MARKET COMMENTARY
Last week, U.S. equities closed at record highs despite a choppy tape driven by geopolitical headlines. The S&P 500 finished at 7,165, up roughly half a percent, the Nasdaq added 1.5% to a new all-time high, and the Dow slipped 0.4%. Semiconductors were the clear standout, with Intel surging 23.6% Friday after a blowout Q1 report that re-anchored the AI infrastructure thesis. The Philadelphia Semiconductor Index extended its winning streak to 18 consecutive sessions, AMD jumped nearly 14%, and Nvidia crossed back above a $5 trillion market cap.
Over the weekend, Iran submitted a new proposal through Pakistani mediators that would prioritize reopening the Strait of Hormuz in exchange for the U.S. lifting its naval blockade, with nuclear negotiations to follow in a separate, later phase. The U.S. has not yet formally responded, and analysts are skeptical, viewing the sequencing as a tactical move by Tehran to relieve economic pressure without making meaningful concessions on its nuclear program. Markets will be watching closely for any White House response to the Iranian proposal, as any signal of progress toward reopening the Strait would be a direct tailwind for risk assets and a headwind for oil.
This week's economic calendar is certaintly busy. Thursday brings the first estimate of Q1 GDP alongside Core PCE, the Fed's preferred inflation gauge, and together they will give the clearest picture yet of how much the Iran-driven energy shock has worked its way into the broader economy. Friday closes the week with ISM Manufacturing PMI, a key read on the health of the industrial economy after a strong flash reading earlier this month. Sitting in the middle of all of it is Wednesday's FOMC meeting, where the Fed is universally expected to hold rates steady. The DOJ dropped its criminal investigation into Jerome Powell on Friday, removing a significant distraction from the central bank, but the outlook for rate cuts remains murky. With Kevin Warsh's confirmation hearing now underway and Senator Thom Tillis dropping his opposition to the nomination, the market is broadly expecting the Fed to stay on the sidelines until new leadership is seated and sets its own direction. Wednesday night, after Powell speaks, Microsoft, Alphabet, Meta, and Amazon all report Q1 earnings in the same session, with Apple following Thursday after the close. Those five names represent nearly $16 trillion in combined market cap, and every one of them will be evaluated on the same question Intel answered emphatically last Friday: is the massive wave of AI capital spending actually translating into revenue growth, or is the return on that investment still ahead of us.
Our Newton model is picking up a notable shift in sector leadership this week. Industrials jumped to the top of the rankings while Technology and Consumer Cyclical both fell sharply, suggesting the market is rewarding real-economy exposure over the high-multiple growth names that led last week's rally. Within equities, Mid Cap and Small Cap moved higher in the rankings while Large Cap slipped, pointing to a modest broadening of market participation. It is worth watching whether this rotation toward more value-oriented and domestically focused segments has staying power, or whether it simply reflects a brief pause before mega-cap tech reasserts its leadership heading into one of the biggest earnings weeks of the year.
Economic Releases This Week
Monday: None
Tuesday: Consumer Confidence
Wednesday: FOMC Meeting, Housing Starts, Building Permits
Thursday: Initial Jobless Claims, GDP, PCE Index
Friday: Consumer Sentiment
Stories to Start the Week
Inside the Washington Hilton: How the Shooting Unfolded
Iran reportedly proposes Hormuz Strait deal to U.S. Here’s where things stand — and what’s next for markets
Tech OpenAI shakes up partnership with Microsoft, capping revenue share payments
This bank CEO let his AI clone handle an earnings call — now he’s signing an OpenAI deal
Our Newton model attempts to determine the highest probability of future price direction by using advanced algorithmic and high-order mathematical techniques onthe current market environment to identify trends in underlying security prices. The Newton model scores securities over multiple time periods on a scale of 0-20 with 0 being the worst and 20 being the best possible score.
Trend & level both matter. For example, a name that moves from an 18 to a 16 would signal a strong level yet slight exhaustion in the trend.
Disclousure:
Investing involves risk, including the possible loss of principal and fluctuation of value. Past performance is no guarantee of future results.
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