The week ahead will be all about the weekend that was.
On Saturday, longtime Berkshire Hathaway (BRK-B, BRK-A) CEO Warren Buffett said he plans to recommend to the company’s board that Greg Abel take over at the end of the year. Abel was named Buffett’s successor back in 2021.
The announcement came at the end of another annual meeting that saw Buffett warn on Trump’s expansive tariff plans and talk down this year’s market volatility, among other things.
As for where this leaves Buffett and Berkshire, Buffett said he has no plans to sell Berkshire stock as a result of the change and won’t be far away, if needed.
“I would still hang around, and could conceivably be useful in a few cases, but the final word would be what Greg said, in operations, in capital deployment, whatever it might be,” Buffett said.
On Friday, Berkshire Hathaway stock closed at a record high. Shares have gained over 17% this year against a 3% drop for the S&P 500.
How investors react to this weekend’s news will not only shape the market discussion in the week ahead, but given Berkshire is the 7th-largest company in the S&P 500 and sports a market cap north of $1.1 trillion, how the stock trades could influence the broader market, too.
Stocks wrapped up last week on a high note, with the S&P 500 (^GSPC) marking its longest winning streak since November 2004 as the index erased all of its post-“Liberation Day” losses, bolstered by a solid April jobs report and fresh optimism around US-China trade talks.
The Dow Jones Industrial Average (^DJI) also rose 3% on the week and the tech-heavy Nasdaq Composite (^IXIC) gained 3.4%.
This market rally and investor optimism will be tested by the Federal Reserve.
The central bank will announce its latest policy decision on Wednesday, and while no changes are expected how Fed Chair Jerome Powell outlines the Fed’s thinking in the face of a shifting outlook will be the week’s key economic event.
The weekly update on jobless claims on Thursday and activity checks from the manufacturing sector on Monday will also feature on the calendar.
Earnings season remains busy, with results from Ford (F), Palantir (PLTR), Disney (DIS), and AMD (AMD) among the most notable set for release.
So far this earnings season, analysts have lowered second quarter EPS estimates for S&P 500 companies by 2.4% — a larger-than-usual reduction as companies weigh concerns over tariffs and a potential economic slowdown, according to FactSet.
The Fed will announce its next interest rate decision on Wednesday as policymakers evaluate the economic impact of Trump’s tariff policies, which are yet to fully show up in the data.
Amid mixed economic signals, including soft survey data from those gauging consumer confidence, the central bank has maintained a cautious tone, with solid hiring and spending trends offering a more optimistic read on the outlook.
On Friday, the April jobs report showed 177,000 jobs were added last month as the unemployment rate held steady at 4.2%, supporting expectations the Fed will keep interest rates unchanged.
U.S. President Donald Trump looks on as Jerome Powell, his nominee to become chairman of the U.S. Federal Reserve, speaks at the White House in Washington, U.S., November 2, 2017. REUTERS/Carlos Barria/File Photo ·Reuters / Reuters
It’s still unclear what future actions policymakers will take as they continue to balance both sides of their dual mandate: maintaining stable prices and achieving maximum, sustained employment.
As Yahoo Finance’s Jennifer Schonberger noted last week, the Federal Reserve finds itself in a difficult position. GDP data released Wednesday indicated growth contracted while inflation rose in the first quarter — an economic scenario that may ultimately require the central bank to prioritize one or the other of its two mandates, full employment and price stability.
“For the Fed, we believe today’s [jobs] number should remove any doubt that they are on hold next week, and the bar for cutting is now even higher for June,” JPMorgan economist Michael Feroli wrote in a note to clients on Friday. “We continue to look for a restart of the easing cycle in September.”
Following April’s jobs data, the probability investors were placing on a June rate cut dropped sharply. According to the CME FedWatch Tool, traders on Friday put just a 37% chance on policymakers cutting rates by 25 basis points at its meeting next month, down from 55% the day prior.
One person not thrilled with that shift? President Trump. He renewed his pressure on the Fed Friday morning, writing on Truth Social: “NO INFLATION, THE FED SHOULD LOWER ITS RATE!!!”
As May trading begins, Wall Street strategists are reexamining the longstanding “sell in May and go away” adage, with many arguing the current policy-driven market doesn’t align with traditional seasonal trends.
Economic uncertainty, fragile market conditions, and key geopolitical factors like US-China trade talks are just a few of the reasons strategists don’t recommend stepping aside simply because of the calendar.
“We’re in a different market this year,” Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, told Yahoo Finance last week. “Historically, if we go back over the past ten years, sell in May hasn’t actually worked too well.”
According to data compiled by LPL Financial, the S&P 500 (^GSPC) has historically posted its weakest average returns between May and October — just 1.8% since 1950 — compared to the stronger November-to-April period.
While summer returns have been positive 65% of the time, their relative underperformance has reinforced the “sell in May” trend.
“Seasonality data can provide important insights into the potential market climate, but it doesn’t represent the current weather,” Adam Turnquist, chief technical strategist at LPL Financial, wrote in a note to clients on Wednesday.
“And when it comes to markets, tariff uncertainty and monetary policy right now have the power to make it rain or part clouds into sunshine.”
Economic data: S&P Global US services PMI, April final reading (51.2 expected, 51.4 prior); S&P Global US composite PMI, April final reading (51.2 expected, 51.2 prior); ISM services index, April (50.3 expected, 50.8 prior)
