US equities advanced for a fifth consecutive week, with the S&P 500 gaining 0.90% to close at a new record of 7,230 and the Nasdaq up 1.1%, driven by AI and semiconductor strength. Markets demonstrated resilience, successfully balancing a strong AI-driven earnings season against the headwinds of an energy-driven supply shock. In fixed income, the 10-year Treasury yield rose 7bps to 4.37%, reflecting hawkish pressure from rising oil prices and a shift in Fed expectations, while credit spreads held relatively steady.
The earnings season remained the primary bullish catalyst, with over 80% of reporting companies beating estimates and earnings growth currently above 25%, led by technology and AI — four of the "Magnificent Seven" reported strong cash flow despite elevated capital investments. The Iran-US conflict remained the dominant risk, with persistent Strait of Hormuz instability keeping oil prices elevated. Meanwhile, Fitch Ratings reaffirmed its cautious outlook on US fiscal policy, flagging public debt levels above 120% of GDP as a medium-term concern.
Markets are digesting the hawkish tone from the latest Fed meeting, with four members voting against maintaining a pro-cut bias for 2026. The key focus for the coming week will be April CPI and employment data, which will be critical in determining whether an economic slowdown is materializing. Market attention remains focused on the earnings season, incoming economic data and developments in the Middle East conflict.
