Last week, US equities extended their recovery, with the S&P 500 gaining 0.5% to close at 7,165, touching fresh record highs mid-week, while the Nasdaq rallied 1.5% on the back of technology strength and the Russell 2000 rose 0.4%. The Q1 2026 earnings season got off to a strong start, with ~80% of reporting companies beating estimates and earnings growth above 20%. Tech remained the core growth theme, with markets pricing in expectations that AI infrastructure could drive ~40% of S&P 500 earnings growth in 2026.
The extension of the US-Iran ceasefire further supported positive sentiment, helping moderate energy-related inflation fears. Petroleum prices finished 2–5% lower on the week, easing stagflation concerns. The 10-year Treasury yield rose ~5bps as improved risk sentiment was balanced against lingering inflationary pressures, with corporate bonds outperforming as credit spreads tightened.
Despite the ceasefire extension, tensions persist, with significant uncertainty surrounding a lasting peace agreement and renewed reports of attacks on vessels in the Strait of Hormuz keeping investors on edge. That said, markets remain constructively positioned — balancing strong earnings momentum and AI optimism against a fragile geopolitical backdrop — heading into an important week of central bank decisions and mega-cap tech earnings from Alphabet, Microsoft, Amazon and Meta.
