The major indices staged an impressive comeback, with the Dow Jones Industrial Average rising 0.7%, the S&P 500 gaining 2.7%, and the Nasdaq Composite surging 4.2%. This broad-based rally was fueled by strong earnings reports from key players, stable Treasury yields, and a healthy dose of momentum as the week progressed.
US Market Highlights
Earnings season was in full swing, with nearly 40% of the S&P 500 companies reporting results. Tech giants like Microsoft (MSFT), Alphabet (GOOG), and Tesla (TSLA) posted impressive numbers, driving gains in their respective sectors. Alphabet even hit a new all-time high! The only notable exception was Meta Platforms (META), which dropped 7.9% after its earnings release.
The AI buzz continued to generate excitement, particularly in the chipmaker space. The PHLX Semiconductor Index (SOX) jumped a whopping 10% this week, riding the wave of optimism surrounding artificial intelligence.
On the economic front, the Advance Q1 GDP report showed slower growth and higher inflation than expected, while weekly jobless claims indicated ongoing strength in the labor market. The March Personal Income and Spending report revealed solid consumer spending but stalled progress on inflation.
Despite these mixed signals, Treasury yields remained relatively calm, with the 10-year note yield rising just five basis points to 4.67% and the 2-year note yield inching up three basis points to 5.00%.
Global Highlights
- The Bank of Japan held interest rates steady, but markets anticipate rate hikes in the coming months as the Yen has plunged 20% against the dollar over the past year.
- The UK’s economic recovery gained momentum in April, with the S&P composite PMI hitting an 11-month high of 54.0%. The pound rallied as markets tempered expectations for rate cuts this year.
- China acquired recently Nvidia A.I. chips through server products made by Super Micro, Dell, and Taiwan’s Gigabyte Tech. Buyers included the Chinese Academy of Sciences and the Shandong A.I. Institute.
- ByteDance publicly refuted reports that it was discussing the sale of TikTok without its video recommendation algorithm.
- China announced plans to pay consumers up to $1,400 to replace old cars, aiming to boost slowing demand in the world’s largest EV market.
- Honda revealed an $11 billion investment in a new EV hub in Canada, set to be operational by 2028 with an annual capacity of 240,000 vehicles.
Commodities & Crypto
Energy
Oil prices managed a small weekly gain, shaking off geopolitical tensions and focusing on the Fed’s monetary policy. Brent crude traded around $88.50, while WTI hovered near $84.
Metals
Copper remained on an uptrend in London, trading at around $9,865 (spot price), supported by a weaker dollar and a less optimistic supply outlook from Chile. Gold took a breather, with the ounce slipping to $2,340.
Crypto
In the crypto world, Bitcoin (BTC) experienced its fourth consecutive week of decline, struggling to reclaim the all-time highs that reached $73,800 last March. The digital currency traded just above $64,000, down 1.6% for the week. The euphoria surrounding the launch of Bitcoin Spot ETFs in the US appears to be fading, with net inflows into these funds dwindling. Ether (ETH) followed a similar trend, slipping 0.75% since Monday. The SEC continues to reject applications for Ethereum Spot ETFs, much to the disappointment of the second-largest cryptocurrency’s supporters.
Calendar & Movers
Looking ahead, investors have a jam-packed week of economic data and corporate earnings to navigate. All eyes will be on the Federal Reserve meeting and the jobs report for clues on the economy’s trajectory. The FOMC interest rate policy statement is expected to keep rates unchanged, with futures implying a 97% probability of no change. However, Fed Chairman Jerome Powell’s Q&A session will be closely watched for any hints on the timing of the first rate cut in this cycle.
Key economic reports to watch:
- Wednesday, May 1: Fed Interest Rate Decision
- Friday, May 3: Unemployment Rate (April)
On the earnings front, we’ll hear from a diverse range of companies, including:
- ConocoPhillips (COP)
- Pfizer (PFE)
- Coca-Cola (KO)
- McDonald’s (MCD)
- Starbucks (SBUX)
Tech titans Apple (AAPL) and Amazon (AMZN) will round out the reports from the Magnificent 7.
Investor Takeaways
As I always say, successful investing is about managing risk, not avoiding it. This week’s market action underscores the importance of staying the course and maintaining a well-diversified portfolio. While short-term volatility can be unnerving, it’s essential to keep your eye on the long-term prize.
With the Fed decision and jobs report on tap, investors should brace for potential market moves. However, it’s crucial not to let emotions drive investment decisions. Stick to your plan, stay disciplined, and remember that slow and steady often wins the race.
As we head into another eventful week, I encourage you to stay informed, stay focused, and stay invested. The road to financial success is rarely a straight line, but with patience and perseverance, you can navigate the twists and turns with confidence.
Until next time, happy investing!
