The S&P 500 and Nasdaq Composite both closed at record highs on Friday, capping a week of strong gains driven by surging artificial-intelligence stocks and a solid April jobs report. The S&P 500 rose 0.84% to 7,398.93, while the Nasdaq jumped 1.71% to 26,247.08. The Dow Jones Industrial Average was nearly flat, adding just 0.02% to finish at 49,609.16.
Weekly performance
The rally extended the winning streak for both major indexes to six consecutive weeks — the longest since October 2024. The S&P 500 climbed 2.3% for the week, the Nasdaq surged 4.5%, and the Russell 2000 gained 1.7%. The Dow managed a modest 0.2% advance, marking its second straight weekly gain.
Jobs report eases growth fears
The Labor Department reported that the U.S. economy added 115,000 nonfarm payrolls in April, while the unemployment rate held steady at 4.3%. Gains were concentrated in health care, transportation, warehousing, and retail. The data helped allay some concerns about economic weakness, though it did not provide a clear signal on the path for interest rates. Robert Pavlik, senior portfolio manager at Dakota Wealth, described the report as evidence of a solid — if not spectacular — economy, adding that it reassured investors that the latest round of strong earnings was not a fluke.
AI stocks lead the charge
Artificial-intelligence stocks remained the center of attention. Nvidia edged up 1.8% on Friday, while Micron Technology and Sandisk both soared more than 15%, fueled by robust demand from data centers. The Philadelphia SE Semiconductor index posted another strong move, lifting its second-quarter gain to 55%.
Earnings support valuations
First-quarter earnings for S&P 500 companies are on track to rise nearly 29% year-over-year, with 83% of the 440 firms that have reported so far beating analyst estimates, according to LSEG data cited by Reuters. “This is an economy that seems hard to wreck,” said Rob Williams, chief investment strategist at Sage Advisory Services. RBC Capital Markets raised its year-end S&P 500 target to 7,900 from 7,750, citing steady earnings growth and momentum in AI-related sectors despite headwinds from inflation, interest-rate uncertainty, and geopolitical tensions.
Underlying weakness
Beneath the headline gains, some pockets of weakness emerged. Cloudflare announced plans to cut about 20% of its workforce and forecast second-quarter revenue slightly below analyst expectations. Expedia flagged a hit to bookings from the Middle East conflict, with Booking Holdings, Marriott, and Hilton also pointing to similar pressure related to the war.
Consumer sentiment hits record low
While traders cheered the market rally, consumers grew increasingly gloomy. The University of Michigan’s consumer sentiment index fell to 48.2 in early May, down from April’s 49.8 — a record low — as gasoline prices continued to squeeze household budgets. “Soaring prices at the pump” were the main driver of the decline, said survey director Joanne Hsu.
Geopolitical and oil risks
The Federal Reserve’s latest financial-stability report, released Friday, highlighted geopolitical risk and the oil shock as the top concerns among survey participants — 75% flagged geopolitical risk, and 70% pointed to the oil shock. The report warned that elevated inflation and interest rates could trigger “declines in asset prices.”
Looking ahead
Next week brings key inflation data, with April’s consumer price index expected to show a 0.6% monthly increase. The core CPI, which excludes food and energy, will draw particular scrutiny in the wake of the latest oil price jump. Traders will also monitor developments in Iran, the Strait of Hormuz, and the upcoming Trump-Xi summit, where rare earths and tech access are expected to dominate talks. Earnings reports from Cisco and Applied Materials are due next week, with Nvidia and Walmart following later this month.
The market’s resilience has been remarkable, but the question remains: can AI earnings continue to carry the load if inflation, oil prices, or geopolitical tensions take a turn for the worse?
