Saturday, May 9

Equity markets closed lower Thursday despite robust corporate earnings, as renewed U.S.-Iran tensions drove oil prices higher and overshadowed 85% of S&P 500 companies beating EPS estimates by 19% on average—far exceeding the 12% growth consensus at quarter-end. The S&P 500 dipped 0.5% to 5,650, Nasdaq fell 0.8% to 18,200 amid Meta's 10% plunge on elevated AI capex guidance, while energy lagged but value stocks held firm against hawkish Fed signals. This resilience defied desks' fears of oil-driven inflation forcing Fed repricing, with tech's 50% EPS surge underscoring AI demand trumping Middle East risks.

Treasury yields climbed on energy-led inflation worries, pushing the 10-year to 4.38% from 4.30%, while investment-grade corporates underperformed amid heavy issuance—though high-yield rebounded on month-end risk appetite. Brent crude surged toward $126 per barrel before easing, its four-year high amplifying supply shock fears, yet equities decoupled as investors prioritized earnings acceleration to 28% over geopolitical noise. The dollar firmed modestly, Japan's 10-year JGB yield ticked to 2.50%, and Nikkei hit records, reflecting BoJ's hawkish tilt amid revised 2026 inflation to 2.8% despite halved growth forecasts.

China's April profits jumped, led by AI and exports, while Moody's upgraded its outlook to stable, citing fiscal resilience against debt risks. Gold held above $2,600 as haven flows countered dollar strength; crypto stayed range-bound absent catalysts.

Monday's ISM manufacturing PMI sets the tone, as sub-50 prints could validate growth worries beneath oil resilience and challenge the soft-landing narrative propping valuations.