Market Commentary

For the week ending 5/8/2026

 

The markets rallied to new all-time highs last week as investors weighed a stronger-than-expected U.S. jobs report, upbeat semiconductor earnings, and escalating geopolitical tensions in the Middle East.

On Monday, equity markets declined slightly due to crude oil prices rising above $106/barrel and intensified fears regarding the Iran conflict. However, by mid-week, those same markets staged a massive recovery (and crude oil dropped to $95/barrel) on reports of a potential U.S.-Iran peace deal. A series of AI-related announcements and partnerships highlighting robust demand aided Wednesday’s rally, which pushed both the S&P 500 and the Nasdaq to fresh all-time closing highs, with the S&P 500 notably closing above the 7,300 mark for the first time. Despite a slight retreat on Thursday, those indices set new all-time highs again on Friday, as the underlying “risk-on” stance remained supported by robust corporate earnings.

Earnings season continued to drive market performance, with investors increasingly differentiating between companies that could turn AI investment into tangible profits. Large-cap tech firms remained the primary drivers of growth, with the “Magnificent Seven” accounting for a substantial portion of total expected earnings growth for the quarter. Advanced Micro Devices posted a standout Q1 earnings report this week, and their positive commentary sent many other semiconductors higher as well. While software and hardware demand surged, consumer-facing sectors provided a mixed outlook. Disney exceeded Wall Street’s expectations this quarter and raised forecasts with streaming and theme parks driving revenue growth. Disney, Uber, DoorDash and other companies reported that consumer demand remained healthy in the first quarter. However, McDonald’s CEO said consumer spending could be “getting a little bit worse.” More dramatically, Whirlpool faced serious headwinds, falling well short of expectations, and lowering their 2026 guidance due to softened consumer confidence amid global conflicts.

April ISM Services was in-line with expectations, and although the new orders index fell, month-over-month they were still in expansion territory. Widespread cost pressures with Middle East tensions added to cautious sentiment and pushed out recovery timelines. Additionally, May Preliminary consumer sentiment came in at a record low, as inflation concerns remained a key driver of weakness and roughly one-third of consumers spontaneously citing surging gasoline prices as a major concern.

The March JOLTS report saw more job openings than expected, but below February’s number. Both the job openings rate and quits rate both were little changed, but new hires rate improved to 3.5% after dipping in February. April ADP report showed 109,000 jobs added vs consensus of 99,000 jobs, marking the largest month-over-month increase since January of 2025. Weekly initial jobless claims came in at 200,000, near last week’s level of 190,000. It is worth noting that last week’s initial jobless claims were the lowest since 1969. Continuing weekly jobless claims came down this past week, now at the lowest level since January 2024. Friday provided the most impactful labor market report of the week, April’s nonfarm payrolls report, which showed 115,000 jobs added, ahead of the 65,000 consensus. The unemployment rate held steady at 4.3%. Overall, this week’s employment data shows that the labor market remains resilient.

Against that economic background, the conflict in Iran continues. On Sunday, May 3rd President Trump announced “Project Freedom” to guide stranded ships through the Strait of Hormuz. Trump added that if Iran interfered with this process the U.S. will respond with force. Iran swiftly threatened to retaliate and launched waves of missiles and drones at the UAE on Monday morning. Last Monday the U.S. military sank six Iranian small boats that were targeting civilian vessels. Tuesday night President Trump announced that the US would pause “Project Freedom” in order to see if an agreement with Iran to end the war could be finalized. Reports indicate that the US and Iran are close to agreement on a one-page, 14-point memorandum of understanding that would end the war and establish a 30-day negotiation period and a framework for nuclear talks. Past attempts at a more permanent end to the conflict have thus far come to nothing, however President Trump expressed cautious optimism about the deal’s prospects. Additionally, China’s Foreign Minister visited Iran last week and pressed for an end to the war and a reopening of the Strait. Iran is evaluating the latest proposal. Wall Street’s optimism about a potential end to the conflict appears to remain intact.

Overall, last week was clearly a good one for the stock market and more specifically for technology stocks, but earnings reports offered a mixed perspective on consumer confidence and demand. While corporate earnings season will begin to wind down in the coming week, the conflict between the U.S. and Iran will remain as a major driving force for oil prices and stock market performance.

For the week, the Dow rose 0.2% to 49,609. The S&P 500 climbed 2.3% to 7,399, and the Nasdaq jumped 4.5% to 26,247.

Oil fell -6.4% to $95.42/bbl. Gold edged up 1.5% to $4,731/oz. and the yield on the Ten-Year Treasury dipped slightly to 4.36%.

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