Wall Street finished the week sharply higher as investors weighed a stronger-than-expected jobs report, upbeat semiconductor earnings, and escalating geopolitical tensions in the Middle East.
The Jobs report reflected an increase of 115K jobs in April, surpassing consensus estimate of 63K. Meanwhile, the unemployment rate held steady at 4.3%, signaling continued resilience in the labor market despite broader economic uncertainty.
Shares of all semiconductor stocks advanced as AMD delivered first-quarter results and forward guidance that topped Wall Street expectations, boosting investor confidence in the firm’s growth trajectory.
Middle East tensions remained elevated after the U.S. military launched retaliatory strikes on Iranian military sites following what Washington described as an attack by Iran on Navy warships transiting the strategically critical Strait of Hormuz.
For the week, the S&P added 2.3%, while the Nasdaq jumped 4.5%, and the Dow added 0.2%.
Future Wealth’s View
The week began with the expectation that the US and Iran were close to a 14-point agreement to end the war and reopen the Strait. Oil prices immediately fell as much as 7% intraday. Stocks surged. Then Trump said Iran would agree and warned bombing resumes if they don’t. Iran, of course, ignored Trump and continued to keep the strait closed. Iran has built a toll booth on the world’s most important shipping lane and Trump can do nothing about it.
Then, later in the week, the jobs report provided the catalyst to take the market higher. Jobless claims came in below estimates. But, productivity growth slowed and labor costs rose faster than expected. That combination is the Fed’s nightmare. Slowing productivity with rising labor costs makes cutting rates nearly impossible without triggering another inflation wave. The bond market is now pricing average inflation above the Fed’s target for the next decade.
Despite the stock market hitting all time highs, consumer sentiment continues to deteriorate. University of Michigan consumer sentiment reading fell to 48.2. That breaks April’s record low of 49.8. Two consecutive all time lows. Americans have never been this gloomy on record and gas prices are the main reason.
The stock market priced a peace deal that never arrived and much like Trump, the stock market has moved on to other things to take it higher. We, at Future Wealth LLC, remain vigilant.