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Good Morning!
Before we jump in, a quick reminder that we have new stock alerts coming next week. Keep an eye on your inbox.
Now let’s break down what actually moved markets this past week and what to watch next.
Market Recap
This was another positive week for markets, though it came with more turbulence than recent weeks. Stocks hit new record highs early in the week, pulled back mid-week on fresh uncertainty around the Middle East, then recovered again heading into Friday. The overall tone remains cautiously optimistic, driven by a combination of solid earnings and easing geopolitical fears.
The biggest story early in the week was the ceasefire extension. President Trump announced the U.S. would indefinitely extend the ceasefire with Iran, just one day before it was set to expire, sending stocks to fresh record highs on Wednesday. That announcement kept the relief rally going and reinforced the sense that a more permanent resolution may be in reach. The indefinite extension is meaningful because it removes the market's concern about hard expiration deadlines that had been a recurring source of volatility.
Oil, however, remained unsettled. Despite the ceasefire extension, crude moved back above $100 per barrel at points during the week as ongoing ship seizures in the Strait of Hormuz kept energy markets on edge. This is the core tension investors are navigating right now: the diplomatic picture is improving, but the energy market has not fully healed. Until oil stabilizes durably below pre-war levels, inflation pressure is not going away entirely.
Earnings season continued to be the other major driver this week, and the results have been broadly encouraging. A busy reporting calendar kept investors focused on company fundamentals, with markets balancing strong individual results against the ongoing macro uncertainty from elevated energy prices. Semiconductor and technology companies were a standout, with a major chipmaker surging to historic highs after its earnings and revenue easily beat expectations, with data center and AI revenue rising sharply and reinforcing the theme that AI demand remains resilient.
On the labor market, initial jobless claims came in slightly above expectations but remain at a subdued level, consistent with an economy that is still holding up despite the pressure from higher energy costs. Consumer spending has remained resilient overall, though lower-income households are feeling the strain from higher fuel and food prices more acutely.
The Fed's position has not changed. Rates are on hold and the market is not pricing in a cut anytime soon. The most recent core PCE reading came in above the Fed's 2% target, and with oil prices near $100 passing through to consumer energy costs, the March reading could prove even more difficult. The Fed needs to see sustained progress on inflation before it has room to move, and that progress depends heavily on whether energy prices continue to ease.
What's Coming Next Week
Next week is one of the most data-heavy weeks of the year and could set the tone for markets heading into summer.
The first estimate of Q1 GDP drops on Thursday April 30, alongside the March PCE inflation report, the Fed's preferred inflation gauge. Markets will absorb growth and inflation data simultaneously, which could trigger a sharp reaction in either direction. A weak GDP reading combined with elevated inflation would put the Fed in a very difficult position and revive stagflation concerns.
The Employment Cost Index also releases that same morning, giving the Fed its most reliable read on wage pressure. Together these three reports will likely shape rate expectations for the rest of 2026.
Beyond the data, the biggest earnings week of the season arrives. The largest technology companies in the world report results, giving investors the most important read yet on how corporate America is navigating the current environment. Strong guidance from this group could extend the rally meaningfully. Any disappointment could trigger a swift pullback from record levels.
The Middle East situation remains the wildcard underneath all of it. The indefinite ceasefire extension is positive, but the energy market is still pricing in risk. Watch oil closely. If it continues to ease, inflation fears cool and the Fed gets more room. If it spikes again, all bets are off.
The bottom line: markets are at record highs, earnings are strong, and the worst of the geopolitical fears have faded. But next week brings a flood of critical data and major earnings that could test those highs.
We will continue monitoring these developments closely and keep you updated with new opportunities as they emerge.
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See you soon!
SmallCapStocks Team
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