S&P 500: 1.71% DOW: 0.38% NASDAQ: 2.77% 10-YR Yield: 4.39%
What Happened?
The S&P 500 closed Friday at 7,230.12. The Nasdaq closed at 25,114.44, its first close ever above 25,000. Both indexes set fresh record highs to wrap up April, and the Russell 2000 ended the week at 2,812.82, within a hair of its own all-time high. On a calendar that handed the tape almost every excuse imaginable to sell off, the only thing the indexes did was go up.
The list of things the market chose to look past was long. The Fed held rates steady on Wednesday with the loudest dissent in 34 years. Four of the five mega-cap tech companies that reported announced an aggregate AI capex bill north of $400 billion, with one of them, Meta, taking a 7% after-hours haircut for its trouble. Q1 GDP came in at 2.0%, below the 2.3% the Street had penciled in. Brent crude touched $111.49 on Tuesday on the U.S.-Iran dual blockade of the Strait of Hormuz, its highest level in three weeks. And Jerome Powell used his post-FOMC press conference to confirm he is leaving the chairmanship on May 15. Any one of those headlines, taken alone, would normally be enough to put the tape under pressure for a week.
Instead the volatility complex ran the other direction. The VIX closed Friday at 16.93, its lowest reading since the Iran war began on February 28. Crude unwound most of its mid-week spike, with WTI back near $102 by the closing bell as Iran sent fresh Hormuz proposals through Pakistani mediators. Breadth held: small caps near records, financials and consumer discretionary both green on the week, and the equal-weight S&P 500 quietly outperforming the cap-weighted version. The tape is doing the thing tapes do when they have already made up their mind: filtering. The headlines that matter for AI infrastructure spend get bid; the ones that don't get a yawn.
For diversified portfolios, the broader read this week is about resilience. A market that absorbs a Fed dissent, a capex shock, an oil whipsaw and a chair transition without flinching is a market in which the dominant narrative, AI-driven productivity and capex, is doing more work than the day-to-day noise. That has not always been true this year, and it will not always be true. But for the past two months, balanced exposure to broad equities and to high-quality fixed income at meaningfully higher yields than were available a year ago has done what it was supposed to do, and the index closes at the end of April are the receipt.
Big Tech Beat the Quarter. Capex Picked the Winners.
Headline takeaway: all five names beat consensus on revenue and EPS; stock reactions ranged from +3% (Apple) to -7% (Meta).
Anthropic markups: per Fortune, ~$28.7B of Alphabet's $62.6B Q1 net income came from a non-marketable equity markup, primarily its Anthropic stake; Amazon disclosed $16.8B pre-tax Anthropic gain.
The key takeaway – Five mega-cap tech companies reported in 48 hours, and every one of them beat the headline numbers. The stocks went five different directions, because the market is no longer grading the quarter; it is grading the size of the AI infrastructure bill that comes with it.
The script was identical for all five names: a clean revenue and EPS beat, accelerating cloud or services growth, and a forward capex number large enough to make the room go quiet. Microsoft reported $82.9 billion in revenue and $4.27 in EPS, with Azure growth reaccelerating to 40% and AI revenue at a $37 billion run rate, up 123% year-over-year. CFO Amy Hood then raised full-year FY26 capex guidance to roughly $190 billion, against a Street that had been modeling closer to $155 billion. The stock fell as much as 5% on Thursday before recovering some of the move. Meta beat on every line, with revenue of $56.31 billion (+33% YoY) and adjusted EPS of $7.31, then raised 2026 capex to $125 to $145 billion, up from $115 to $135 billion. The stock dropped 7% in extended trading.
The companies that got rewarded for the same template were the ones whose cloud businesses showed the clearest signs of monetizing the spend. Alphabet reported $109.9 billion in revenue (+22% YoY), Google Cloud growth of 63% to $20 billion (with backlog nearly doubling sequentially to $460 billion), and EPS of $5.11, up 82%. Per Fortune's reporting, roughly $28.7 billion of Alphabet's $62.6 billion in net income came from a markup on the value of its private equity holdings, primarily its stake in AI lab Anthropic following recent secondary-market valuations approaching $1 trillion. Amazon printed $181.5 billion in revenue and $2.78 in EPS against $1.64 expected, with AWS reaccelerating to 28% growth, its fastest pace in 15 quarters. Amazon's earnings release explicitly disclosed that Q1 net income included $16.8 billion in pre-tax gains from its Anthropic investment.
Apple closed out the week with the cleanest print of the bunch on Thursday afternoon. Revenue of $111.2 billion was a March-quarter record, up 17% year-over-year. Services hit an all-time high of $30.98 billion at gross margin north of 70%, and the company authorized another $100 billion buyback. iPhone revenue grew 22%, also a March-quarter record, the only line that came in just shy of the most aggressive consensus mark. The stock added 3% on Friday and helped pull the S&P to its closing record.
The broader read for portfolios is that capex has quietly replaced revenue growth as the variable that determines whether a beat gets paid. That is a meaningful reframe of the AI trade. For diversified equity exposure it argues against trying to pick which of these five names will get the next quarter's reaction right; the dispersion within the group this week was wider than the dispersion between the indexes themselves. Owning the basket meant capturing Apple, Alphabet, and Amazon's gains without having to absorb Meta and Microsoft's after-hours hits, which is roughly the textbook case for diversified ownership at the top of the cap table.
Powell Held Rates One Last Time, and Four Dissenters Made Sure It Won't Be Easy for the Next Guy
Vote count: 8 to 4 to hold the federal funds rate at 3.50% to 3.75%; most dissents at a single meeting since October 1992.
The dovish dissent: Gov. Stephen Miran wanted a 25 bps cut, his sixth consecutive cut-side dissent.
The hawkish dissent: Hammack (Cleveland), Kashkari (Minneapolis), and Logan (Dallas) opposed the statement's easing bias language.
10-year Treasury yield: jumped ~7 bps to 4.42% Wednesday, settled at 4.39% Friday; +7 bps WK.
The key takeaway – The FOMC voted 8 to 4 to hold rates steady, the most dissents at a single meeting since October 1992. Three regional presidents went to the mat over a single phrase in the statement, the rate-cut crowd lost the easing bias, and the markets quietly removed any 2026 cut from the price of money. Then Powell announced he is staying on the board.
On paper, Wednesday's decision was a non-event. The federal funds rate stayed in its 3.50% to 3.75% range, exactly where it has been all year, and exactly where the FedWatch tool had it priced at 100% going in. The drama was in the vote count. Governor Stephen Miran dissented in favor of a quarter-point cut, his sixth consecutive dissent on that side of the ledger. More notably, regional presidents Beth Hammack of Cleveland, Neel Kashkari of Minneapolis, and Lorie Logan of Dallas all voted against the statement, not the rate hold itself, but specifically against language that signaled the next move would likely be a cut.
Four dissents at one meeting is a number you have to go back to October 1992 to match. The mechanics matter for what comes next. What the dissenters were arguing for was a neutral statement, one in which a hike was as plausible as a cut, given the inflation pressure coming out of the Iran energy shock and core PCE moving back up to 3.2%. Powell told the room they had a "vigorous" debate. The Treasury market did the rest of the talking. The 10-year note yield jumped roughly seven basis points to 4.42% on Wednesday, fully pricing out any 2026 rate cut, and CME futures moved to assign a 9% probability to a rate hike by December.
Then came the personnel news. In his press conference, Powell confirmed this was his final appearance as chair. His term ends May 15. Kevin Warsh, President Trump's nominee, advanced through the Senate Banking Committee earlier the same morning and is widely expected to clear the full Senate. The twist was Powell announcing he intends to remain on the Board of Governors for "a period of time to be determined," citing his concern about ongoing investigations into the Fed's headquarters renovation. His underlying term as a governor runs to January 2028. That decision keeps the seat off the market for Trump and, as ClearBridge's Josh Jamner put it in a note, means Warsh inherits a board no more dovish than the one Powell ran.
For diversified portfolios, the broader read is that the rate path the market was pricing into 2026 is gone. Cuts are off the table for the rest of the calendar year unless the labor market or oil prices break decisively in one direction. That changes what bonds are doing in a portfolio: at a 4.39% 10-year yield, intermediate-duration Treasuries and investment-grade credit are paying a real coupon for the first time in a meaningful way since 2007. The case for owning duration is no longer "rates are about to fall;" it is "rates are paying you to wait."
From Around the Watercooler
Q1 GDP comes in at 2.0%, with AI capex doing most of the lifting
Microsoft and OpenAI restructure the partnership: exclusivity ends, AGI clause goes
Spirit Airlines preparing to cease operations as $500M federal rescue collapses
Roblox cuts 2026 bookings guide by nearly $1B; stock plunges 24%
SpaceX's IPO filing reveals a dual-class structure that puts Musk above firing
Disclousure:
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