Investment update
Weekly insight into the marketplace.
May 19 to 23, 2025
Stock market win streaks came to an end
U.S. stock markets made modest gains on Monday while Canada’s TSX was closed for the Victoria Day holiday. News that Moody’s had downgraded its credit rating on U.S. government debt to one level below top grade weighed on performance throughout the trading session. The tech-heavy Nasdaq and S&P 500 edged up 0.02% and 0.09%, respectively, while the broader-based Dow advanced 0.32%. On Tuesday, the TSX started its holiday-shortened trading week with a fresh record close and tenth-straight winning session – adding 0.32% despite a mixed inflation update. All the major U.S. stock indexes were down Tuesday, with rising Treasury yields dampening equity market performance, as investors became increasingly concerned over a proposed Trump administration tax-cut bill that could significantly increase U.S. government debt. These concerns escalated on Wednesday and weighed heavily on all the North American stock benchmarks. The Dow plunged 1.91%, the S&P 500 dropped 1.61%, and the Nasdaq shed 1.41%. Meanwhile, bond yields surged, with the 30-year U.S. Treasury yield reaching its highest level since October 2023 at 5.08%. The TSX ended its longest win streak since 2021 with a 0.83% loss – its worst daily performance in nearly six weeks. U.S. Treasury yields remained elevated on Thursday and continued to hamper Wall Street stock market performance. The Dow and S&P 500 closed essentially flat, while the Nasdaq edged up 0.28%. The TSX eked out a small 0.06% gain with support from financial stocks. On Friday, the U.S. benchmarks extended loses. A 3% drop in Apple’s share price pulled the Nasdaq 1% lower after President Trump threatened to apply tariffs on Apple products unless the company moved iPhone manufacturing to the U.S. The Dow dipped 0.61%, and the S&P 500 fell 0.67%. The TSX ticked 0.10% higher, buoyed by gold, copper and oil prices.
Canadian inflation data was mixed
According to consumer price index data released by Statistics Canada on Tuesday, the country’s inflation rate cooled to 1.7% in April, down from 2.3% in March. The slowdown reflected the federal government's removal of the consumer carbon tax. Lower crude oil prices were also a factor. However, core inflation measures, which remove the more volatile food and energy costs, and don't factor in one-off changes like the carbon tax cut, rose in April. Policy-makers at the Bank of Canada and investors will keep a close eye on incoming data in the lead up to the central bank’s next interest-rate decision on June 4.
U.S. tax-cut bill raised debt concerns
On Thursday, the U.S. House of Representatives approved a massive tax-cut bill that could add trillions of dollars to the nation’s already bloated US$36 trillion debt. Treasury yields surged on Tuesday and Wednesday in the lead up to the bill passing through Congress, which caused investors to move away from equity markets. The yield on the benchmark 10-year Treasury rose over 10 basis points from the start of the week, reaching 4.58% late Wednesday (it was 4.02% as recently as May 1). The multitrillion-dollar bill, which will now move to the Senate, aims to extend US$4.5 trillion in tax breaks from the first Trump administration, while adding new cuts. There will likely be changes to the bill following a debate in the Senate.
The stock and bond market*
| Index | Close | Week | YTD |
|---|---|---|---|
| S&P/TSX Composite | 25,879.95 | -0.35% | 4.66% |
| Dow Jones Industrial Average | 41,603.07 | -2.47% | -2.21% |
| S&P 500 Index | 5,802.82 | -2.61% | -1.34% |
| NASDAQ Composite | 18,737.21 | -2.47% | -2.97% |
| 10-year Canadian Bond Yield | 3.29% | 0.12% | 0.06% |
| 10-year U.S. Treasury Yield | 4.51% | 0.08% | -0.07% |
| WTI Crude Oil (US$/barrel) | $61.53 | -1.54% | -14.21% |
| Canadian Dollar | US$0.7283 | 1.73% | 4.76% |
| Bank of Canada Prime Rate 4.95% | |||
*Weekly performance ending May 23, 2025. Source: Bloomberg.
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Canadian GDP data for Q1 (May 30): Statistics Canada will release economic growth data for Q1 on Friday. If the economy appears to be heading into a deeper slowdown, it could raise expectations for the Bank of Canada to cut interest rates on June 4.
Circle these dates
May 26: U.S. markets closed for Memorial Day
June 4: Bank of Canada interest-rate decision June 17 to 18: U.S. Federal Reserve interest-rate decisionThe commentary in this report is based on current market conditions and market media sources available to the public and may change without prior warning at any time. The forecasts provided herein are not guarantees of future performance and include risks, uncertainty and assumptions. While Co-operators Life Insurance Company (“Co-operators”) believes these assumptions are reasonable, there is no guarantee they will be confirmed. This report is not a guarantee of future investment performance, nor should undue reliance be placed on this report. This report is provided as a general source of information for a specific point in time and should not be considered solicitation to buy or sell any investment. Nothing contained in this report constitutes investment, legal, tax or other advice. The content in this report should not be relied upon in making an investment or other decision, and individuals should obtain relevant and specific professional advice and read the terms and conditions contained in the relevant offering documents carefully before any investment decision is made. Co-operators is not responsible for any loss or damage as a result of reliance on the information contained in this report. Co-operators makes no representations or warranties as to the information contained herein and does not guarantee its accuracy, timeliness, completeness or usefulness. Co-operators is committed to protecting the privacy, confidentiality, accuracy and security of the personal information it collects, uses, retains and discloses in the course of conducting business. Please visit cooperators.ca/privacy for more information. Co-operators® is a registered trademark of Co-operators Group Limited and is used with permission. Investing in your future. Together.TM is a trademark of Co-operators Group Limited. If you are a client who has received this, and you have questions or want to discuss your investments, please contact your Financial Advisor.
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