TGT Target Corp

U.S. equity markets extended their momentum last Friday, with the S&P 500 posting its fifth consecutive gain. All three major indexes ended the week solidly higher despite softer consumer sentiment and persistent inflation worries.

The S&P 500 climbed 0.7% to close at 5,958.38, while the Nasdaq Composite added 0.52%, finishing at 19,211.10. The Dow Jones Industrial Average rose 331.99 points (0.78%) to 42,654.74, pushing it into positive territory for the year.

Over the week, the S&P 500 advanced 5.3%, the Dow increased 3.4%, and the tech-heavy Nasdaq surged 7.2%, fueled by strong rebounds in major tech stocks. Nvidia led with a 16% gain, Meta climbed 8%, and Apple and Microsoft rose 6% and 3%, respectively.

Investor sentiment was bolstered by eased trade tensions after the U.S. and China agreed to a 90-day tariff pause, providing some relief from fears of escalating trade conflicts. Attention now shifts to forthcoming economic data that may shed light on how these trade policies are affecting global growth.

Market participants will be closely watching May’s U.S. purchasing managers’ index (PMI) reports on Thursday, which will offer timely insight into manufacturing and services sector health.

While many official statistics have so far indicated resilience in the U.S. economy, analysts caution that these figures lag behind recent developments and do not fully capture the effects of President Trump’s tariff announcements from early April. Despite some tariff rollbacks, levies of 10% or more remain in place.

Citi analysts noted that “hard data” continues to show global economic strength, supported in the U.S. by frontloading of purchases. However, “soft data” such as confidence surveys tell a more cautious story, with consumer and business sentiment continuing to decline.

In addition to PMI data, this week’s economic calendar includes housing reports: existing home sales on Thursday and new home sales on Friday, along with weekly jobless claims also due Thursday.

A wave of retail earnings reports this week will provide a clearer picture of how tariff uncertainties are influencing the economy and whether the recent equity rally is sustainable.

Reports from retailers like Target (NYSE:TGT), Home Depot (NYSE:HD), and Lowe’s (NYSE:LOW) arrive amid easing recession fears linked to tariffs. However, Walmart (NYSE:WMT) recently cautioned that tariff-related price hikes remain a concern, drawing renewed attention to how retailers are navigating ongoing trade challenges.

These earnings will also serve as a key barometer for consumer spending trends, a vital component of U.S. economic growth.

Other notable earnings expected this week include Snowflake (NYSE:SNOW), Baidu (NASDAQ:BIDU), and Palo Alto Networks (NASDAQ:PANW).

JPMorgan: Highlights progress in trade tensions, with proposed tariffs on China scaled back from 145% to 41%. While trade risks remain, the worst seems behind us.

RBC Capital Markets: Notes the S&P 500’s strong start to last week reflects easing trade headwinds but warns upside may be limited without improved macroeconomic outlook.

Morgan Stanley: Observes that sensitivity of stocks to interest rates is increasing, with no expected Fed rate cuts this year. Earnings growth will be crucial to sustaining rallies.

Capital Economics: Points to lingering market stresses beyond trade issues and warns of potential volatility as trade talks progress and tariff “pauses” expire.

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