This week Aya unpacks notable earnings reports, a Fed meeting, and what we can expect with oil back over $100 per barrel. While the Fed meeting was notable for the 4 dissenting votes, interest rates remain unchanged. Watch the full video to hear how the S&P ended the month, the latest GDP numbers, and how AI capital expenditures continue to drive the markets.

TRANSCRIPT:

Hello, and welcome to our weekly Seven Market Movers video series from Wealth Enhancement. My name is Aya Yoshioka, Director and Senior Investment Strategist. Each week we like to highlight information related to geopolitics, economic growth, fiscal policy, interest rates, inflation, corporate earnings, and investor sentiment. Topics really that capture the market’s attention and what it means for you, the investor.

So this past week we had a lot of news coming from companies themselves.

Most of them all reporting first quarter earnings numbers. And we also had the Federal Reserve have their meeting on Wednesday and their conference. We also got some economic data, notably first quarter GDP numbers. A lot of information we know that was thrown at a market that was trading at record highs.

We also know that the market has been dealing with a lot of the geopolitical uncertainty related to the conflict in Iran. But despite all of this, markets were really willing to look through this uncertainty as earnings and macroeconomic data reaffirm the overall growth narrative.

Geopolitical and energy risks didn’t just disappear, but investors couldn’t afford to wait for a resolution to a problem that they felt would get resolved eventually. With oil trading back above $100 a barrel though, we’re still likely to see some economic damage at least in the coming months.

But in the meantime, tech and AI have roared back in terms of coming to the forefront of investor attention as it relates to equity markets. This week, saw over a third of companies within the S&P 500 Index report earnings. On Wednesday night alone, we saw 4 of the Mag 7 companies representing a little over 17.5% of the index just from those four companies.

AI remains the primary driver and we’re still expecting over $600 billion dollars in capital spending in 2026 alone, mostly going towards data center compute capacity for AI models.

On the last day of April, we got first quarter GDP estimates and the report showed that the US economy grew at a 2.0% annualized pace, an improvement over last quarter’s 0.5% pace, but it was a little under what economists were expecting, 2.3%.

Growth was really driven by investments, exports and government spending, mostly on that investment side, really tied back to that capital spending that we see from a lot of these tech companies.

Consumer spending did see a little bit of a slowdown and we also saw the inflation measures in that GDP report remain relatively elevated.

The Fed meeting was this week. Policymakers held rates steady at 3.5% to 3.75%, in line with market expectations. And when there isn’t much to talk about related to the action that the Fed didn’t take, it’s really the nuances of that decision that got dissected by markets. Policymakers voted 8 to 4, so we had 4 dissenters here showing that there was division within the Fed in terms of what the future path of interest rates might look like.

A lot of policymakers emphasize the uncertainty in terms of the economic environment, geopolitical, higher energy prices that could linger and the unknown timing of all of this may or may not impact inflation for the long term.

Treasury yields fluctuated a little bit this week as they tend to do around Fed meetings, but credit markets remained relatively calm, signaling the confidence in corporate balance sheets, and we saw this play out in first quarter earnings reports.

In summary, markets closed April near record highs with the S&P 500 climbing over 10% in the month of April alone, bringing the year to date returns back above 5%. The NASDAQ was up over 15% during the month of April and small caps also participated with the Russell 2000 up 15% as well in the month of April.

Corporate earnings momentum outweighed lingering geopolitical and inflation risks. And while the US Iran situation and volatile oil prices kept inflation concerns alive and really constrained the Fed’s ability to take interest rates down, corporate profits remained resilient and supported overall economic growth.

The result was a market defined by high confidence, especially in technology as we enter the month of May.

Thanks for listening and we’ll see you again next week.