Profit Insights

**Wall Street Edges Higher Despite Moody's U.S. Credit Downgrade**

On Monday, May 19, 2025, U.S. stock markets demonstrated resilience, closing slightly higher despite an early slump triggered by Moody's downgrade of the U.S. government's credit rating. The S&P 500 managed its sixth consecutive day of gains, adding 0.1%, while the Dow Jones Industrial Average rose 0.3%, and the Nasdaq Composite saw a fractional increase. Investors largely absorbed the news of the U.S. debt being cut to AA1 from AAA, with Moody's citing "persistent, large fiscal deficits." This makes Moody's the last major credit agency to lower its U.S. Treasury rating, following Standard and Poor's in 2011 and Fitch in 2023.

The 10-year Treasury note yield briefly spiked to its highest intraday level in over a month at 4.56% before settling around 4.45%, little changed from its previous close.

**Market Performance & Trends**

Stock markets had seen significant gains in the three weeks prior, fueled by moderating concerns about global trade tensions and their potential economic impact. Last week, the Dow, S&P 500, and Nasdaq posted their biggest weekly gains since early April. Year-to-date, the S&P 500 is up 1.3%, and the Dow has gained 0.3%, while the Nasdaq is down just 0.5%.

Trading volume on Friday was higher than the recent 20-session average, with advancers outnumbering decliners on both the NYSE and Nasdaq.

**Company Earnings & Corporate News**

Several companies were scheduled to report earnings on May 19th, including:
* Global Ship Lease (GSL)
* Niu Technologies (NIU)
* Trip.com Group (TCOM)
* Agilysys (AGYS)
* Yalla Group (YALA)
* Safe Bulkers (SB)
* 8x8 (EGHT)
* TAT Technologies (TATT)
* Zepp Health (ZEPP)
* Qifu Technology (QFIN)
* Transcat (TRNS)
* CBAK Energy Technology (CBAT)
* Compugen (CGEN)
* Gilat (GILT)
* Ryanair Holdings (RYAAY)
* ZIM Integrated Shipping Services (ZIM)

ZIM Integrated Shipping Services reported its first-quarter 2025 results, announcing revenues of $2.01 billion and net income of $296 million. The company also reaffirmed its full-year 2025 guidance and declared a dividend.

PrimeEnergy Resources Corporation announced increased oil and gas production, leading to a 16.4% year-over-year revenue increase in Q1 2025. The company also highlighted its share repurchase program.

Nvidia and Foxconn announced plans to build an AI factory supercomputer in Taiwan.

**Economic Indicators & Trends**

* **U.S. Credit Rating:** Moody's downgraded the U.S. long-term issuer and senior unsecured ratings to Aa1 from Aaa, citing large fiscal deficits.
* **Inflation:** April's Consumer Price Index (CPI) showed a 2.3% increase over the past 12 months, with core CPI (excluding food and energy) up 2.8% year-over-year. Producer prices in April saw their largest monthly decline since December 2009. Headline CPI for April rose 0.2% m/m, a softer-than-expected outcome, largely driven by cooling services inflation. Core goods prices also rose 0.2% m/m.
* **Retail Sales:** Retail and food services sales edged up in April. However, retail trade sales fell from March but were up 4.7% from April 2024. April's retail sales report appeared soft on the surface, advancing by a slim 0.1%, with the control group that feeds into GDP contracting by -0.2%. March's figures were revised higher, suggesting consumers may have pulled forward demand ahead of potential tariff-induced price hikes.
* **Industrial Production:** Industrial production was flat in April.
* **Housing Starts:** Housing starts increased 1.6% m/m in April. However, residential building permits declined in April and were 3.2% lower than a year earlier.
* **Consumer Sentiment:** The University of Michigan's preliminary index for consumer sentiment in May dropped to its lowest reading in its history (50.8%). Inflation expectations for the next year climbed.
* **Trade:** The U.S. and China agreed to a 90-day pause in tariff implementations.
* **Uncertainty:** "Uncertainty" was mentioned in 84% of S&P 500 company earnings calls between March 15 and May 15, the second-highest level in 10 years. "Tariff" was mentioned on 91% of earnings calls in the last two months, a decade high.
* **Federal Deficit:** The U.S. federal government reported a $258 billion surplus in April, though the fiscal year 2025 deficit stands at $1.049 trillion.
* **Unemployment Claims:** For the week ended May 10, new unemployment claims were 229,000, unchanged from the prior week.
* **U.S. Census Bureau Index of Economic Activity (IDEA):** The current index value as of May 19, 2025, was -0.70.

**Global Markets**

* **Indian Markets:** Indian equity markets were expected to open cautiously on May 19th due to weak global cues, the U.S. credit downgrade, and firm gold prices. On May 19th, the BSE Sensex closed down 271 points, and the NSE Nifty 50 slipped 74 points, primarily due to losses in IT stocks following the Moody's U.S. credit downgrade. On Tuesday, May 20th, Indian benchmark indices plunged sharply, with the BSE Sensex falling 872.98 points and the Nifty50 settling 261.55 points lower.
* **Chinese Economy:** Economic indicators in China showed weakness in April, with industrial production expanding 6.1% y/y (down from 7.7% in March) and retail sales rising 5.1% y/y (down from 5.9% in March).
* **European Markets:** The European Commission revised its 2025 growth forecast for the Eurozone downwards from 1.3% to 0.9%. European markets closed broadly lower on Monday, May 19th. Inflation in the Euro Area remained stable at +2.2% YoY in April.
* **Japanese Economy:** The Bank of Japan indicated it will continue raising interest rates if the economy recovers from tariff impacts.

**Commodities & Currencies**

* **Gold:** Gold prices increased on Monday, with spot gold rising 1.4% to $3,247.40 an ounce, boosted by a weaker dollar and renewed safe-haven demand following the U.S. credit downgrade. On Tuesday, May 20th, gold prices experienced a decline due to a firm US dollar and optimism surrounding potential ceasefire negotiations.
* **Oil:** West Texas Intermediate (WTI) futures, the U.S. crude oil benchmark, rose 0.4% to $62.70 per barrel on Monday. Oil prices were relatively stable as investors watched Iran-U.S. talks and economic reports from China. On Tuesday, May 20th, WTI crude rose to around $62.3 per barrel.
* **U.S. Dollar:** The U.S. dollar index was down 0.7% at 100.37 on Monday.
* **Bitcoin:** Bitcoin was trading around $105,500 on Monday afternoon.
* **Indian Rupee:** The Indian rupee rose against the U