As economic data for the first quarter of 2025 is gradually released, market sentiment is becoming increasingly tense. On April 30th, the U.S. Bureau of Economic Analysis (BEA) will release the preliminary estimate of first-quarter GDP. According to current forecasts, the Atlanta Fed's GDPNow model expects the economy to contract by 2.5%, while Goldman Sachs holds a more moderate view, predicting a growth of 0.1%. This set of data is crucial, as a negative growth figure could trigger risk-averse sentiment, negatively impacting the U.S. stock and cryptocurrency markets. Although the tariff increase effective April 2nd has a limited impact on this quarter, greater downward pressure is expected in the coming quarters.
Also released on the same day is the core PCE inflation index. Deloitte forecasts that this indicator will exceed the Federal Reserve's long-term inflation target of 2% by 2025. If the data is higher than expected, it may push up U.S. Treasury yields and put pressure on risk assets.
As May begins, more key data will continue to stir market nerves. On May 1st, initial jobless claims will be released, and considering recent federal layoffs, the data may rise, potentially boosting market expectations for rate cuts. The ISM manufacturing PMI, if below the neutral line of 50, could further intensify market worries about an economic recession.
The non-farm payroll report on May 2nd is also highly anticipated. March data showed an increase of 228,000 jobs, with an unemployment rate of 4.2%. However, Ernst & Young (EY) expects only 50,000 new jobs in April, and the unemployment rate may rise to 5%, which could further trigger market concerns about an economic slowdown.
The FOMC meeting on May 6th is in the spotlight. Although the market bets that the Federal Reserve may begin a rate-cutting cycle, if core inflation (with CPI expectations at 2.8%) remains stubbornly high, the Fed may adopt a more cautious stance. Additionally, the CPI and PPI data in mid to late May will reassess inflation pressures, especially against the backdrop of tariffs, which may further elevate consumer prices. Meanwhile, retail sales data is also worth monitoring, with a general expectation that consumer growth in 2025 will slow to 1.7%, reflecting weakened consumer spending momentum.
Regarding corporate earnings reports, Amazon and Apple will release their earnings reports after the market closes on April 30th. For Amazon, investors will focus on the growth of the AWS business and the trade-off with potential tariff costs on its retail operations. If the company lowers its future guidance, it could drag down the entire tech sector. For Apple, despite record revenue in Q4, the decline in hardware sales has raised market alerts, and tariff issues may further compress profit margins. However, if the company can provide an optimistic outlook, it may alleviate market concerns.
From early to mid-May, several key companies will also release their earnings reports. The excitement surrounding Microsoft and Meta in the AI sector continues to rise, but their profitability needs to be monitored in light of increasing tariff costs. The consumer goods sector, such as PepsiCo and Unilever, may become a focus for investors' defensive positioning due to their strong inflation resistance.
Overall, starting in the second quarter of 2025, the U.S. economy faces multiple challenges, and the delicate balance between data and policy will determine the market's upcoming direction. Investors need to closely monitor the key indicators and corporate earnings reports that will be released soon to capture potential market signals.
