A potentially blockbuster week laced with pivotal earnings reports from almost $30 trillion-worth of S&P 500 names including five of the Magnificent Seven, key economic data and central bank interest rate decisions at home and abroad began following a weekend of no discernible progress on the Iran War.

With limited credible conflict newsflow, Wall Street eased gently into the first half of the week on Monday, conserving its energy perhaps for a possibly more volatile second half. After solid sessions in Asia and Europe, US stocks essentially flatlined for the session but squeaked out just enough to notch more new all-time record highs for the S&P 500 and NASDAQ indexes.

The Bank of Japan left local interest rates unchanged on Tuesday. Energy prices continued to climb with Strait of Hormuz traffic remaining at a standstill and the United Arab Emirates’ shock withdrawal from Saudi-dominated OPEC, raising the average price of a gallon of gas at US pumps to $4.30 and over $6.00 in California. Trump posting a picture of himself with a machine gun and the caption: “NO MORE MR. NICE GUY!” didn’t help.

US stocks faltered, pulling back from their record levels with the NASDAQ reversing hardest on a Wall Street Journal report of trouble at OpenAI which sent tremors through some of the firm’s many tech partners and acted as a sharp reminder to investors to maintain portfolios that are balanced across sectors.

Big Wednesday arrived with a Fed Funds Rate-setting announcement on tap followed by Jerome Powell’s final press conference as chairman and a tsunami of monster earnings after the closing bell.

The Fed obviously did nothing with interest rates but a split is clearly emerging on the committee between those looking to maintain a bias towards only focusing on cutting rates in the near future and other members looking for more symmetrical and flexible language that at least leaves the door open for possible interest rate hikes in response to the increasing inflation pressure brought about by tariffs and war.

In a lively press conference, Powell confirmed that he would stay on as a Fed governor once his chairmanship expires later this month, infuriating Trump. The indexes ended the session a little lower.

Broadly speaking, the earnings reports were graded by Wall Street as follows:

* Alphabet/Google: Excellent job all round. A gold star for the teacher’s pet.

* Microsoft: Could do better on AI service offerings. We aren’t angry, just a bit disappointed.

* Meta: Overspending yet again on unproven, kinda strange stuff. You have to rein it in and we likely won’t be happy until you do.

* Amazon: Revenues growing nicely, good work. But we do need to keep one eye on that spending of yours.

Long term US interest rates joined oil prices in touching wartime highs (5.00% on the 20-year and $126 respectively) on the last day of the month on Thursday before pulling back a little, continuing their non-confirmation of recent stock market exuberance (see below).

Central banks in Europe and the UK held local interest rates unchanged. Q1 US GDP estimates came in stronger than expected, sending the indexes shooting back to new record highs again despite the mixed tech earnings and the PCE index showing inflation continuing to run hot, soaring from 2.8% to 3.5% annualized, the biggest month-on-month increase for years.

The S&P 500 scored a 10% jump for the month of April, its best monthly performance since 2020. The Small Cap index and the NASDAQ did even better; up 12% and 16% respectively.

Apple reported after the close, beating expectations on most metrics but didn’t blow the doors off and the stock price shifted moderately higher on Friday as stocks began May as they had ended April by marching deeper into record territory with the S&P 500 index now on a five-week winning streak.

Some other things I’m thinking about ..

* I talked in last week’s report about the divergence between stock market performance and consumer sentiment. Another notable divergence is the one between stock market performance and that of other financial markets. Put simply, compared to the day the ceasefire was declared on April 7th, energy prices are now much higher, as is the 10-year Treasury yield. The S&P 500 index, meanwhile, has surged 9% over the same time frame.

* To be clear, this lack of confirmation by oil and interest rate markets doesn’t mean that the rally in stocks is illegitimate. The strong earnings and solid economic data upon which it is based are real. Stock markets are assuming that the war has passed peak intensity and we are at least on a road to some kind of resolution. But neither oil nor interest rates are signaling that and this non-confirmation can be spun one of two ways.

* Positively, it could mean that good earnings and economic data are so strong that they are swamping geopolitical concerns, providing an effective offset to event risk. Negatively, it could mean that the stock rally has simply been fueled by “fast money chasing” that has sent mega-cap tech stocks spinning higher on little more than general hope of a resolution and that there is a non-trivial risk that this could all reverse quickly and nastily.

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ARTICLE OF THE WEEK ..

“Just three months stand between the average American household and bankruptcy.” The death of the American Dream is now official.

.. AND I QUOTE ..

“The stock market isn’t always right, but it’s right far more often than any of us trying to predict what will happen next.”

Ben Carlson, Ritholtz Wealth Management

LAST WEEK BY THE NUMBERS:

Last week’s S&P 500 market color courtesy of finviz.com

* SPYM, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 1.0% last week, is up 5.7% so far this year and ended the week at its all-time record closing high (05/01/2026).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 1.0% last week, is up 13.5% so far this year and ended the week at its all-time record closing high (05/01/2026).

* VXUS, an International Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price rose 0.6% last week, is up 10.0% so far this year and ended the week 1.8% below its all-time record closing high (04/17/2026).

INTEREST RATES:

* FED FUNDS RATE * ⬌ 3.625% (unchanged from a week ago)

* PRIME RATE ** ⬌ 6.75% (unchanged from a week ago)

* 3 MONTH TREASURY ⬇︎ 3.68% (3.69% a week ago)

* 2 YEAR TREASURY ⬆︎ 3.88% (3.78% a week ago)

* 5 YEAR TREASURY ⬆︎ 4.02% (3.92% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.39% (4.31% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.96% (4.88% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.97% (4.91% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of Friday’s market close.

* Decided upon by the Federal Reserve Open Market Committee at periodic meetings 8x a year. Used as a basis for overnight interbank loans and for determining high yield savings interest rates.

** Wall Street Journal Prime Rate as of Friday’s close. Tending to move in lockstep with the Fed Funds Rate, this measure is used as a basis for determining certain consumer loan interest rates such as credit cards, auto loans, personal loans, home equity loans/lines of credit and securities-based lending.

*** Used as a basis for determining mortgage interest rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬆︎ 6.30%

One week ago: 6.23%, one month ago: 6.43%, one year ago: 6.76%

Data courtesy of the Freddie Mac Primary Mortgage Market Survey.

INTEREST RATE EXPECTATIONS:

Where will the Fed Funds interest rate be after the next rate-setting meeting on June 17th?

* 0.25% higher than now .. ⬇︎ 0% probability (1% a week ago)

* Unchanged from now .. ⬇︎ 93% probability (94% a week ago)

* 0.25% lower than now .. ⬆︎ 7% probability (5% a week ago)

With five more rate-setting meetings in 2026, what is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts this year?

* ⬌ Zero (unchanged from a week ago)

Data courtesy of the CME FedWatch Tool and is derived from futures market pricing as of Friday’s market close based on the current Fed Funds interest rate of 3.625%.

PERCENT OF S&P 500 STOCKS ABOVE THEIR OWN 200-DAY MOVING AVERAGE:

* ⬆︎ 57%

One week ago: 55%, one month ago: 45%, one year ago: 37%

Data courtesy of barchart.com as of Friday’s market close.

This widely-used technical measure of market breadth is considered to be a very robust indicator of the overall health of the S&P 500 index.

A high percentage (above 70%) generally suggests broad market strength and a bullish trend, while a low percentage (below 30%) may indicate market weakness and a bearish trend.

FEAR & GREED INDEX:

“Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffett.

Data courtesy of CNN Business as of Friday’s market close.

The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicators that measure different aspects of stock market behavior. They are: market momentum, stock price strength, stock price breadth, put and call option ratio, junk bond demand, market volatility and safe haven demand.

Extreme Fear readings can lead to potential opportunities as investors may have driven prices “too low” from a possibly excessive risk-off negative sentiment.

Extreme Greed readings can be associated with possibly too-frothy prices and a sense of “FOMO” with investors chasing rallies in an excessively risk-on environment . This overcrowded positioning leaves the market potentially vulnerable to a sharp downward reversal at some point.

A “sweet spot” is considered to be in the lower-to-mid “Greed” zone.

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