Weekly Market Watch

Chips and Ships

Last week, the S&P 500^® reached another record high and posted its ninth consecutive weekly gain. The Nasdaq and MSCI Emerging Market indices outperformed, driven by the continued rally in semiconductor stocks amid demand for artificial intelligence (AI) technologies. Markets were further supported by optimism for a potential U.S.–Iran agreement to extend the ceasefire for 60 days and reopen the Strait of Hormuz. However, negotiations are ongoing as of this writing.

Crude oil prices and U.S. Treasury yields moderated on the hopes of a potential resolution in the conflict, despite April Personal Consumption Expenditure (PCE) inflation data posting a 3.8% annual increase. While this figure remains above the Federal Reserve’s 2% inflation target, the report was in line with consensus expectations.

Market Outlook

Despite the strong market rally, equity valuations are balanced and largely supported by the favorable earnings outlook. Recent developments in the Middle East conflict have helped to stabilize long-term interest rates and ease overall financial conditions.

A finalized U.S.-Iran deal would provide further clarity on the path forward for energy markets, inflation and ultimately, interest rates. We remain constructive on diversified equities, with a modest tilt towards AI-related U.S. and emerging market exposures, supported by the durable AI and business investment cycle.

Chart of the Week

The S&P 500 recorded its ninth consecutive week of gains, the longest streak since 2023.

Streaks exceeding nine consecutive weeks of gains are rare, with only five occurrences since 1985.

We maintain a favorable view on equities, as the current streak has been supported by robust earnings, particularly in semiconductor stocks.

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