The US market, in particular, and the world in general will revolve around what happened over the past weekend.
On May 3, 2025, CEO Warren Buffett of Berkshire Hathaway announced he plans to step down at the end of this year and proposed that the board appoint Greg Abel as his successor.
The announcement was made at Berkshire's annual shareholder meeting. Here, the investment legend warned about Trump's tax increase plans and reassured investors amid recent market fluctuations. He stated he has no intention of selling Berkshire stock and will continue to support the company if needed.
The US stock market closed last week with strong gains. The S&P 500 recorded its longest winning streak since November 2004, erasing losses after Liberation Day. The market was driven by a positive April employment report and expectations surrounding US-China trade negotiations.
However, this upward momentum will face challenges from the Federal Reserve.
The Fed will announce its policy decision on May 7. Although the market predicts the Fed will keep interest rates unchanged in this meeting, Chairman Jerome Powell's remarks about the economic outlook remain closely monitored by investors.
Additionally, investors will also monitor data on the number of unemployment claims and production figures.
The earnings season continues to be active with major names such as Ford, Palantir, Disney, and AMD.
Pressure on the Fed
In the context of Trump's tariff policies not yet being clearly reflected in economic data, the Fed will have to assess carefully before making its next move.
Recent economic data is sending mixed signals. Consumer confidence shows signs of weakening, but the labor market and household spending remain stable.
The April employment report shows the economy added 177,000 new jobs, with the unemployment rate stable at 4.2%. This reinforces predictions that the Fed will not rush to adjust interest rates.
However, it is currently unclear what the Fed's next direction will be, as they are still trying to balance two goals: controlling inflation and maintaining labor market stability.
The GDP data for Q1 released last week showed that the US economy contracted while Q1 inflation rose. This poses a difficult challenge for the Fed, forcing policymakers to prioritize one of the two aforementioned goals.
According to economist Michael Feroli from JPMorgan, the latest employment data eliminates the possibility of the Fed taking action in this week's meeting, or even in June. He maintains his forecast that the Fed will begin its rate easing cycle in September.
After the employment report was released, the probability of the Fed cutting rates in June dropped significantly. According to the CME FedWatch tool as of last Friday, investors now predict only a 37% chance that the Fed will cut rates by 25 basis points next month, down from 55% the previous day.
President Trump is not satisfied with this change. He continues to pressure the Fed with a statement on Truth Social: 'NO INFLATION, THE FED MUST CUT RATES!!!'
Refer to Yahoo Finance
