Stocks hit record levels ahead of big week of earnings, Fed and US Inflation data

Macroeconomic/ geopolitical developments

• US equities advanced again last week, with the S&P 500 rising 0.55% and the Nasdaq Composite gaining 1.50% to fresh record closes, while the Dow Jones Industrial Average slipped 0.4% and remains just below its prior peak. Strength in technology and energy shares, alongside easing geopolitical worries and steady economic data, helped sustain the positive market tone.

• Ceasefires between the US and Iran, and separately Israel and Lebanon, have helped calm immediate geopolitical fears and modestly support market sentiment, although tensions remain fragile amid ongoing violations and unresolved negotiations. However, disruption in the Strait of Hormuz continues, with Iranian shipping restrictions and the US blockade of Iranian ports sustaining uncertainty over global energy supplies, inflation and growth.

• First-quarter earnings season has remained supportive for equities, with 84% of reporting S&P 500 companies beating expectations and blended earnings growth improving to 15.1% year-on-year, keeping the quarter on track for a sixth straight period of double-digit gains. Tesla and Intel were key highlights, with both topping forecasts, while Intel’s strong guidance and improving AI-related demand helped reinforce optimism around the broader technology sector.
• Markets face a packed and potentially pivotal week ahead, with more than one-third of the S&P 500 reporting results, including five Magnificent Seven names led by Microsoft, Alphabet, Amazon, Meta and Apple. Attention will also turn to Wednesday’s Federal Reserve decision and Thursday’s US PCE Inflation report, alongside policy meetings from the BoJ, BoE, ECB and BoC.

Global financial market developments

• US and global equity averages were higher.
• US and European bond yields were slightly higher on the week
• The US Dollar Index moved higher through the week.
• Gold futures were little changed.
• Oil futures prices rallied through the week.

Key this week

Central Bank Watch: It is a busy week for central banks, with the main focus on Wednesday’s Federal Reserve Policy Statement, Interest Rate Decision and Press Conference. Elsewhere, the Bank of Japan announces its policy decision on Tuesday, while the Bank of Canada also reports on Wednesday, before the Bank of England and European Central Bank round off the week with their latest policy updates on Thursday.

Macro Data Watch: The key macroeconomic releases this week are Thursday’s US GDP and PCE Inflation data. Other notable updates include Eurozone GDP and HICP figures on Thursday, followed by Japan’s CPI report and the US Manufacturing PMI on Friday.

Earnings Watch: US first-quarter earnings season gathers pace this week, with five of the Magnificent Seven set to report. Alphabet, Microsoft, Amazon and Meta headline Wednesday’s schedule, before Apple follows on Thursday.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued