Last week ended on a high note for the U.S. economy, with a strong April jobs report reinforcing the solid underpinnings of the U.S. economy. During the month of April, 263,000 new jobs were added compared to an expectation of 190,000, while the unemployment rate fell to 3.6% from 3.8% – the lowest level in almost 50 years. The enthusiasm for the markets changed over the weekend, however, with the threat of additional tariffs on Chinese goods.
U.S. equity markets begin the week below their all-time highs, as the possibility of escalating tariffs and their potential impact on U.S.-China trade talks remind investors that risks do remain. The war of words in these types of negotiations tend to be worse than the outcome, but investors should remain cautious as some key dates for progress on trade occur in May. The market is pricing in the odds of a favorable outcome on trade, and any miss will likely lead to a short-term pullback in stocks given the recent rally.
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