Saturday, May 2

Escalating U.S.-Iran tensions in the Strait of Hormuz propelled oil prices higher, lifting energy stocks and pushing Treasury yields to 4.43% on the 10-year note as markets questioned central bank rate cut prospects. The S&P 500 notched five straight weekly losses for the first time since 2022, down 2% on the week and pacing for its worst month in a year, defying consensus hopes for Mideast de-escalation that had supported record highs earlier in April. Brent crude climbed to $112 per barrel while WTI settled around $105, underscoring supply disruption fears that caught desks off-guard after a midweek ceasefire extension failed to ease positioning.

U.S. equities showed rotation with large-caps outpacing small-caps and value beating growth, as Q1 GDP expanded 2.0% annualized—buoyed by 4.4% government spending and 43.4% surge in information-processing equipment tied to AI momentum—while core PCE inflation rose 3.2% year-over-year, higher than expected and validating Fed's on-hold stance at 3.50%-3.75%. S&P 500 earnings beat estimates at 84% through the week with 15.1% blended growth, led by tech giants like Alphabet, Amazon, Meta, and Microsoft topping sales forecasts, yet geopolitical jitters overrode the resilient consumer data including 1.7% March retail sales jump. April Flash PMI hit 52.0 with manufacturing at a four-year high, but output prices accelerated fastest since mid-2022 on supply delays.

Eurozone and UK central banks held rates steady, while Singapore's MAS tightened policy for the first time in four years citing prolonged energy price elevation even post-Mideast supply recovery. Nasdaq and S&P closed Thursday at records with 0.3% gains, but weekly oil-driven caution prevailed as jobless claims hit 1969 lows at 189,000.

Monday's ISM manufacturing PMI stands out because it will gauge if Q1 stock-building masked demand weakness or signals broader reacceleration; a print above 50 could cement no-cut Fed pricing amid 27.5% year-end inflation forecasts.