U.S. equity benchmarks have extended a strong recovery from their late-March troughs, buoyed by what market participants describe as the most impressive quarterly earnings season in over four years. The rally has coincided with a diminishment of worst-case worries about the economic consequences of the Iran conflict, and investors appear increasingly focused on maintaining exposure to avoid being left behind.
On Friday, stock indexes advanced after April payrolls exceeded expectations, while attention remained fixed on developments related to Iran. The S&P 500 rose 0.84% to close at a record 7,398.93. The Nasdaq Composite climbed 1.71% to 26,247.08, also a record closing level. The Dow Jones Industrial Average was largely unchanged on the day, edging up 12 points, or 0.02%, to 49,609.16.
All three major averages finished the week in positive territory. The Nasdaq led weekly performance with a 4.5% gain, and the S&P 500 added 2.3%. Both indexes recorded a sixth consecutive weekly advance - their longest streak since 2024. The Dow underperformed, tacking on just 0.2% for the week.
Friday's employment data provided an additional catalyst. Nonfarm payrolls increased by 115,000 in April, more than double the 55,000 economists had been forecasting, while the unemployment rate held steady at 4.3%.
Market attention now shifts to several macroeconomic releases that will help shape the path for interest rates and risk assets. Tuesday's consumer price index is projected to show a 0.6% monthly rise, according to a Reuters poll, following March's 0.9% surge which was driven largely by gasoline prices. With energy-driven rate cuts now effectively ruled out for the year and the Federal Reserve presenting a more hawkish stance at its most recent meeting, traders will be especially focused on the core CPI reading, which excludes energy and can provide a clearer signal about monetary policy.
Producer prices are scheduled for Wednesday, and monthly retail sales on Thursday will offer insight into whether higher energy costs are constraining other areas of household spending.
A narrow set of corporate reports remain as Q1 winds down
Although the bulk of first-quarter results have already been released, several influential companies will still report in the coming days. Networking giant Cisco and semiconductor equipment maker Applied Materials are among the names investors will watch closely this week. Chinese e-commerce firms Alibaba and JD.com will also publish results as the earnings cycle tapers.
Morgan Stanley highlighted that first-quarter results have broadly exceeded expectations, noting S&P 500 earnings per share surprised to the upside by 19% while sales surprised by 1.9% - measures the bank characterized as strong relative to historical norms.
According to Morgan Stanley, the median S&P 500 company beat earnings estimates by 6% in the quarter, the strongest such reading in four years, and achieved median earnings growth of 16% - about double the trailing four-quarter average. Forward 12-month EPS projections for the median stock have continued to move higher.
For the quarter overall, Morgan Stanley expects S&P 500 EPS growth of 26% year-on-year with sales growth of 9%. The calendar still contains heavyweight reports later in the month from chipmaker Nvidia and retailer Walmart.
Analysts' outlooks
Morgan Stanley summarized the backdrop as one of continuing fundamental strength in U.S. earnings, with positive operating leverage driving notable first-quarter surprises and prompting upward revisions to 2026/2027 estimates. The firm noted that both median stock EPS growth and EPS surprise are at four-year highs.
JPMorgan observed that the so-called Mag-7 group had become unusually inexpensive in March, a valuation backdrop that combined with strong earnings helped fuel a rally in the space. The bank pointed to potential upside in emerging-market AI-related plays and flagged Korea and Taiwan as areas where their emerging-market strategists remain bullish. JPMorgan also suggested China tech could narrow its valuation gap relative to peers.
Evercore ISI framed recent market action as echoing periods of strong investor enthusiasm for technology and related sectors, referencing a rotation led by information technology, consumer discretionary and communication services. The firm described the momentum following the 3/30/26 low as reminiscent of past broad-based surges and cited an ambitious target for the S&P later next year in its projection.
Where markets stand and what to watch
The combination of stronger-than-expected corporate results and a better-than-forecast jobs report has supported risk assets, but incoming inflation data and the path of geopolitical developments remain key determinants of near-term performance. Core CPI and producer prices will be parsed for signs about the trajectory of rates, while retail sales will be examined for evidence on how consumers are responding to elevated energy costs.
With a few influential corporate reports still to come, markets will also weigh any surprises from firms such as Cisco, Applied Materials, Alibaba and JD.com, and later in the month from Nvidia and Walmart. Investors and strategists will use those results alongside macro data to reassess earnings momentum and the outlook for sectors that have driven recent gains.
Note: Certain market and firm-level statistics referenced in this article reflect recent reporting and analyst commentary on earnings surprises, index performance, and economic releases.