11/05/2026
Mega-Cap Earnings, Powell’s Final Chapter, and Oil’s Peace-Deal Whipsaw | 2026 Weeks 19–20 Review
(fortnight ending Friday, 8 May 2026)
This two-week update covers the fortnight ending Friday, 8 May 2026. The market story over these two weeks is really one of three interlocking scripts running simultaneously: a historic mega-cap earnings season that kept delivering, a Federal Reserve meeting that ended Jerome Powell’s chairmanship with maximum institutional drama, and an oil market that swung violently on the shifting odds of a U.S.–Iran peace agreement.
The net result, paradoxically, was record highs. But underneath the index prints, the macro picture is more complicated than the headline numbers suggest.
Cross-Market Snapshot (through Friday, 8 May)
S&P 500: 7,398.93
Dow Jones Industrial Average: 49,609.16
Nasdaq Composite: 26,247.08
STOXX Europe 600: 612.14
DAX: 24,338.63
FTSE 100: 10,233.07
Brent crude: $101.29/bbl
WTI crude: $95.42/bbl
U.S. gold futures: $4,730.70/oz
Spot gold: around $4,720/oz
U.S. 10-year Treasury yield: 4.38%
U.S. 2-year Treasury yield: 3.90%
U.S. 30-year Treasury yield: 4.95%
DXY U.S. Dollar Index: 97.84
EUR/USD: around 1.179
The Macro Pulse
The central macro question over these two weeks was whether a resilient labour market could continue to offset the inflation damage being done by elevated energy costs. The data came down firmly on the side of resilience, even if the quality of that resilience remains open to debate.
The most important release came on Thursday, 30 April, when the Bureau of Economic Analysis published its first estimate of Q1 2026 GDP growth alongside the March PCE deflator. Q1 GDP grew at an annualised pace of 2.0%, up from 0.5% in Q4 2025 but below consensus expectations of roughly 2.3%. More critically for the Fed, headline PCE rose 3.5% year-on-year in March, while core PCE — the Fed’s preferred inflation gauge — accelerated to 3.2% year-on-year, with a 0.3% month-on-month gain.
That keeps underlying inflation materially above the Fed’s target. Initial jobless claims for the week ending 25 April provided an almost surreal counterpoint, falling to 189,000, the lowest reading since 1969. The labour market is not running hot in the way it did earlier in the cycle, but layoffs remain exceptionally low.
Then came the April nonfarm payrolls report on Friday, 8 May. April payrolls rose by 115,000, well above the Dow Jones consensus estimate of 55,000, following the 185,000 jobs created in March. The unemployment rate held steady at 4.3%, while average hourly earnings rose 0.2% month-on-month and 3.6% year-on-year, below expectations of 0.3% and 3.8%, respectively.
The wage deceleration matters. It is a modest counterweight to the PCE numbers, suggesting wage-driven inflation is not yet re-accelerating, even as headline prices are being pushed higher by energy. The University of Michigan’s Consumer Sentiment Index dropped to 48.2 in early May, the lowest reading in the survey’s history, with roughly one-third of respondents spontaneously citing gasoline prices as a key source of concern.
Central Banks: Powell’s Final Act
The FOMC’s 29 April decision will be remembered less for the rate outcome — a hold at 3.50%–3.75%, universally expected — than for the institutional turbulence surrounding it. Four FOMC members dissented, the most since late 1992.
Three of the four dissented not because they disagreed with holding rates steady, but because they wanted the easing bias removed from the statement — a signal that they view inflation risks as more durable than the majority is currently acknowledging. One dissenter, Governor Stephen Miran, broke the other way, voting for a 25 basis point cut.
The statement language also escalated materially from the prior meeting. It changed from saying inflation remained “somewhat elevated” to saying that “inflation is elevated,” and explicitly noted that developments in the Middle East were contributing to a high level of uncertainty around the economic outlook.
Powell, in what was likely his final press conference as Fed Chair, pushed back against stagflation comparisons, arguing that the 1970s analogy was misplaced given the very different unemployment and inflation backdrop. On the question of rate hikes, he was clear that policymakers were not currently saying the Fed needed to hike now. Still, market pricing shifted modestly toward the possibility that the next move could be higher, not lower, if the energy shock proves persistent.
Powell also indicated that he would remain on the Fed’s Board of Governors for a period after his chairmanship ends. The Senate process around Kevin Warsh’s nomination is now central for markets. The June FOMC meeting will likely be the first under new leadership, and it will arrive with a fresh SEP, a new dot plot, and considerable uncertainty about how a Warsh-led Fed would interpret the dual mandate in an energy-shock environment.
Europe: Holding the Line Under Pressure
Both the ECB and the Bank of England convened in late April, and both held.
The ECB kept its deposit rate at 2.0% at its 30 April meeting, while flash eurozone inflation data released the same day showed headline inflation jumping to 3.0% in April, driven largely by energy. ECB President Christine Lagarde stressed that the outlook was highly uncertain and would depend on the duration of the war and its effects on energy markets, supply chains, and broader inflation.
The June meeting is now the one to watch. Money markets are pricing roughly a 75% probability of a first ECB hike in June, which would take the deposit rate to 2.25%.
The Bank of England’s outcome was similar in direction but more divided in texture. The MPC voted 8–1 to hold Bank Rate at 3.75%, with the single dissent calling for a 25 basis point increase to 4.0%. The Bank’s framing was careful: monetary policy cannot directly offset higher energy prices, but it can and must respond if those energy prices generate second-round effects in wages, services, and inflation expectations. That distinction will define the Bank’s trajectory through the summer.
Equity Markets: Record Highs on an Earnings Foundation
The S&P 500 gained 2.3% over Week 20 and the Nasdaq surged 4.5%, with both benchmarks posting six consecutive weekly gains — their longest winning streak since 2024. The Dow was the relative laggard, gaining only 0.2% for the week, reflecting its lower technology weighting. Week 19 had already set the tone: on 1 May, the S&P 500 closed at 7,230.12 and the Nasdaq at 25,114.44, both then-record closing highs, helped by Apple’s fiscal Q2 earnings beat, broader technology strength, and easing oil prices on peace-deal optimism.
The engine behind the broader rally was unambiguously mega-cap technology earnings. Meta reported Q1 revenue of $56.31 billion, up 33% year-on-year, with ad impressions up 19% and average price per ad up 12%, while net income rose 61% to $26.77 billion. Apple reported fiscal Q2 revenue of $111.2 billion, up 17% year-on-year, with iPhone revenue rising 22% to roughly $57 billion. Services revenue reached approximately $31.0 billion, up about 16% year-on-year, reinforcing the long-term bull case around the company’s higher-margin, recurring revenue base. Amazon’s Bedrock platform also strengthened the AI infrastructure narrative, processing more tokens in Q1 2026 than in all prior years combined, with customer spending on Bedrock growing 170% quarter-on-quarter. Across the broader S&P 500, the blended Q1 2026 earnings growth rate now stands at roughly 27.7%, with 84% of reporting companies beating EPS estimates — both comfortably above historical averages.
The semiconductor complex was the other defining story of the fortnight. AMD reported Q1 numbers on 5 May and delivered a clear beat: revenue of $10.25 billion against a $9.89 billion consensus, up 38% year-on-year, with Data Center segment revenue of $5.8 billion, up 57%. Shares surged 16% on Wednesday, 6 May, as investors focused on the acceleration in AI-related data-center demand and management’s guidance for continued server growth.
Then, on Friday, the Wall Street Journal reported that Apple and Intel had reached a preliminary chip-manufacturing agreement, following more than a year of talks. Intel shares rose roughly 14–15% on the news, while Apple gained around 1.7–2%, as investors interpreted the agreement as a major potential validation of Intel’s foundry strategy and of the broader push to diversify advanced chip manufacturing capacity.
The strategic backdrop is important. Apple still relies heavily on TSMC for its most advanced chips, while Intel has been trying to rebuild credibility in foundry manufacturing after years of ex*****on challenges. A preliminary Apple manufacturing agreement, if finalised, would not merely be another supplier contract; it would represent a meaningful vote of confidence in Intel’s ability to serve one of the world’s most demanding semiconductor customers. More broadly, the AMD print and the Apple–Intel headlines reinforced the same market thesis: demand across the semiconductor stack remains extremely strong, AI infrastructure is still pulling capital toward CPUs, accelerators, memory, networking and foundry capacity, and domestic chip manufacturing has become a strategic priority rather than a purely commercial decision.
In Week 20, Datadog surged 31% after reporting quarterly revenue above $1 billion for the first time, with its AI observability tools directly tied to the infrastructure buildout underpinning the sector. The contrast with CoreWeave was instructive. CoreWeave beat revenue estimates — $2.08 billion versus the $1.97 billion expected — but its adjusted EPS loss of $1.12 was wider than the $0.90 consensus, and its Q2 revenue guidance of $2.45–$2.6 billion trailed the $2.69 billion estimate. The market continues to draw a hard line between AI revenue and AI profitability.
European equities had a more difficult finish to the fortnight. The STOXX 600 closed at 612.14, retreating from its mid-week high around 623.25 rather than falling from that level the prior Friday. The DAX finished at 24,338.63, down 1.32% on Friday, while the FTSE 100 closed at 10,233.07, down 0.43% on the day. European risk appetite was pressured by renewed Hormuz tensions, higher oil prices, and a fresh layer of U.S.–EU trade uncertainty after Washington threatened materially higher tariffs on EU goods unless the bloc removed tariffs on U.S. products by 4 July.
Commodities and FX
Oil provided the most dramatic price action of the fortnight. Brent spiked during Week 19 as President Trump said he would maintain the naval blockade of Iran until Tehran agreed to a nuclear deal. Brent surged to roughly $118 and WTI moved above $106 during the escalation phase.
The subsequent reversal was equally sharp. By Wednesday, 6 May, reports that the U.S. and Iran were close to a memorandum of understanding sent Brent tumbling toward $101 and WTI back toward $95. By Friday, 8 May, renewed clashes in the Gulf produced only a partial rebound: Brent closed at $101.29 and WTI at $95.42, with both benchmarks still posting weekly losses of more than 6%.
The IEA continues to describe the disruption as the largest in oil-market history, with roughly 10–13 million barrels per day affected depending on the measure used. Morgan Stanley also warned that U.S. gasoline inventories are drawing down sharply and could fall toward historical summer lows if imports remain weak and refinery yields continue favouring distillates over gasoline.
Gold finished the week firmer. U.S. gold futures settled at $4,730.70/oz, while spot gold was around $4,720/oz, heading for a weekly gain of more than 2%. The move was driven less by classic safe-haven demand and more by the interaction between peace-deal optimism, a softer dollar, and the possibility that lower oil prices could eventually reduce the pressure on rates.
The DXY closed at 97.84, its lowest level in roughly ten weeks, despite the stronger-than-expected payroll print. The reason was straightforward: peace-deal optimism softened the dollar’s safe-haven premium. EUR/USD traded around 1.179, supported by the ECB’s refusal to signal cuts, rising market pricing for a June hike, and improved eurozone risk sentiment when oil prices softened.
What to Watch This Week
The single most important release this week is April CPI, due Tuesday, 12 May. With headline PCE already at 3.5% and consumer sentiment at a record low, the print will either confirm that inflation is broadening beyond energy or provide some relief if core goods remain contained. April PPI follows on Wednesday, 13 May, adding another layer to the inflation picture before markets price expectations for the June Fed meeting.
The Senate process around Kevin Warsh’s nomination to lead the Federal Reserve also remains central. Markets have largely priced in confirmation, but the vote itself and any subsequent commentary on his policy philosophy — particularly his view on the current easing bias in the FOMC statement — will be watched closely by rate markets.
Strait of Hormuz developments remain the dominant headline risk. Tehran is expected to respond to the U.S.’s peace memorandum via Pakistan. Any credible confirmation of a framework agreement, let alone an actual reopening of shipping lanes, would be a major event across oil, rates, FX, and equities simultaneously — and the directionality of that move could dwarf anything else on the calendar.
Earnings season continues. AMD has already reported, while Nvidia’s results are expected on 20 May. Nvidia will be the more important test of whether the AI infrastructure spending cycle remains intact, particularly given CoreWeave’s capex escalation and the market’s unresolved question about when AI spending translates into durable profitability.
Finally, the U.S.–EU trade relationship warrants attention after Trump’s 4 July tariff ultimatum. A second front of policy uncertainty, layered on top of an energy shock, is not what European risk assets need heading into what may be a pivotal ECB meeting in June.
Six straight weeks of equity gains, record index highs, and a historic earnings season — yet consumer confidence is at its worst since 1952. The question worth sitting with this week is which of those two signals is telling the truth about where the economy is actually headed.
‼️ Disclosure ‼️
This material is provided for informational and educational purposes only and does not constitute investment advice.
