MARKET COMMENTARY
US equities surged to new highs last week, with all major indexes closing at record levels. The standout performer was the Philadelphia Semiconductor Index (SOX), which continued its historic run, posting another strong week and closing Friday at its highest level on record. Three catalysts drove the advance. First, oil prices fell sharply after Axios reported the US and Iran were closing in on a one-page framework to end hostilities, pushing Brent crude down from above $108 per barrel. Second, AI-driven earnings from key semiconductor names continued to beat elevated expectations. Third, solid US economic data reinforced confidence in the growth outlook. Last Friday's April jobs report added to that confidence: nonfarm payrolls rose 115,000, topping the 55,000 consensus estimate, marking two consecutive months of payroll beats and the first back-to-back positive surprises in over a year.
The positive tone from last week now runs headlong into a complex geopolitical and policy calendar. On the Iran front, markets may have gotten ahead of the diplomacy. Over the weekend, President Trump took to social media to call Iran's counter-proposal "totally unacceptable," rejecting conditions that included lifting the US blockade and releasing frozen Iranian assets. Iran's response also made no mention of nuclear arms, which remains a core US demand. The fragile ceasefire from April 8 is still in place, but the path to a formal deal is far from clear. Meanwhile, President Trump is traveling to Beijing for a two-day summit with President Xi Jinping, the first US presidential visit to China in nearly a decade. The agenda centers on the state of the tariff truce, AI policy and competition, and China's role in the Iran conflict. According to the Council on Foreign Relations, China enters the talks with meaningful leverage given its positioning on critical minerals, energy supply, and its credibility with Iran as a trading partner. On domestic policy, the full Senate is expected to vote this week on Kevin Warsh's nomination to become the next Federal Reserve Chair, possibly as early as today. The Senate Banking Committee advanced his nomination along party lines, 13 to 11, in late April. His confirmation would arrive just days before Jerome Powell's term expires on May 15, though Powell will remain on the Fed's Board of Governors after his chairmanship ends.
The data calendar will be closely watched this week, with Tuesday's April CPI report headlining the slate. Headline inflation is expected to cool slightly from March's elevated 0.9% monthly reading, though it remains firm, while core inflation is projected to tick higher month-over-month, a sign that underlying price pressures have not yet retreated despite fading energy effects. On a year-over-year basis, both measures are expected to move higher, with headline CPI rising toward 3.8% and core toward 2.8%. Later in the week, markets will also receive the Producer Price Index and US retail sales data, both of which will add further color to the inflation trajectory and the health of the American consumer.
The SOX's more than 60% rally from its late-March lows is not a one-stock story. What began with Nvidia has broadened into full-stack leadership across testing, networking, memory, power management, and capital equipment. TSMC reported Q1 revenues up 40% year-over-year with 50% profit margins; ASML, Marvell, Micron, Broadcom, and AMD are all participating; and hyperscaler capital expenditure is expected to exceed $700 billion this year. Deutsche Bank has characterized this as "a powerful, AI-driven demand cycle," and the breadth of participation matters: when multiple nodes of the semiconductor supply chain move in unison, it reflects genuine end-demand rather than speculative rotation into a single name. JPMorgan recently raised its S&P 500 price target citing AI as a primary driver, and the broader index reflects a decisive rotation away from the defensive positioning that characterized early 2026 and into high-beta technology and semiconductor names, with growth and momentum outperforming value and defensive factors as geopolitical tail risks fade and earnings beat. The international implications are equally significant: Taiwan's equity market benefits directly from TSMC's role in the AI supply chain, ASML remains the canonical pick-and-shovel play on global AI infrastructure, and the broader supply chain running through South Korea, Japan, and Southeast Asia means a sustained AI semiconductor cycle represents a structural tailwind for export-oriented Asian economies that investors are now beginning to price in.
Economic Releases This Week
Monday: None
Tuesday: Consumer Price Index
Wednesday: Producer Price Index
Thursday: Initial Jobless Claims, US Retail Sales
Friday: None
Stories to Start the Week
Trump says Iran ceasefire is ‘on life support’ after rejecting Tehran’s counterproposal
Leading stocks are losing their low-asset edge
Microsoft CEO Satya Nadella takes stand in Musk v. Altman trial
How a job at OpenAI became the greatest lottery ticket of the AI boom
American hantavirus cruise passengers flown to quarantine center after positive test
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:
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