What Happened Last Week
- Earnings Drive Gains: A strong slate of earnings pushed the S&P 500 to new all-time highs, with leadership increasingly concentrated in large-cap tech.
- Rates Grind Higher: Treasury yields rose as investors digested resilient economic data and dissent over the Fed’s future policy.
- Higher Oil Persists: Oil prices remained elevated, but investors expressed optimism on a timely resolution.
What We’re Watching This Week
- Earnings Week Four: Many smaller software and consumer-facing names are set to report this week.
- Jobs Data: Friday will bring the April non-farm payrolls report, and Tuesday’s job openings data will provide background.
- Middle East: Oil prices continue to hover above $100 as the U.S. Navy begins assisting ships transiting the Strait of Hormuz.
Investment Management Team’s Views
A strong earnings backdrop pushed equities to new highs and powered the S&P 500 and Nasdaq-100 to their best months since 2020, but leadership narrowed once again. The busiest week of reporting reinforced corporate America’s resilience, as the AI investment cycle continued to underpin earnings strength and equity valuations. However, as earnings season winds down, investors are shifting their focus to forward guidance, which companies have kept notably cautious amid ongoing macro uncertainty. Recent gains have become increasingly concentrated in a small group of AI-linked companies. While narrow leadership is not new in this cycle, it raises the stakes for investors as more of the market’s performance comes to hinge on a single theme. In the weeks ahead, investors will ask how much additional upside markets can price into AI-related earnings and whether leadership can broaden beyond that cohort.
Macro crosscurrents remained active but largely took a back seat to strong earnings. A busy week of central bank meetings and continued volatility in energy markets kept macro investors engaged. The Fed delivered an uneventful meeting on the surface, though four dissenters highlighted growing divisions around the policy path. In Europe, policymakers are signaling a tightening bias contingent on how energy prices evolve. As leadership transitions at the Fed and internal divisions reduce the likelihood of near-term policy changes, markets will likely continue to take their primary cues from the earnings backdrop. This dynamic also leaves markets sensitive to incremental geopolitical progress, particularly around energy flows, which could ease inflation concerns and support a rebound in international equities and global fixed income.
The week ahead will center on labor market data and the next wave of AI-linked earnings. Investors will receive job openings on Tuesday, jobless claims and productivity data on Thursday, and the April payrolls report on Friday, making labor the clear macro focus. Earnings from Palantir, Advanced Micro, CoreWeave, Uber, and Airbnb will also test sentiment and demand across AI, software, and consumer-facing platforms. With equities at highs and leadership still concentrated, markets will watch whether the data confirm economic resilience and look for signs of improving sentiment in software stocks.