The first week of May presented a complex landscape for investors: on one hand, the S&P 500 recorded its best streak in two decades and the labor market showed resilience; on the other, the Federal Reserve maintained its restrictive stance, and Warren Buffett’s retirement announcement was accompanied by disappointing results for Berkshire Hathaway.

Beyond these events, the broader macroeconomic environment continues to deteriorate: GDP contracted in the first quarter, the U.S. dollar has posted a significant decline since January, and Congress is debating tax reforms that could impact budgetary stability. Meanwhile, international tensions are rising, with China imposing trade retaliations and OPEC adjusting its production strategy.

Berkshire Hathaway: Buffett Announces Retirement

Warren Buffett announced this week that he will step down as CEO of Berkshire Hathaway by the end of 2025, handing over leadership to Greg Abel. The news coincided with the company’s Q1 earnings report, which showed a 14.1% decline in operating profits compared to the same period last year. Berkshire also increased its cash position, signaling a more conservative stance in response to ongoing economic uncertainty. Buffett also criticized the current administration’s tariff policies, warning about their potential impact on growth.

S&P 500 Hits a Record

The S&P 500 posted nine consecutive days of gains — its best performance in 20 years. This rally was driven by strong earnings from companies like Microsoft and Meta, along with expectations of stable monetary policy. However, analysts warn that the rebound may not be sustainable if trade tensions and fiscal constraints persist.

The Fed Holds Its Ground

The Federal Reserve chose to keep interest rates in the 4.25% to 4.5% range, despite political pressure to begin cutting. Jerome Powell noted that recent inflationary pressures driven by new tariffs justify a cautious approach. The Fed stated that more evidence of stability is needed before considering any policy adjustments.

Employment Beats Expectations

The April jobs report revealed the creation of 177,000 new jobs, surpassing market forecasts. The strongest job growth came from healthcare, transportation, and finance. The unemployment rate held steady, and wage growth slowed, potentially giving the Fed more flexibility in the coming months.

Final Analysis

While markets welcomed positive signals such as the S&P 500 rally and strong employment numbers, the broader outlook remains uncertain. The Fed continues its restrictive stance, Buffett’s retirement marks the end of an era, and key macroeconomic indicators — like the GDP contraction and dollar weakness — point to structural challenges. In this context, caution and diversification remain essential pillars for any investment strategy.

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Sources: Wall Street Journal, MarketWatch, AP News, New York Post, News.com.au