Stock Market Summary – May 07, 2025

The Federal Reserve maintained its key interest rate range at 4.25%-4.5%. The Dow Jones Industrial Average was up nearly 300 points, despite fears over the Fed’s depiction of economic risks, which it attributes significantly to geopolitical uncertainties. Markets are unsure of how President Trump’s tariff push will affect the economy, raising the possibility of a stagflationary scenario. The Fed’s recent statements suggest a wariness to act preemptively in cutting interest rates.

In terms of top stocks, Alphabet’s shares fell significantly due to claims that AI will replace search engines and rising competition in core search. Uber’s shares also slipped despite an 18% increase in trips during Q1. Disney’s shares rose after topping Q2 expectations, revealing strong subscriber growth for Disney+, and announcing plans for a new theme park in Abu Dhabi. Smaller gainers include Lionsgate Studios, Logitech, and Novo Nordisk. Conversely, Arista Networks, Super Micro Computer, International Flavors & Fragrance, and Rivian Automotive are among the notable losers.

As discussions between US and Chinese officials draw focus, the market is waiting for clarity on the progress of trade deals, which are foundational to projections of inflation and growth.

Shares of Alphabet, the parent company of Google, plummeted 8% after Apple’s services chief, Eddy Cue, commented on the potential future dominance of AI over standard search engines. This hit both Alphabet and Apple stocks, with the latter falling 2%. It raises questions about the future of Google as the default search engine on Safari, especially since the relationship between the two tech giants is already under scrutiny in an ongoing Department of Justice lawsuit.

In other news, JPMorgan recommends investors position themselves for potential upside due to former President Trump’s teased “very big announcement.” The specifics of the announcement were not disclosed, but its potential to drive the market led JPMorgan to suggest purchasing S&P 500 call options to capitalize.

In the tech sector, there is restructuring news. Cybersecurity firm, CrowdStrike, plans to reduce its global workforce by 5% in an effort to boost efficiency. Despite shares falling almost 4% on the announcement, the move is viewed positively for the company’s long-term efficiency goals.

Meanwhile, Disney’s stock climbed more than 10% after posting impressive earnings results and offering positive updates on its latest theme park in Abu Dhabi. Likewise, Honeywell’s shares increased by over 2% following an upgraded rating to ‘buy’ by Bank of America, driven by expected stable and positive earnings revisions and business simplification through upcoming spin-offs.

Finally, billionaire investor Warren Buffett has downplayed the recent market volatility, claiming it to be insignificant compared to historical data. While acknowledging the recent jitters in the market, Buffett said the current situation is far from a dramatic bear market, urging investors to adapt to the financial climate rather than expect it to adjust to them. Though the S&P 500 was roughly 9% below its February peak at the time of his comments, Buffett remained unperturbed by short-term volatility.