Two the Point — Still Standing, But Showing Signs of Strain

While the Fed held steady this week, the incoming data continues to paint a nuanced picture. Beneath the surface of a stable labor market and solid earnings season, select areas of the economy are starting to show strain, just not enough to force a policy pivot.

Key Insights:

• The Fed kept rates unchanged, signaling a continued wait-and-see approach as policymakers monitor incoming data for clearer signs of slowing growth.
• ISM Manufacturing PMI fell to 48.7 in April, marking a third straight month of contraction; new orders and exports remain under pressure.
• ISM Services PMI rose to 51.6, indicating modest expansion, though hiring remains in contraction at 49.0.
• Nonfarm payrolls rose by 177,000, with the unemployment rate steady at 4.2%; jobless claims ticked up to 241,000, the highest in over a year.
• S&P 500 Q1 earnings are tracking +13.6% year-over-year, led by Health Care and Communications, while Energy lags.
• Full-year 2025 EPS estimates continue to trend lower, now at $264/share, implying +7.7% growth.