model allows it to expand globally with limited capital risk, earning royalties instead of owning and operating all locations, as seen with its Japan and upcoming UAE parks. Additionally, streaming showed renewed strength with Disney+ adding 2.5 million subscribers and posting $336 million in operating profit, positioning the company for $5.75 in adjusted EPS for FY2025.
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Source: The Wall Street Journal
