Dow Jones, Nasdaq, S&P 500 weekly preview: Focus on jobs data, Broadcom earnings

Investing.com -- U.S. stocks closed at record highs on Friday, capping a strong month for equities as technology shares led the way.

The S&P 500 rose 0.22% to 7,580.06, the Nasdaq Composite gained 0.2% to settle at 26,972.62, and the Dow Jones Industrial Average added 363 points, or 0.72%, to finish at 51,032.46. All three indexes touched fresh intraday all-time highs during the session.

Dell Technologies was among the strongest performers, with shares surging nearly 33% in their best single-day gain on record after the company reported first-quarter results that beat expectations on both revenue and earnings, and raised its full-year outlook.

For the week, the Nasdaq led with a gain of more than 2%, while the S&P 500 added more than 1% and the Dow posted a rise of just under 1%. For May as a whole, the Nasdaq climbed more than 8%, the S&P 500 finished up around 5%, and the Dow advanced nearly 3%.

Attention now turns to a busy week of economic data and AI chip giant Broadcom’s earnings, which could test the durability of the rally.

The May employment report, due Thursday, is expected to show the economy added 85,000 jobs with the unemployment rate holding at 4.3%, according to a Reuters poll. The reading takes on added significance as investors weigh whether persistently high inflation could prompt interest rate hikes that would weigh on stocks.

Inflation concerns were reinforced by data released Thursday showing the Personal Consumption Expenditures price index rose 3.8% in the 12 months through April, its largest increase since May 2023, driven in part by higher energy prices linked to the conflict in the Middle East. The Federal Reserve uses the PCE measure as its benchmark for its 2% inflation target.

Reports on manufacturing and services sector activity are also due next week, ahead of a key inflation reading the following week — one of the last major data points before Federal Reserve Chair Kevin Warsh presides over his first policy meeting on June 16-17.

On the earnings front, Broadcom reports quarterly results on Wednesday in what will be closely watched as a gauge of sentiment around the AI infrastructure buildout. Semiconductor stocks have surged in recent weeks on optimism over rising chip demand.

HPE, Palo Alto Networks and CrowdStrike are also scheduled to report in the coming days.

JPMorgan: "We fundamentally remain cautious on AI cannibalisation trades, as per our Year Ahead, but tactical stabilisation remains likely. While we do not necessarily expect the repeat of 2025, when the rally was almost exclusive to Mag-7 for most of 2nd half, we believe there is more upside for Mag7 over the next months, as earnings are more than compensating for the stocks rebound. We also find EM memory trade has legs, as meaningful supply additions are not coming before the start of 2028."

RBC Capital Markets: "Following the outperformance that the US saw after the war began, the U.S./non-U.S. P/E has now moved back to levels in line with the five-year average but doesn’t look highly stretched yet. On a 20-year time frame, the U.S./non-U.S. relative P/E has moved up but is not yet back to past highs. This tells us there is still some room for the US to outperform non-U.S."

Evercore ISI: "The S&P 500 is becoming a market of stocks. Record concentration in handful of AI names is spurring index strength and subduing the side effects of a challenging geopolitical/consumer backdrop. Heightened index exposure to a select few names in one theme can also accentuate downside. But with valuations for the U.S. tech sector historically subdued relative to the broader index, focus remains on EPS durability which 1Q26 confirmed is exceptionally strong."

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