Confidence Heats Up as Earnings Torch Estimates

2025-05-30

Paul Eitelman, CFA

Paul Eitelman, CFA

Global Chief Investment Strategist




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Economic insights
Market insights

Key Takeaways

  • Strong rally in U.S. stocks
  • Consumer confidence rebounds
  • Q1 earnings shatter expectations 

On this week’s edition of Market Week in Review, Chief Investment Strategist Paul Eitelman recapped recent stock and bond market performance. He also discussed the rebound in consumer confidence and first-quarter earnings. 

Rally Time

U.S. stocks rose during the holiday-shortened trading week, with the S&P 500 advancing nearly 2% through Thursday’s close. Stocks also performed well globally, with the MSCI All-Country World Index rising slightly above 1%.

Eitelman said the stock market’s broad rally since early April has been nothing short of phenomenal. For instance, the S&P 500 has shot up over 6% during May alone—a move he called outstanding.

The good news has also carried over to the fixed income space, where credit spreads have narrowed significantly. “Spreads are now the tightest they’ve been since President Trump’s ‘Liberation Day’ announcement,” Eitelman said.

Government bond yields have also ticked lower over the past few weeks, soothing investors rattled by April’s big upward spike. This includes the yield on the 10-year Treasury note, which fell 0.08% this week, Eitelman said. 

Open to Optimism

In another positive development, there are hints that confidence among U.S. consumers and businesses is on the rebound. “We’re seeing signs of life in the latest surveys, following some pretty weak numbers in April,” Eitelman said. As evidence, he pointed to The Conference Board’s measure of consumer confidence, which increased by 12 points from April to May.

“This encouraging news also suggests the gap between how consumers feel and how consumers act—the difference between soft and hard data—might be narrowing,” Eitelman remarked.

U.S. businesses also appear to be more optimistic about the overall environment. The latest regional Fed manufacturing surveys show a notable rebound in companies’ plans for future spending, he explained.

“Capex intentions are now back to where they were at the start of 2025. That’s a notable bounceback from the weaker levels we saw the last few months, when businesses were much more concerned about the impact of tariffs,” Eitelman said. 

Upside Surprise

First-quarter earnings season is wrapping up in the U.S. with generally strong results. Earnings growth for the quarter is tracking around 15% on a year-over-year basis—double what consensus expectations were coming into the reporting period, Eitelman noted.

“This has been a nice positive surprise. We’ve seen broad-based strength across the S&P 500, with some of the tech companies in particular really being sources of resilience,” he concluded.

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