How Tax Reform and Economic Data Are Shaping Investor Sentiment
Market News 23 may
This past week, global investors closely followed developments in the U.S. market, where the House of Representatives passed President Trump’s sweeping tax and spending bill. The legislation — which raises the SALT deduction cap to $40,000 and increases the debt ceiling by $4 trillion — triggered significant market volatility, ranging from surging Treasury yields to initial declines in stock indices.
According to the Tax Foundation, the proposal is projected to add $3.3 trillion to the federal deficit and boost GDP growth by a modest 0.6% over the next decade. Treasury yields initially spiked — with the 10-year reaching 4.63% and the 30-year climbing to 5.15% — but later retreated as dovish remarks from Fed Governor Waller signaled potential rate cuts in the second half of the year, provided trade tariffs stabilize.
U.S. equities saw mixed performance. Tech giants such as NVIDIA, Alphabet, and Snowflake led the Nasdaq higher, buoyed by strong earnings reports. Meanwhile, semiconductor stocks — including Analog Devices and Texas Instruments — came under pressure amid sector rotation and weaker outlooks.
Labor market data added to the week’s economic narrative: initial jobless claims fell to a one-month low of 227,000, signaling a resilient employment backdrop. Additionally, the S&P manufacturing PMI unexpectedly rose, suggesting continued economic expansion.
Not all indicators were positive, however. Existing home sales dropped to a 7-month low, and foreign investor interest in U.S. assets waned due to ongoing trade tensions and a recent downgrade of the U.S. credit rating by Moody’s.
Crypto Momentum: Bitcoin Hits Record High
Bitcoin surged more than 2% to a new all-time high after the U.S. Senate began reviewing a stablecoin regulation bill, following a reversal in opposition from some Democrats. The move sparked renewed interest in digital assets, lifting shares of Coinbase and other crypto-related firms.
Corporate Headlines: Earnings, M&A, and Executive Moves
The week brought a slew of corporate news:
Zoom raised its earnings outlook, driven by strong adoption of its AI Companion;
Snowflake reported 26% product revenue growth and raised its annual guidance;
Nike announced a return to Amazon after a five-year absence;
Sanofi strengthened its neurology pipeline with the acquisition of Vigil Neuroscience;
Honeywell expanded into sustainable technologies with a deal to acquire Johnson Matthey's catalyst business;
Ralph Lauren, Urban Outfitters, and Advanced Auto Parts all beat earnings expectations, sending their shares higher.
Global Snapshot: Europe and Asia Under Pressure
While U.S. markets remained in the spotlight, international indexes struggled. Eurozone PMI data was mixed — with the manufacturing index climbing, but the composite unexpectedly dropping. The U.K.’s PMI also disappointed, falling to 45.1. Meanwhile, European bond yields declined, reflecting the ECB’s cautious stance amid global economic uncertainties and trade friction.
Investors continue to navigate a complex environment shaped by macroeconomic indicators, legislative developments, and corporate results. As the focus shifts to the Fed’s next moves, tariff updates, and potential rate cuts, volatility remains high.