Weekly Market Watch

Whipsawing a Path Higher

Last week, the S&P 500^® posted its eighth consecutive week of gains and all major equity indices were up on continued enthusiasm for artificial intelligence (AI)-related capital expenditures (capex) and technology investments. Yet earnings reports painted a mixed picture during the week. While Nvidia Corp. beat earnings expectations, the company, along with consumer bellwethers Target Corp. and Walmart Inc., signaled caution on forward guidance. The latter two cited profitability pressures from rising fuel costs while investors questioned elevated valuations.

Crude oil prices fell last week yet remain approximately $30 above pre-Middle East conflict levels as President Trump indicated on Thursday that peace negotiations are "on [the] borderline." Geopolitical conditions and elevated raw materials prices continue to raise inflation expectations and pressure economic activity. The 10-year Treasury yield hit a one-year high of 4.67%, reflecting persistent inflation concerns.

Market Outlook

We are still constructive on equities supported by stabilizing labor markets, sustained capex guidance and increasing productivity, led by AI innovation. Choppy markets may continue until there is more clarity on the path of yields and inflation, but we see a positive inflection on the horizon.

Chart of the Week

As the summer driving season begins, consumers face the highest average gasoline prices since mid-2022.

A prolonged Middle East conflict could stoke higher inflation and weigh on consumer spending.

We remain constructive on equities despite the macro uncertainty, as the strong earnings outlook persists.

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