Last week, U.S. stocks reached new highs again. The S&P 500 and Nasdaq closed at records on Friday, supported by strong earnings, a solid jobs report, and hopes that the Middle East conflict might eventually move toward resolution. Those hopes weakened over the weekend after Iran submitted a counterproposal to Washington's peace plan and President Trump rejected it as unacceptable. The Strait of Hormuz remains blocked, oil prices rose again to about $105, and the conflict has entered a prolonged phase that markets dislike, but may try to absorb.

And yet, Wall Street is not showing much fear: artificial intelligence, corporate profits, and a resilient U.S. economy remain the dominant forces shaping investor behavior. One reason is that investors have recent experience with shocks that initially looked destabilizing but were eventually absorbed. Last year, tariffs rattled markets, the sell-off faded, and stocks resumed their climb even though many trade barriers remained. By the end of 2025, U.S. trade barriers were still at their highest level in a century. Markets adjusted. They often do, though not always wisely.

On January 1, few would have expected the S&P 500 to be up around 8% and the Nasdaq around 16% after weeks of conflict in Iran. Fewer still would have expected investors to respond to triple-digit oil by buying more semiconductor shares. The U.S. economy has not broken, with the April jobs report coming up stronger than expected. It also marked the first time in a year that the economy created jobs for two consecutive months. Recent data point to continued expansion, a solid labor market, and companies still delivering earnings strong enough to support current valuations.

Those earnings are the main source of the market's resilience. According to FactSet figures cited in the market commentary, S&P 500 earnings per share are up 27.7% from a year earlier. Technology is doing most of the work, with earnings per share up 50.7%. AI-linked semiconductor companies posted quarterly earnings growth of roughly 99%.

But there is a significant caveat. Some of the profit surge has been boosted by unrealized gains on investments in private AI companies such as OpenAI and Anthropic. Large cloud and technology groups are not only investors in these companies. In many cases, they are also customers, suppliers, and strategic partners. When valuations rise, the structure looks powerful. If confidence weakens, it may look more circular. The distinction between a productive ecosystem and a self-reinforcing financial structure is not always as clear as markets would like.

The coming week is busy: Tuesday brings the U.S. consumer price index, followed by producer prices on Wednesday. Economists expect inflation to have picked up in April, partly because the Middle East conflict is pushing energy prices higher. China has already offered an early warning. Annual inflation accelerated to 1.2%, above forecasts of 0.8%, while producer prices rose 2.8%, well above the expected 1.5%.

President Trump is due to meet President Xi Jinping later this week, in the first visit to China by a U.S. president since 2017, when the visitor was also Trump. The agenda is broad: Iran, Taiwan, artificial intelligence, nuclear weapons, tariffs, and a possible extension of a critical minerals deal. Expectations for a breakthrough are low, and probably rightly so. In a meeting between the world's two largest powers, avoiding escalation can itself count as progress.

Other geopolitical developments will also compete for attention. Vladimir Putin has said he believes the war in Ukraine is nearing its end, while there are rumors that the European Union could reopen negotiations with Russia. The United Kingdom and France are organizing a multinational meeting on escorting ships through the Strait of Hormuz. Benjamin Netanyahu has said the war in Iran will not end while Tehran retains nuclear capabilities. In Britain, Prime Minister Keir Starmer is preparing a major speech under political pressure. In Washington, a Senate committee is expected to examine a long-awaited cryptocurrency bill.

Corporate earnings will add another layer. The first-quarter season is winding down, with more than four-fifths of major Western companies already having reported. But important names remain, including Cisco, Applied Materials, Allianz, and Siemens Energy. In Asia, Tencent, Alibaba, Mitsubishi Heavy, SoftBank, and Kioxia are also due. Later this month, Nvidia and Walmart will draw heavy attention for very different reasons: Nvidia as the symbol of the AI boom, Walmart as a gauge of the American consumer.

Today's session already shows the split in market behavior. Intel rose in premarket trading after a report of a preliminary chip-making agreement with Apple, extending Friday's sharp gain. Airlines slipped as higher oil prices threatened margins, with Southwest, Delta, and United all under pressure. Gold miners also fell as bullion prices declined.

Today's economic highlights:

On today's agenda: China's monthly and yearly inflation rates along with the PPI; in the United States, existing home sales and their monthly change; in Canada, the Bank of Canada's Market Participants Survey. See the full calendar here.

  • Dollar index: 97.988
  • Gold: $4,668
  • Crude Oil (BRENT): $104.32 (WTI) $98.46
  • United States 10 years: 4.4%
  • BITCOIN: $81,243

In corporate news:

  • Short seller Andrew Left is set to stand trial in Los Angeles over allegations that he manipulated stocks including Nvidia and Tesla through misleading public statements about his trading positions.
  • Arthur J. Gallagher & Co. acquired Mays Brown Solicitors, with financial terms undisclosed.
  • Honeywell said Quantinuum filed a registration statement for a proposed initial public offering.
  • Goldman Sachs-backed Go is reportedly seeking a valuation of about $1.28 billion in a planned Tokyo IPO.
  • OpenAI reportedly allowed more than 600 current and former employees to sell shares in a recent financing, with some employees selling up to $30 million each.
  • Major brokerages including BofA Global Research and Goldman Sachs pushed back expectations for Federal Reserve rate cuts as inflation risks and resilient U.S. jobs data keep policymakers cautious.
  • Alphabet is considering its first Japanese yen bond sale, potentially raising several hundred billion yen to help fund rising AI-related capital spending.
  • Blackstone agreed to acquire Greek e-commerce platform Skroutz from CVC Capital Partners, with reports valuing the deal at about €635 million including debt.
  • Nike faces a proposed consumer class action alleging it failed to return tariff-related costs to customers after a Supreme Court decision invalidated some duties.
  • Google launched its AI-powered Google Finance service across Europe.
  • Apollo and Blackstone are considering a $35 billion financing package for Broadcom, according to Bloomberg News.
  • Apple and Intel have reached a preliminary agreement on chip manufacturing. Additionally, Apple plans design adjustments to macOS 27 to address instability issues in Tahoe, according to Bloomberg.
  • Lumentum will join the Nasdaq 100 on May 18, replacing Costar.
  • Anthropic has signed a $1.8 billion deal with Akamai for computing power.
  • Michael Burry is positioning himself in MercadoLibre following its decline.
  • Today's key earnings reports: Constellation Energy, Barrick Mining, Simon Property, Circle Internet, Fox Corporation...

Analyst Recommendations:

  • Biomarin Pharmaceutical Inc.: Goldman Sachs initiates coverage with a neutral rating and a target price of USD 69.
  • Cnh Industrial N.v.: Goldman Sachs downgrades to neutral from buy and reduces the target price from USD 12 to USD 10.50.
  • Dell Technologies Inc.: UBS downgrades to neutral from buy and raises the target price from USD 167 to USD 243.
  • Standardaero, Inc.: UBS upgrades to buy from neutral and reduces the target price from USD 35 to USD 34.
  • The Trade Desk, Inc.: HSBC downgrades to reduce from hold and reduces the target price from USD 31 to USD 20.
  • Walt Disney Company (The): Phillip Securities upgrades to buy from accumulate with a target price of USD 130.
  • Americold Realty Trust, Inc.: Compass Point Research & Trading maintains its buy recommendation and raises the target price from USD 14.50 to USD 21.
  • Apollo Global Management A: BMO Capital Markets maintains its market perform recommendation and raises the target price from USD 108 to USD 140.
  • Caterpillar Inc.: Evercore ISI maintains its outperform rating and raises the target price from USD 878 to USD 1103.
  • Cummins Inc.: Evercore ISI maintains its outperform rating and raises the target price from USD 694 to USD 845.
  • Datadog, Inc.: CICC maintains its outperform rating and raises the target price from USD 150 to USD 204.
  • Davita Inc.: TD Cowen maintains its hold recommendation and raises the target price from USD 144 to USD 201.
  • Doximity, Inc.: Wells Fargo maintains its overweight recommendation and reduces the target price from USD 45 to USD 32.
  • Epam Systems, Inc.: Deutsche Bank maintains its hold recommendation and reduces the target price from USD 140 to USD 110.
  • Globalfoundries, Inc.: Susquehanna maintains its positive recommendation and raises the target price from USD 100 to USD 125.
  • Lumentum Holdings Inc.: CITIC Securities Co Ltd maintains its buy recommendation and raises the target price from USD 620 to USD 1186.
  • Micron Technology, Inc.: Deutsche Bank maintains its buy recommendation and raises the target price from USD 550 to USD 1000.
  • Quanta Services, Inc.: Cantor Fitzgerald maintains its overweight recommendation and raises the target price from USD 630 to USD 901.
  • Roku, Inc.: Baird maintains its outperform rating and raises the target price from USD 130 to USD 160.
  • Slb N.v.: Bernstein maintains its outperform rating and raises the target price from USD 56.10 to USD 71.
  • The Timken Company: Evercore ISI maintains its outperform recommendation and raises the target price from USD 129 to USD 158.
  • Vontier Corporation: Evercore ISI maintains its outperform rating and reduces the target price from USD 47 to USD 36.