What we learned last week:
“You can’t connect the dots looking forward; you can only connect them looking backward. So, you have to trust that the dots will somehow connect in your future.” – Steve Jobs
The S&P 500 completed its tenth consecutive week of gains going back to the last week of March.
Led by earnings from tech companies and spending on AI the S&P 500 and Nasdaq have bounced back more than 20% from their March 30th lows this year.
All three major U.S. stock indexes finished the week at record highs with familiar themes continuing to lead the way.
Starting with oil prices, investors road a rollercoaster pushed and pulled by events in Iran. Prices initially fell on optimism for peace talks and ultimately a reopening of the Strait of Hormuz. Prices rode higher Thursday after the U.S. and Iran exchanged military strikes and The Revolutionary Guard said it targeted a U.S. air. By Thursday afternoon prices fell back down on optimism over negotiators reaching a 60-day memorandum of understanding (MOU) which still awaits President Trumps approval.
Oil prices are down almost 20% for from their high this year, helping support higher stock prices.
The second major theme driving stock indexes is AI growth. Micron topped a $1 trillion market value for the first time last week, driven by artificial intelligence demand for its memory chips. Memory chips have become extremely valuable as AI infrastructure build out moves into the inference stage, making it challenging for chip companies to provide enough supply to meet demand.
The week finished with two notes from the economy the market interpreted as positive. Inflation and jobs data are currently under a microscope as investors navigate how the Fed will manage interest rates.
U.S. jobless claims continue to show a healthy labor market, which has been deemed; ‘low higher low fire’. Prices are on the rise, however, Personal Consumption Expenditures Index showed month over month change in prices rose less than economists expected, giving stock prices a boost Friday.
We move into the last big week for first quarter earnings, several tech companies from the cyber security industry and chip maker Broadcom will report and have the attention of investors along with companies’ consumer sector companies. The week is also packed with labor market data and can potentially move investors’ expectations for a Fed rate hike this year, which has implications for stocks. Although, investors will likely keep a keen eye on oil prices and events out of Iran as the world waits for oil supply to come back online.
What’s Ahead This Week
Economic Events
- Jobs data will be in focus as investors await the June Fed meeting with the new Fed Chairman, Kevin Warsh
- Job openings report (JOLTS) is scheduled to be released Tuesday
- Followed by ADP private payroll report Wednesday
- Weekly jobless claims Thursday and the non-farm payroll report from the BLS Friday will most likely grab headlines
Earnings
- Several companies in the cyber security sector are reporting earnings. Outlook will likely be under a microscope as investors weigh AI’s impact on their business model
- Palo Alto Networks
- CrowdStrike
- Rubrik
- Several more consumer companies are reporting earnings
- Dollar General
- Ulta Beauty
- Five Below
- Lululemon
- AI chip supplier Broadcom, an important component to the AI infrastructure buildout, reports after-market hours on Wednesday
- Medical device developer and manufacturer Medtronic report before the market opens on Wednesday
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.
