Here’s a quick recap of last week’s events (May 4 – May 10) 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

US Stocks Finish Mixed as Trade Progress and Fed Uncertainty Clash

• Major indexes ended the week narrowly mixed as markets reacted to Fed caution, tariff developments, and economic data.
• Small and mid-caps led for the fifth week straight, suggesting investor confidence in domestic-focused firms.
• The Dow dipped slightly, while the S&P 500 and Nasdaq slipped 0.47% and 0.27%, respectively.
• Early-week losses came as the S&P 500 snapped its nine-session win streak, but stocks rebounded midweek on positive trade signals.
• News of a US-UK trade deal, the first since reciprocal tariffs began, and upcoming US-China talks helped lift investor optimism.

Federal Reserve Holds Steady but Warns of Tough Road Ahead

• As expected, the Fed kept rates at 4.25%–4.50%, but the tone of the statement grew more cautious.
• Officials cited rising risks to both inflation and unemployment, complicating the path forward.
• Chair Jerome Powell emphasized a “wait and see” stance, noting tariffs could drive both slower growth and higher inflation—a dilemma for monetary policy.
• Futures markets reduced expectations of a near-term rate cut.

Service Sector Strengthens Despite Rising Prices

• ISM Services PMI climbed to 51.6 in April, the 10th straight month of expansion.
• Subindexes for new orders, employment, and deliveries improved, though the prices index jumped to 65.1, the highest in over two years, mainly due to tariff-related cost increases.
• In contrast, Manufacturing PMI (last week) showed continued contraction, reflecting weaker demand and job cuts in the sector.

Key Takeaways & Market Outlook

• US-UK trade deal and upcoming US-China talks lifted trade hopes and supported risk sentiment.
• Fed held rates steady but flagged heightened economic uncertainty and policy trade-offs.
• Service sector activity remained resilient, though price pressures are rising.
• Bond markets saw higher yields as traders reassessed rate cut odds and processed Fed remarks.
• Investors continue to monitor tariff impacts, with manufacturing under pressure while services remain steady.

Word of the Week

Main features of this deal include no interest (riba), full transparency of cost and profit, and compliance with Islamic (Shariah) law. It is widely used in Islamic banking for buying goods like property, cars, or equipment.

Murabaha helps Muslims access financing while staying within religious guidelines. It promotes ethical trade and avoids speculation or unfair gain.

Example: A bank buys a car for $20,000 and sells it to the customer for $22,000. The buyer pays over time. The $2,000 is the bank’s profit. No interest is charged.

Murabaha is not a loan. It is a sale with a known cost and profit. Both buyer and seller agree on the terms in advance.

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