Key insights
- US equities showed resilience last week, despite rising oil prices, Treasury yields, and hawkish Fed commentary. Strong earnings from the Magnificent Seven drove gains. Declining volatility and high active manager exposure suggest elevated optimism, but overbought technicals and reduced rate cut expectations present potential headwinds. Overall, the market exhibits a cautiously bullish sentiment.
Investing.com -- U.S. stocks demonstrated notable strength last week, with the S&P 500 and Nasdaq Composite each gaining approximately 1% to mark their fifth consecutive weekly advance and reach new highs, according to a Canaccord research note.
The market absorbed several headwinds during the first half of the week, including a roughly 13% surge in crude oil prices, a 12-basis point increase in the 10-year Treasury yield, and Federal Reserve Chair Powell's final policy announcement, which featured four dissenters.
Economic data released Thursday showed GDP growth of 2%, slightly below the 2.3% consensus estimate but consistent with prior year levels. March Personal Consumption Expenditures data revealed prices rising 3.5% year-over-year, driven by a 22% annual increase in gasoline prices.
The Federal Open Market Committee maintained rates steady at its latest meeting, with forward commentary revealing increased dissenting voices. Market expectations for a 2026 rate cut declined from approximately 18% to effectively 0% during the week.
Earnings from major technology companies broadly exceeded expectations. Revenue and earnings per share estimates for the so-called Magnificent Seven stocks increased 27% and 25%, respectively, over the past year.
The VIX volatility index fell 9% for the week, closing at 16.99, near its lowest level in nearly 13 weeks. The S&P 500 weekly stochastic indicator rose from an oversold reading of 3 five weeks ago to an overbought level of 97.
The NAAIM Exposure Index, measuring active manager positioning, stood at 93.79%, signaling elevated optimism levels.