Brace for Impact | Inflation Hits, Fed Shakes, China Roars – Week of May 11
Dive into the market analysis for the upcoming week of May 11, 2025 and the week’s key economic data. Stay ahead with expert insights and forecasts.
Market Report
Major indices held steady with sideways action, consolidating after a strong rally from the April 7 lows.
The S&P 500's 9-day win streak ended Monday, setting a quieter tone for the week.
Stock-specific moves dominated, notably:
Disney (DIS) surged after strong Q1 earnings and upbeat full-year guidance.
DIS Daily Chart Alphabet (GOOGL) dipped on AI-related concerns threatening its core search business.
GOOGL Daily Chart
Macro & Geopolitical Highlights
OPEC+ to increase oil output by 411K barrels/day starting June.
U.S. trade deficit hit a record $140.5B, driven by tariff-avoiding import spikes.
Rising geopolitical tension as India launched strikes on nine Pakistani sites, prompting vow of retaliation.
U.S.-China trade meeting planned in Switzerland between Treasury Secretary Bessent and China’s Vice Premier.
PBOC eases policy: cut reverse repo rate by 10 bps (1.40%) and RRR by 50 bps (now 9.00%).
Fed holds rates steady (4.25–4.50%), with Powell signaling patience and data-dependence amid new policy uncertainties.
Bank of England cuts rates by 25 bps to 4.25% as expected.
Trump announces UK trade deal with a baseline 10% tariff and hints at more deals ahead.
Trump also championed the reconciliation bill, suggesting it’s a good time to buy stocks.
Sector Performance
Top sectors:
Industrials +1.1%
Consumer Discretionary +0.8%
Utilities +0.5%
Bottom sectors:
Healthcare -4.3%
Communication Services -2.4%
Consumer Staples -1.1%
Rates & Currency
2-Year Yield: +4 bps → 3.88%
10-Year Yield: +6 bps → 4.38%
U.S. Dollar Index: +0.4% → 100.42 (rate cut expectations now pushed to July)
Weekly Market Heatmap
Weekly Sector Performance
Market Triangle
⦿ Trend → Short & Medium term positive, while long-term is still mixed
Short-term (5D) → Positive
Medium-term (20D) → Postive
Long-term (50D & 200D) → Mixed
⦿ Breadth → Short-term is positive, while long-term is negative
4% Week → Positive
25% Quarter → Negative
52w NHL → Mixed
⦿ Momentum → Positive but losing momentum in high volatility
Velocity → Mixed
Volatility → Negative
The market is showing signs of recovery in the short-term & medium-term —
loss of momentum in a volatile environment, but breadth and trend are improving.
Broader Market Analysis
Breadth remains broad with 10 of 11 sectors holding above their 200-day SMAs — a sign of underlying structural support.
Short-term hesitation is visible, with mixed action on the 20SMA and 50SMA columns, suggesting indecision.
Health Care (XLV) and Energy (XLE) are showing diverging relative strength — a possible early sign of rotation.
Volatility compression across sectors signals a likely breakout or breakdown event brewing — especially in Technology (XLK) and SPY.
All four major U.S. equity ETFs — SPY (S&P 500), QQQ (Nasdaq 100), IWM (Russell 2000), and MDY (S&P MidCap 400) — are losing short-term momentum after a strong recovery from April lows. Each index has paused just below key resistance zones, with price action stalling near declining moving averages and trendline barriers.
SPY and QQQ have rebounded ~16% and ~20% from their April lows, while IWM and MDY are both up ~15–17%, reflecting sustained but now decelerating participation across both growth and value segments.
Despite maintaining higher lows, bearish divergences and rejection wicks near overhead resistance levels suggest rising caution. Volume has cooled across all four ETFs, and none have managed to reclaim their 200-day moving averages convincingly.
This market pause appears driven by macro uncertainties (Fed, trade, and earnings noise) and increasing signs of sector rotation exhaustion. Until we see confirmed breakouts above resistance on strong volume, this move should still be viewed as a counter-trend rally within a longer-term corrective cycle.
Looking Ahead to the Upcoming Week
Markets face a high-stakes week packed with inflation data, retail sales, and multiple Fed speakers, all of which could drive volatility and reset interest rate expectations heading into summer.
Key Economic Events to Watch:
Tuesday, May 13
CPI (m/m, y/y) + Core CPI — 🔴 Major market mover: With both headline and core inflation expected at +0.3%, any upside surprise could reignite rate hike fears.
Wednesday, May 14
FOMC Member Waller Speaks (5:15am) — 🟠 A key voice ahead of Powell’s address; tone may hint at internal Fed consensus on inflation risks.
Thursday, May 15
PPI & Core PPI (m/m) — 🔴 Critical for producer-level inflation trends; consensus is +0.2% and +0.3%.
Retail Sales (m/m) — 🔴 With consumer activity slowing, a flat reading after March’s strong print (+1.4%) will be closely watched.
Unemployment Claims — 🔴 Any deviation from the forecast (229K) could rattle labor market sentiment.
Empire State & Philly Fed Indexes — 🟠 Regional activity reads; potential to amplify or ease recession concerns.
Fed Chair Powell Speaks (8:40am) — 🔴 All eyes will be on tone, especially if CPI/PPI readings come in hot.
Friday, May 16
Prelim UoM Consumer Sentiment — 🔴 Expected to tick up to 53.1; sentiment levels are key to gauging consumer resilience.
UoM Inflation Expectations — 🔴 At 6.5%, any move higher could push yields up and dampen equity risk appetite.
📌 Takeaway:
This is a "data-dependent Fed" week — and we’re getting the two most critical inflation reports (CPI & PPI), plus Powell’s commentary. Expect market sensitivity to any deviation from forecast, especially if inflation proves stickier than anticipated. Positioning into Wednesday and Thursday should be tactical, with heightened awareness of potential volatility spikes.
Earnings Highlights:
Monday, May 12
🔹 Before Open: Hertz (HTZ), Monday.com (MNDY), Redwire (RDW)
🔹 After Close: Plug Power (PLUG), Simon Property Group (SPG), Zscaler (ZI), Indie Semiconductor (INDI), and several small-caps like SMR, GCT, RGTI
Tuesday, May 13
🔹 Before Open: Berkshire Hathaway (BRK.A, BRK.B), JD.com (JD), On Holding (ONON), Sea Limited (SE), CyberArk (CYBR), Under Armour (UA)
🔹 After Close: OKLO
Wednesday, May 14
🔹 Before Open: Global-e (GLBE), Bitfarms (BITF)
🔹 After Close: Cisco (CSCO), Red Cat Holdings (RCAT), Iris Energy (IREN), dLocal (DLO), NXT
Thursday, May 15
🔹 Before Open: Walmart (WMT), Alibaba (BABA), Deere & Co. (DE)
🔹 After Close: Applied Materials (AMAT), CAVA Group (CAVA), Take-Two Interactive (TTWO), Quantum Computing Inc. (QUBT), Kulr Tech (KULR), Bit Digital (BTBT)
Friday, May 16
🔸 No major earnings scheduled.
📌 Takeaway
This week features a mix of mega-caps and high-volatility tech names. Eyes will be on Walmart, Alibaba, and Applied Materials for macro reads on consumers, China, and semiconductors. Meanwhile, Berkshire and Cisco will offer deeper insight into broader economic and enterprise trends. Expect post-earnings price swings in mid- and small-cap tech after close each day.
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