What we learned last week:
“The best thing about the future is that it comes one day at a time.” – Abraham Lincoln
As tensions in the middle east are discounted, major stock market indexes advanced for the sixth straight week led by semiconductor earnings.
The S&P 500 and tech-heavy Nasdaq finished the week at record highs, gaining 2.36 percent and 4.52 percent respectively.
A report from Axios early morning last Wednesday gave investor sentiment fresh hope that the U.S. and Iran were close to a deal that would bring an end to the conflict. The news sent oil prices down more than 6% and stock market futures jumped.
However, over the weekend Iran’s counterproposal to end the war was rejected by President Trump, calling it “totally unacceptable.” The U.S. wants assurances that Iran will end its nuclear program as part of any peace deal.
Last week’s market advance to record highs was concentrated on earnings results from tech companies. Specifically, companies producing semiconductor chips.
AMD, a company who develops central processing unit & graphic processing unit chips, based in Silicon Valley, CA, reported first quarter earnings after the market hours Tuesday. Their report beat stock analysts expected revenue, and gross and net income demonstrating demand for AI datacenters is showing no sign of slowing. The company’s stock rose more than 18% on the news in premarket trading Wednesday and finished the week up more than 25%.
In addition to earnings, the labor market’s health made headlines with several reports.
A look at job openings report (JOLTs) from the month of March underline the AI disruption in the Tech sector and “low higher, low fire dynamic in the broader market. ADP provided their monthly recap for April, which showed private employment added 109,000 after March shed 61,000. It is the U.S. payroll report from the Bureau of Labor Statistics that makes headlines each month.
In the case of this past Friday’s report, U.S. payrolls increased 115,000 in April, versus economist expectations for 55,000. The report complicates the Fed’s path to rate cuts. Stocks have priced in a future cut; however, the bond market increased its expectations for no rate cuts this year.
Moving to the week ahead but staying with rates and the Federal Reserve, Federal Reserve Chair Jerome Powell’s term ends this week and Kevin Warh’s nomination is expected to receive approval this week by the Senate.
The rest of the week will not be short on news as investors watch events unfold in the middle east, inflation data, and maybe most important the Trump-Xi summit. President Trump will be visiting Beijing Thursday and Friday to cover an agenda crucial to world economics.
What’s ahead this week:
Economic Events
- This week inflation takes center stage with Consumer price index and Producer price index. Investors are looking at price levels for indications of potential rate policy from the Federal Reserve
- U.S. retail sales Thursday will be an important indicator for consumer health
Earnings
- Earnings from the market’s largest companies have mostly finished up. There are several tech companies relating to the AI mega theme reporting
- Power provider Constellation Energy generates supply and marketing of clean electricity and renewable products, as well as wholesale energy.
- Networking company Cisco Systems
- Semiconductor chip material provider, Applied Materials
- Auto makers Honda and Toyota
- Nuclear fission reactor developer Oklo and quantum computing systems developer D-Wave Quantum are two companies on the cutting edge of technological development reporting this week.
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.
