Markets Soar on Earnings and Job Report; Bonds Also Gain
Good morning,
The Dow (+0.2%), NASDAQ (+4.5%), S&P 500 (+2.4%), and EAFE (+1.1%) exhibited strong gains for the week, and with the NASDAQ and S&P 500 extending their all-time highs. Similarly, taxable bonds gained 0.3% and tax-free municipal bonds rose 0.2%. The 10-year Treasury yield fell 0.01% to finish the week at 4.37%.
It’s nice to see that economic data had the largest effect on the market last week, rather than geopolitical rumors and events (most notably the Iran conflict and the global impact to oil supply). Corporate earnings have been very strong and served as the main catalyst to last week’s market rally. According to the Wall Street Journal, total S&P 500 earnings are on track to gain 27% in the first quarter. However, profits for the Magnificent 7 AI-related stocks are projected to be up 61%, while only 16% for the remaining 493 companies. While on topic, I wish to address an error in a statement made in a recent weekly recap. I stated that the top 1% of S&P 500 stocks represented 90% of the S&P 500 earnings. The inaccuracy lies in the fact that it wasn’t the S&P 500, but the top US companies, which would also include private companies not listed on the stock exchanges. Regardless, the conclusion remains the same – most earnings are driven by a small handful of companies. When the behemoths are increasing by 61% (of much bigger numbers), it dwarfs the overall earnings of the remaining companies. This is consistent with the stock market’s rally since 2023, as the rally has been led by a small handful of stocks. It should also be noted that the stock market recovered from a 9.1% drop between January 27 and March 30, and it took only 16 days to recover from those losses. According to the New York Times, when looking at market drops of 9% or more since 1951, this was the fastest recovery, with the average recovery taking 309 days.
In other economic news, data was mixed. The Institute of Supply Managers (ISM) Services sector fell slightly, but remained in expansion territory. More importantly, the April jobs report showed a gain of 115,000 jobs, more than doubling economists’ expectations. So far in 2026, job gains have averaged 76,000 per month, compared to 42,000 last year.
Have a great day and terrific week!
Source: Yahoo Finance
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The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.
