Last Week
Despite peace talks stalling out and oil prices surging, the financial markets remained stable.
Strong corporate earnings reports and solid economic data offset the war news. S&P 500 blended earnings for the quarter increased to 15.1% from 13.0% the week earlier, following excellent results across multiple sectors, with the chip stocks contributing significantly. In terms of economic data, retail sales in March jumped 0.4%, twice the forecast, and consumer sentiment improved modestly.
Early in the week, U.S. President Donald Trump extended the ceasefire with Iran indefinitely until a coordinated plan for an end to the war, which would include Israel, could be reached. The definition of “indefinitely is open to interpretation. Additionally, Iran has said it will not participate in a second round of talks with the U.S., objecting to what it described as excessive and unrealistic demands from Washington. As a result, the Strait of Hormuz remained closed, and oil prices spiked by double digits, with Brent closing up 17.2% to $105 per barrel.
Strength in the Oil & Gas and Technology sectors masked underlying weakness. Declining issues outnumbered advancing issues by a factor of 3-2; nevertheless, the S&P 500 rose 0.6%, the Nasdaq Composite jumped 1.5%, and the Russel 2000 finished + 0.5% in the green. The Dollar moved 0.5% higher, while Gold slipped about 4%, and the yield on the 10-Year Treasury moved 6 basis points higher to 4.31%.
On the Chicago Sports Scene, the Cubs are red hot, but the Cincinnati Reds are even more red hot (pun intended). The National League Central looks like an exciting division this summer.
This Week
It will be an earnings palooza with 180 S&P 500 companies reporting results, including five members of the Magnificent 7, setting up one of the busiest stretches of the season.
On Wednesday, Microsoft, Meta Platforms, Amazon, and Alphabet will all report, and Apple follows on Thursday.
Outside of tech, Verizon, Visa, Coca-Cola, Starbucks, AbbVie, Qualcomm, Ford Motor, Eli Lilly, Merck, Mastercard, Exxon Mobil, and Chevron are on the earnings calendar for the week.
The Federal Reserve meets on Wednesday and is widely expected to keep rates unchanged, but it marks the final meeting chaired by Jerome Powell. A Senate vote on Kevin Warsh’s nomination is also due, raising the prospect of a shifting policy dynamic in the months ahead.
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