What We Learned Last Week
“Control is an illusion, you infantile egomaniac. Nobody knows what’s gonna happen next: not on a freeway, not in an airplane, not inside our own bodies and certainly not on a racetrack with 40 other infantile egomaniacs.” – Dr. Clair Lewicki, Days of Thunder
Volatility picked up last week as the Dow Jones Industrial Average and Nasdaq finished lower. The S&P 500 hit 7,000 before pulling back.
Tech stocks had the earnings spotlight, with reports from Microsoft, Meta, and Apple. A pick by President Trump to replace Fed Chairman Jerome Powell and plunging gold and silver prices had investors’ attention to cap the week.
Starting with tech earnings there was a divergence in outcomes. Investors seemed to like Meta’s plan to spend $115-$135 billion on its AI build-out this year – nearly double its 2025 spend. Microsoft shares dropped more than 10% after earnings on slowing growth in its cloud segment, Azure. Microsoft news and earnings from other software companies, characterized by AI disruption, has pushed software stocks into a bear market.
Turning to the Federal Reserve, investors’ expectations for no change to the policy rate were met Wednesday following the FOMC meeting. Statements from the committee and Chairman Powell reflected expectations for solid economic growth, the potential for tariff-fueled inflation that should ultimately recede, and a lethargic labor market.
Staying with the Fed, President Trump tapped Kevin Warsh to be the next chair of the Federal Reserve. Warsh served on the Fed’s governing board from 2006 to 2011 after working as an economic adviser in the George W. Bush administration. The market’s reaction was difficult to interpret, falling gold and silver prices stole the headlines on Friday.
The prevailing narrative is that Warsh’s nomination triggered the decline in metal prices; however further selling pressure pushed spot silver down 28% and gold 9%, moves that are difficult to explain by this singular event.
Swirling around earnings and fed news, the dollar hit a 4-year low last week, there was concern of a potential government shutdown, a pending SCOTUS decision on tariffs, tariff policy and geopolitical uncertainty, and slumping consumer confidence here at home.
The week ahead is likely to pick up where Friday left off, with volatility increasing as traders and investors position for the dynamic environment. Long-term investors will put more of a focus on earnings, specifically companies in tech and healthcare sectors.
What’s Ahead This Week
Economic Events
It’s the first Friday of the new month and this means the week is full of jobs data. The labor market and wages play a critical role in the economy policy from the Federal Reserve.
- Job openings report will give insight into hiring which has stalled
- ADP private payroll report
- Initial jobless claims
- The unemployment report and rate update from the Bureau of Labor Statistics
Earnings
Another week for earnings to potentially move stocks with companies from tech and healthcare sectors reporting.
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- Palantir, Advanced Micro Devices, Google, Uber, Qualcomm, and Amazon are each tied into the AI trend in their respective industries.
- Merk, Amgen, Pfizer, Eli Lilly, AbbVie, Novo Nordisk, and Bristol-Myers Squibb, each compete to develop and bring prescription drugs to market to address disease.
My goal is for you to feel educated and informed about variables we do and don’t have control over and find ourselves working within. I hope to do it in an informative and relatable way. As always, I value your relationship and planning objectives – my door is always open for conversation.
