Categories:
Key areas of focus
- It is a relatively light week for scheduled macro data releases. Attention turns to March Retail Sales and the final April University of Michigan Consumer Sentiment reading. On the micro side, earnings season continues with more than 90 S&P 500 companies reporting, alongside roughly 200 additional firms outside the index.
- Lower oil prices and reduced Middle East tensions helped fuel a strong risk-on sentiment last week. Equity markets rebounded sharply, with the S&P 500 posting three consecutive record highs and the Nasdaq reaching new peaks as well. The Dow sits just below its high watermark, while small caps reclaimed and exceeded prior highs after briefly entering correction territory.
- There is a style rotation happening in the market. Growth meaningfully outperformed value for the third week in a row. While value still leads year-to-date, that gap has narrowed noticeably as investors lean back toward growth amid improving market momentum.
Week in review
Investor sentiment last week remained closely tied to developments in the Middle East and the evolving outlook for global energy flows. Markets opened Monday digesting renewed volatility in oil prices as the Strait of Hormuz remained closed amid fresh blockade headlines and a lack of agreement between the U.S. and Iran over the weekend. Existing home sales fell sharply, particularly in the Northeast. On Tuesday, stocks moved broadly higher as fresh inflation data showed a softer‑than‑expected core PPI reading, even as components tied to PCE suggested less progress beneath the surface. Wednesday extended the equity rally despite a weaker Empire State manufacturing reading that pointed to regional contraction. Thursday’s data flow painted a mixed but still constructive picture: jobless claims remained low, the Philly Fed survey strengthened, and manufacturing production data softened modestly. Markets finished the week decisively higher on Friday after Iran announced that the Strait of Hormuz would reopen during the ceasefire between Israel and Lebanon, while an upside surprise in housing starts led by multifamily construction added further support.
Spotlight
It did not take long for markets to shake off the headwinds from the latest Middle East conflict. The S&P 500 bottomed just two weeks ago, on March 30th, and has already rebounded to all‑time highs. An outcome that would have seemed unlikely as recently as last week. While headlines continue to create short‑term noise, equities remain forward‑looking instruments. That forward focus has allowed investors to pivot back to earnings, the most consistent long‑term driver of stock performance. With that lens, the S&P 500 has largely looked through inflation concerns, AI uncertainty, private credit risks, and questions around consumer spending, instead focusing on earnings growth that investors still believe is intact. First‑quarter earnings season is now gaining traction. Several large banks reported last week, and their results, which are often viewed as proxies for the broader economy, suggest households and businesses are holding up. The pace of reporting accelerates this week, with more than 90 S&P 500 companies and roughly 200 additional firms reporting results.
Markets
Sectors
Style & Market Cap
Sources
1. Existing Home Sales
National Association of REALTORS (NAR), Existing-Home Sales Summary, retrieved from NAR; https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales
2. Producer Price Index (PPI)
U.S. Bureau of Labor Statistics, Producer Price Index News Release Summary, retrieved from U.S. Bureau of Labor Statistics; https://www.bls.gov/news.release/ppi.nr0.htm
3. Empire State Manufacturing Survey
The Federal Reserve Bank of New York, Empire State Manufacturing Survey, retrieved from New York Fed, https://www.newyorkfed.org/survey/empire/empiresurvey_overview
4. Jobless Claims
U.S. Department of Labor, Unemployment Insurance Weekly Claims, retrieved from U.S. Department of Labor; https://www.dol.gov/ui/data.pdf
5. Philly Manufacturing Survey
The Federal Reserve Bank of Philadelphia, Manufacturing Business Outlook Survey, retrieved from Philadelphia Fed, https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/manufacturing-business-outlook-survey
6. Industrial/Manufacturing Production
Board of Governors of the Federal Reserve System, Industrial Production and Capacity Utilization – G.17, retrieved from The Federal Reserve, https://www.federalreserve.gov/releases/g17/current/
7. Housing Starts & Building Permits
United States Census Bureau, Monthly New Residential Construction, retrieved from U.S. Census, https://www.census.gov/construction/nrc/current/index.html
Market Data
Morningstar Direct using Morningstar Indices
Authors:
Anthony Silva, CFA®
Senior Director of Strategy Management
World Investment Advisors, LLC