It’s great to be back. I had an amazing time visiting my son in Spain and now it’s time to dig back in.
Equity markets continue to price in optimism that the Iran conflict may be nearing an end, even as it stretches past eleven weeks and Strait of Hormuz traffic remains at a standstill. On Friday, President Trump stated that “Iran plans to make an offer aimed at resolving U.S. demands,” sending markets to new all-time highs.
The S&P 500 and Nasdaq closed at record highs on Friday, with the hope for possible negotiations between the U.S.and Iran to end their war. Also a surge in Intel shares helped extend the rally in semiconductor stocks.
Markets had rallied in recent weeks on hopes that a resolution to the Iran War was on the horizon, along with expectations of strong corporate earnings, but gains have been tempered this week as optimism for a peace deal dimmed, with the Strait of Hormuz remaining shuttered.
The leader of the AI revolution approached a new peak on Friday, and two of the three main U.S. equity indexes posted fresh all-time highs during a risk-on yet mixed-up stock market rally. Crude oil prices declined amid relative quiet on the Middle East front.
NVDA was the top-performing stock in the DJIA and closed within a couple of dollars of a new high, even as the industrial average was alone among the main indexes in the red for the day. NVDA, which traded at $212.19 intraday on October 29, changed hands at a high of $210.95 today.
As mentioned above, INTC was actually the leading semiconductor stock, after management reported expectations-beating first-quarter revenue and earnings and CEO Lip-Bu Tan cited “clear signs that the CPU is reasserting itself as the indispensable foundation of the AI era” during the company’s earnings call.
For the week, the Dow lost -0.4% to 49,231, the S&P 500 gained +0.6% to 7,165 the Nasdaq closed higher by 1.5% to 24,837 and the Russell 2000 added +0.4% to 2,787. The CBOE Volatility Index closed higher by +7% to 18.71.
TMI (Too Much Info)
Are you overwhelmed with the amount of information available 24/7? What is relevant? What’s not? The news cycle is never-ending and we have certainly learned that a simple tweet (X – I guess), or a benign post on social media can instantly move the markets.
How about if we just focus on news that affects the markets? Especially this coming week. Besides the massive amount of earnings reports coming up, how about all the economic data? What is most important and how do we trade ahead of or around the news? VERY CAREFULLY!
Bond auctions, durable goods, FOMC minutes, inflation data, GDP and more. That is just this week! And yes – it is now time for the “Magnificent” Earnings Moment.
More than one-third of the S&P 500 is set to post results this week alone. They include five of the “Magnificent Seven” megacap companies, which have been among the signature stocks of the bull market that began more than three years ago.
MSFT, GOOGL, AMZN and META all report on Wednesday and AAPL reports on Thursday! Are you kidding? How do we parce through what can affect the overall market?
The answer is… don’t get caught up with the news cycle. Don’t make rash decisions based on news you see or hear. When it comes to understanding what is real or not, relevant or not, the market will tell us. Trying to time a news event or act upon an announcement can be extremely detrimental to your wallet. Patience is a virtue.
Fed Meeting to Be Powell’s Last?
The unprecedented criminal investigation by the Trump administration into Fed Chair Jerome Powell was abrutly called off Friday, potentially clearing the way for his proposed replacement, Kevin Warsh, to win Senate approval. A key Republican senator, Thom Tillis of North Carolina, vowed to block Warsh’s confirmation unless the matter was dropped.
In this case, the president’s very public desire for the Fed to cut rates in the hopes it will boost the economy was seen as the reason behind the investigation. A federal judge recently alluded to the contention, ripping into prosecutors as he refused to let them issue subpoenas.
But even if this is Powell’s last meeting and Warsh becomes the new Fed chief, can he lower rates all by himself? President Trump has made it clear he expects his choice for Federal Reserve chair to quickly cut interest rates once he takes office. Yet Americans shouldn’t pencil in lower borrowing costs for mortgages, auto loans, or business loans just yet.
Should he be confirmed, Warsh will still face several hurdles to reducing rates, including rising gas prices that are pushing up inflation, questions about his political independence, and 11 other Fed policymakers who have a vote on the decision, with the majority of them not ready to cut.
Warsh, who was a member of the Fed’s governing board from 2006 to 2011, regularly argued for rate cuts last year as he sought Trump’s nomination to replace Powell. But since being named in late January, he has kept quiet, and hasn’t made any public comments since the Iran war started Feb. 28.
Christopher Waller, a Fed governor who voted in favor of a rate cut in January, last week expressed concerns that rising inflation could mean the Fed would have to stand pat. He also suggested that with the unemployment rate a still-low 4.3%, rate cuts might not be necessary.
And Treasury Secretary Scott Bessent said last week that if the Fed wanted “to wait for some clarity” before cutting rates, “I understand that,” a statement widely seen as providing some cover for Warsh to keep rates unchanged for at least a few months. For now, Wall Street investors see little chance for a rate cut until October 2027, according to futures pricing.
Keep this in mind, as this is something many people do not understand. The Fed Chair does not and cannot move rates all by him(her)self. Warsh (and every Fed Chair), is just one of 12 voters on the Fed’s rate-setting committee, which meets eight times a year to decide on where to set its overnight interest rate. Most have indicated in recent speeches or votes that they are reluctant to lower borrowing costs with inflation as high as it is. The committee voted 11-1 to keep rates unchanged in March.
Over one-quarter of the way through the earnings season, the S&P 500 is reporting strong results. Overall, 28% of the companies in the S&P 500 have reported actual results for Q1 2026 to date. Of these companies, 84% have reported actual EPS above estimates, which is above the 5-year average of 78% and above the 10-year average of 76%. In aggregate, companies are reporting earnings that are 12.3% above estimates, which is above the 5-year average of 7.3% and above the 10-year average of 7.1%.
Economic Reports of Note (All Times EST):
Monday
10:30 am – US: Dallas Fed Mfg Business Index
11:30 am – US: 3 & 6-month Bill Auctions
1:00 pm – US: 2 & 5-year Note Auctions
Tuesday
8:15 am – US: ADP Employment
8:55 am – US: Redbook
9:00 am – US: House Price Index
10:00 am – US: Conference Board Consumer Confidence
10:00 am – US: Richmond Mfg & Services Index
1:00 pm – US: 7-year Note Auction
Wednesday
7:00 am – US: Mortgage Data
8:30 am – US: Durable Goods
8:30 am – US: Housing Starts
8:30 am – US: Retail & Wholesale Inventories
9:45 am – CAN: Bank of Canada Interest Rate Decision
10:00 am – US: Atalnta Fed GDPNow
10:30 am – US: Crude Oil Inventories
2:00 pm – US: FOMC Interest Rate Decision
2:30 pm – US: FOMC Press Conference
Thursday
5:00 am – EU: GDP & CPI
7:00 am – UK: Bank of England Interest Rate Decision
8:15 am – EU: ECB Interest Rate Decision
8:30 am – US: Weekly Jobless Claims
8:30 am – US: GDP
8:30 am – US: PCE
8:30 am – US: Personal Income & Spending
9:45 am – US: Chicago PMI
10:00 am – US: Atlanta Fed GDPNow
10:00 am – US: Dallas Fed PCE
11:30 am – US: 4 & 8-week Bill Auctions
Friday
9:45 am – US: ISM Manufacturing PMI
11:30 am – US: Atlanta Fed GDPNow
