Assalamu Alaykum,

Here’s a quick recap of last week’s events (May 11 – May 17) in the US stock market. From major index movements to key economic events, stay informed about the trends that matter to halal investors like you.

Market Overview

• Markets surged this week after the US and China agreed to a 90-day suspension of tariffs, reducing US tariffs on Chinese goods from 145% → 30% and Chinese tariffs on US goods from 125% → 10%.
• The Nasdaq soared 7.15%, leading major indexes, while the S&P 500 gained 5.27% and Dow Jones rose 3.41%.
• Mid and small-caps posted gains for the 6th straight week, reflecting broad-based optimism.
• A US-Saudi AI chip deal added to bullish sentiment, lifting tech and semiconductor stocks sharply.

Inflation Data Surprises to the Downside

• April CPI rose 2.3% YoY, slightly below expectations and the slowest pace since early 2021. Core CPI and headline CPI both rose 0.2% MoM.
• Producer Price Index (PPI) dropped 0.5%, defying forecasts for a rise, driven by falling margins—a sign that firms are absorbing tariff-related costs instead of passing them on to consumers.

Consumer Data Softens

• Retail sales growth cooled to just +0.1% in April (vs. +1.7% in March), suggesting consumers pulled back after a pre-tariff shopping spree in March.
• Consumer sentiment (U. of Michigan) slid again to 50.8, marking a 5th straight monthly drop.
  • 73% of respondents spontaneously cited tariffs, reflecting growing anxiety.
  • Inflation expectations jumped to 7.3% for the year ahead (from 6.5%).

Key Takeaways & Market Outlook

• US-China tariff pause triggers broad equity rally.
• Inflation cools more than expected, supporting the Fed’s wait-and-see approach.
• Retail activity and sentiment weaken, showing consumer caution.
  Risk appetite returns, benefiting corporate credit over Treasuries.

Word of the Week

Main features of Sukuk include asset-backed structure, risk-sharing, and prohibition of interest (riba). It allows investors to earn returns while staying within Islamic financial principles.

Sukuk are widely used by governments and companies in Islamic finance to raise capital for infrastructure, development, or business projects.

Example: A government issues Sukuk to build a highway. Investors buy the Sukuk and receive rental income generated from the highway tolls as their return.

Unlike conventional bonds, Sukuk represent ownership in an asset, not a debt obligation. This makes them more ethical and asset-linked.

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