Market Wrap | Fed Warns on Debt as Tech Stocks Surge

On May 7, 2025, the S&P 500 Index rose by 0.43%, the Dow Jones Industrial Average increased by 0.70%, and the Nasdaq Composite Index gained 0.27%. Fed Chair Jerome Powell expressed concerns about the unsustainable trajectory of US debt, warning of potential long-term economic implications. Powell also noted that tariffs have had a more significant impact on inflation expectations than initially anticipated, indicating that ongoing trade negotiations could influence future monetary policy decisions.

Based on the current market performance, several sectors outperformed the S&P 500, including the technology, healthcare, discretionary consumer goods, industrial, and financial sectors. Notably, the technology sector demonstrated exceptional performance. Conversely, the communication services, materials, and real estate sectors moved in the opposite direction of the S&P 500.

Nvidia's stock rose by 3.10% today, driven by news that the U.S. plans to relax export restrictions on AI chips to China. This move signals renewed growth opportunities for the company, as it could potentially expand its market reach in the region. Meanwhile, ASML Holding's shares climbed by 3.00%, with the company expected to post earnings of $5.83 per share for the current quarter, representing a year-over-year change of +35%.

Asset Entities surged over 455%, driven by its merger with Strive Asset Management, creating a unique publicly-traded Bitcoin treasury company with innovative financial strategies. DevvStream rose nearly 108%, as its joint venture with Fayafi aims to unlock high-impact decarbonization and energy transition opportunities. Digital Ally dropped over 90%, facing significant challenges due to weak financial performance, declining revenues, and increasing debt. Vast Renewables fell over 57%, as the company faces a regulatory investigation over environmental compliance issues.

Fed Chair Powell commented on the unsustainable path of US debt and the potential for future rate adjustments depending on economic developments. He noted the impact of tariffs on inflation expectations and the significance of current tariffs being larger than anticipated. The US Consumer Credit showed a higher-than-expected increase, indicating robust consumer activity. Additionally, the US appeals court affirmed the Microsoft-Activision merger, potentially affecting the technology and gaming sectors. Alphabet's shares fell as Apple explores AI search capabilities, highlighting competitive pressures in the tech industry. Lastly, the Fed's FOMC meeting proceeded as planned, maintaining the policy rate, indicating cautious economic monitoring amidst global uncertainties.