Weekly Commentary (5/4/26) – Earnings Hold Firm as Oil and Rates Keep Pressure on Markets

Weekly Commentary (5/4/26) – Earnings Hold Firm as Oil and Rates Keep Pressure on Markets
Last week, investors had to balance two very different forces: a surprisingly resilient earnings season led by several of the Magnificent 7, and another surge in geopolitical and inflation anxiety tied to the still-fragile Iran ceasefire and the continuing disruption around the Strait of Hormuz. Five of the Magnificent 7 reported during the week, and their results reinforced how central AI-related spending has become to both earnings growth and broader economic momentum. At the same time, higher oil prices and renewed supply concerns kept interest-rate pressure in place and limited the market’s room for comfort.

For the week, the DJIA added 0.55% and the S&P 500 grew 0.92%. The tech-heavy Nasdaq finished up 1.12%. International equities also gained with the MSCI EAFE Index up 0.98%, while emerging market equities (MSCI EM) fell 0.52%. Small company stocks, represented by the Russell 2000, were 0.94% higher. Fixed income, represented by the Bloomberg Aggregate, fell 0.39% for the week as yields moved higher. As a result, the 10 Year Treasury closed at a yield of 4.39%, up 8 basis points on the week. Gold prices closed at $4,629.90/oz, down 2.00%. Oil moved up 7.54% to $101.94 as investors continued to price in supply risk and uncertainty surrounding Middle East shipping routes.

Last week’s economic news showed an economy that is still holding up, but with inflation pressure not yet giving the Federal Reserve much room to relax. First-quarter GDP came in at 2.0%, a touch below expectations, but personal income and spending remained firm, core PCE matched estimates at 0.3% for the month, and the year-over-year core reading moved up to 3.2%. Meanwhile, the Fed held rates steady, but the meeting revealed the most divided board vote in decades, underscoring how uncertain and uncomfortable the current inflation and rate backdrop has become.

Earnings season, however, has continued to provide support. With roughly two-thirds of the S&P 500 having reported by the end of the week, profit growth expectations moved sharply higher, helped in large part by strong results from major technology companies. That has helped offset some of the damage from higher yields and oil prices. Still, the bar is rising: continued heavy AI-related capital spending is impressive, but investors will eventually want clearer evidence that this spending is converting into durable monetization rather than simply bigger budgets and more expensive inputs.

Outside the U.S., the picture is more difficult. Europe appears more exposed to the oil shock than the U.S., with eurozone inflation re-accelerating, growth slowing, and ECB officials already warning that higher energy prices may require tighter policy if inflation does not improve. That leaves the region in a more uncomfortable position, as it is more directly affected by imported energy pressure while also facing weaker growth.

The coming week will give markets plenty to consider, including services data, job openings, jobless claims, productivity, and Friday’s employment report. After a week in which strong earnings helped steady sentiment, investors will be watching to see whether labor-market data and Fed commentary reinforce the idea that rates may stay higher for longer. With the Iran ceasefire still looking fragile and oil markets still sensitive to every headline, markets are likely to remain reactive.

We continue to advise investors to be disciplined in adhering to their investment policy and patient when the markets’ winds are pushing against the planned course.

“Patience is not passive; on the contrary, it is concentrated strength.” – Bruce Lee
Sources
Market data: J.P. Morgan Asset Management, Weekly Market Recap, May 4, 2026. Index returns, yields, key rates, and commodity prices as cited in the Weekly Data Center. All equity returns represent total return for stated period.  Oil and Gold data as cited in the Wall Street Journal May 4, 2026
Economic Data: MarketWatch.com
Investors cannot invest directly in an index. Past performance does not guarantee future results. Diversification does not guarantee investment returns and does not eliminate the risk of loss. This material is for informational purposes only and should not be relied upon as investment advice or a recommendation of any particular security, strategy, or investment product. This material does not consider the investment objectives, financial situation, or unique needs of any individual investor. Consult your financial advisor before making any investment decisions.