Weekly Market Insight

What happened last week?

• Last week reinforced a resilient macro and earnings backdrop. Q1 S&P 500 results were notably strong, with growth accelerating to ~27% and beat rates well above historical averages. Consumer spending remained healthy, highlighting stable demand and no signs of lower-income weakness despite geopolitical risks. Macro data supported a steady outlook, with resilient labor markets, continued expansion in manufacturing, and solid underlying demand. However, Iran conflict and related oil price surge remain key overhangs. (FactSet)
• Big Tech earnings were broadly supportive of the AI narrative, with strong demand and elevated capex, though ongoing concerns around ROI and sustainability still top of mind. (FactSet)
• No real progress in the Middle East stalemate, with markets still skeptical of near-term escalation even as the Strait of Hormuz remains effectively closed and reopening timelines slip into mid-to-late summer. The ceasefire continues to hold, providing a key tailwind this month, but efforts to form an international coalition have gained little traction and Trump said to be considering a resumption of strikes. Confidence in near-term deal remains low especially after Trump said Friday afternoon he is "not satisfied" with latest Iranian proposal. Meanwhile, last week's inventory data highlights tightening conditions, with US crude stocks falling 6.2M barrels in the week ended 24-Apr. Market is increasingly pricing in a longer delay to the strait reopening and tightening inventories, requiring higher prices to drive demand destruction and rebalance market. (FactSet)
• Fed FOMC meeting ended with rates unchanged but was marked by rare internal division, with four dissents reflecting disagreement over easing bias. Statement was largely unchanged, still implying the next move could be a cut, though some economists see the dissents as lowering the bar for hikes. Notably, Chair Powell said he will remain on the Board as a governor after his chair term ends. Markets continue to price no rate cuts this year, with economists warning a prolonged pause is likely unless labor market conditions weaken. (FactSet)
• Last week's economic data was mostly supportive of macro: 1) First read of Q1 GDP came in at +2.0% SAAR, below 2.3% consensus but up from Q4's +0.5%, with some boost tied to post-shutdown normalization; 2) March personal income rose 0.6% m/m, rebounding from February, while spending increased 0.9% m/m, in line with expectations; 3) Core PCE printed 0.3% m/m, easing from 0.4%; 4) April ISM Manufacturing showed steady demand though rising prices flagged as concern; 5) Labor data remained very strong, with initial jobless claims at 189K, the lowest since 1969, and continuing claims at 1.785M, both well below expectations; 6) April consumer confidence beat, highest since December; 7) Preliminary headline March durable goods orders increased 0.8% m/m (vs 0.4% consensus, prior 1.2% decline). (FactSet)