Stocks rose for the fifth consecutive week, closing out their best month since 2020 with double-digit gains. The market’s focus centered on the AI investment theme, corporate earnings, and Federal Reserve commentary.
As the so-called “Big Five” AI heavyweights reported earnings, investors drew a clear distinction between companies showing strong AI-driven growth and those facing concerns over rising capital spending. Alphabet and Amazon moved higher as investors rewarded their revenue growth and cloud momentum, while Meta and Microsoft came under pressure amid concerns over large AI-related capex targets.
More broadly, corporate earnings and guidance came in better than expected. Several companies pointed to strong demand tied to the AI buildout, including data center construction, computing capacity, semiconductors, and electricity needs. Apple, while not yet committing to the same level of AI infrastructure spending, reported solid iPhone demand and announced a $100 billion stock buyback.
Economic reports pointed to continued resilience, with steady growth and a firm labor market. GDP was supported by solid consumer spending and business capital expenditures, though sticky inflation keeps the Fed cautious.
The Federal Reserve held rates steady at 3.50%–3.75%, as expected. The key takeaway was the Fed’s cautious tone, with officials citing elevated inflation, higher global energy prices, and an uncertain economic outlook. The meeting also highlighted growing division within the Fed, with four dissenting votes—the most since 1992. Chair Jerome Powell also said he will remain on the Board of Governors after his term as Chair expires this month, with Kevin Warsh widely viewed as the heir apparent.
All major stock indices finished higher for the week. The Dow gained 0.56%, while the S&P 500 and Nasdaq each added about 1% and reached new record highs. Since the late-March lows, the S&P 500 has gained 13.6%, while the Nasdaq has surged 19.6%. Energy led sector performance, helped by a 7.9% jump in oil prices.
Treasury yields moved modestly higher. The 5-year yield rose 10 basis points to 4.02%, while the 10-year yield increased 6 basis points to 4.37%.
With the services survey and employment report due next week, investors will get another look at the strength of the U.S. economy. Enjoy the weekend, and we’ll be back next week with more daily market updates.