Weekend Update #274
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Equity markets finished the week on a broadly positive note as a powerful semiconductor rally and renewed hopes for US-Iran peace talks drove major indexes higher, though the Dow lagged. The Philadelphia Semiconductor Index rose for its 18th consecutive session, a record-setting streak not seen since the index's inception, with the VanEck Semiconductor ETF gaining roughly 40% during that span. Intel surged to an all-time high on Friday, eclipsing its dot-com era peak, after delivering a revenue forecast of $13.8 to $14.8 billion for the June quarter — well above the $13 billion Wall Street had anticipated. Nvidia also closed at a record, reclaiming its $5 trillion market cap crown. For the week, the S&P 500 and Nasdaq both posted gains driven by the AI and semiconductor complex, while the Dow was weighed down by losses in IBM and ServiceNow following mixed earnings. Investor sentiment remained cautious around elevated oil prices, with Brent crude hovering near $100 per barrel amid persistent Strait of Hormuz tensions, but optimism over potential US-Iran negotiations helped counterbalance those concerns.
The macro backdrop this week painted a picture of rising anxiety among American households. US consumer sentiment fell to a record low in April, as respondents cited growing concern over the economic fallout from the Iran conflict and its effect on energy prices. Inflation expectations surged, with consumers projecting prices to rise at an annual rate of 4.7% over the next year, up sharply from 3.8% in March — a troubling signal for the Federal Reserve as it attempts to balance its dual mandate. On the policy front, the Department of Justice announced it would drop its investigation into building-renovation cost overruns at the Federal Reserve, a move that effectively clears a path for Senate confirmation of Kevin Warsh, President Trump's nominee to lead the central bank. Warsh faced the Senate Banking Committee this week, where lawmakers scrutinized his inflation-hawk record, views on Fed independence, and his personal wealth of at least $192 million. Oil markets remained a focal point, with WTI crude briefly topping $106 per barrel mid-week before partially retreating as diplomatic signals offered a degree of relief.
Corporate news was dominated by the AI and technology sectors. Intel's blowout guidance sent its stock to a historic high, with CEO Lip-Bu Tan's turnaround strategy gaining credibility among investors. Tesla outlined plans to more than triple last year’s capital expenditures to over $25 billion in 2026, earmarking funds for Optimus humanoid robot production and AI infrastructure — a move that pressured free cash flow but underscored Elon Musk's long-term vision. Chinese AI startup DeepSeek unveiled its V4 Pro and V4 Flash flagship models, claiming top-tier performance in coding benchmarks and positioning itself as a challenger to OpenAI and Anthropic. In deal news, SpaceX secured a right-to-acquire agreement for AI coding startup Cursor at a $60 billion valuation, with a $10 billion breakup fee if the deal falls through ahead of SpaceX's anticipated IPO. Trump's acting attorney general signed an order shifting state-licensed medical marijuana from Schedule I to Schedule III, delivering a significant tax benefit to licensed operators and sending cannabis stocks surging as much as 20%. The US government also moved toward a $500 million rescue package for Spirit Airlines, with warrants that could grant up to 90% ownership of the carrier post-bankruptcy. Apple CEO Tim Cook announced he will transition to executive chairman on September 1, handing the CEO role to hardware chief John Ternus, capping Cook's 15-year run atop the company.
Looking ahead, geopolitical developments will remain the dominant driver of market sentiment. Special envoys Steve Witkoff and Jared Kushner are expected to travel to Pakistan this weekend for talks with Iranian counterparts, with Iran's Foreign Minister Abbas Araghchi also in Islamabad; any indication of a breakthrough on the Strait of Hormuz blockade could meaningfully move energy markets and risk assets. Earnings season remains in full swing, with a heavy slate of reports expected from major consumer, industrial, and technology names in the week ahead. Fed watchers will be tracking any Senate progress on the Warsh confirmation, as well as any remarks from Fed officials ahead of the next policy meeting. Consumer sentiment data has now signaled two consecutive months of deterioration, and investors will be watching for any follow-through in retail sales or labor market figures. A resolution to the Iran conflict, even a partial one, could send the S&P 500 toward the 8,000 level that JPMorgan's strategists have flagged as a plausible bull case — but absent that catalyst, near-term caution is warranted.
Friday's Close
(Weekly Performance)
S&P 500 7,165.08. (+0.55%)
Nasdaq 24,836.60 (+1.50%)
Dow Jones 49,230.71 (-0.44%)
Thank you Blue Room Senior Analyst NICK PEART.
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