Another Week, Another New High

Performance for Week Ending 5.1.2026:

The Dow Jones Industrial Average (Dow) gained 0.6 percent, the Standard & Poor’s 500 Index (S&P 500) added 0.9 percent, and the Nasdaq Composite Index (Nasdaq) tacked on 1.1 percent for the week ending May 1. Sector breadth was positive with 10 of the 11 S&P sector groups closing higher. Communication Services was the strongest (4.5 percent), while materials (-1.95 percent) was the weakest.

*See below for Index Definitions

MARKET OBSERVATIONS: 4.27.2026  – 5.1.2026

The S&P 500 finished higher for a fifth straight week, with the broader market index closing on Friday at a new all-time high. For the month of April, the S&P gained 10.4 percent, the best monthly performance since November 2020. The rally in recent weeks has been a reflection of solid first quarter earnings, signs the economy remains on firm footing, and building hopes for a deal to end the war in Iran. As the calendar turns to May, seasonal trends will re-enter the conversation. Over the past 10 years, the S&P 500 has posted an average gain of 1.5 percent during the month, with positive returns in nine of the 10 years.

FOMC Meeting: As expected, the Federal Reserve (Fed) left rates unchanged in a range of 3.5–3.75 percent at the conclusion of the Federal Open Market Committee (FOMC) meeting but a deepening division over the outlook for policy was revealed amid increased uncertainty caused by the conflict in the Middle East. Four officials voted against the decision, including three who objected to language in their post-meeting statement that suggested the central bank would eventually resume cutting rates. Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan “supported maintaining the target range for the federal funds rate but did not support inclusion of an easing bias in the statement at this time,” the committee said. Governor Stephen Miran dissented in favor of a quarter-point reduction in rates. The vote marked the first time since October 1992 that four officials dissented against a FOMC decision.

At the after-meeting press conference, Fed Chair Jerome Powell said the economic outlook is uncertain due to the Middle East developments, consumer spending is resilient, housing remains weak, and labor conditions have softened. While this will be Powell's last press conference as Fed chair, he said he will continue to serve as a Fed governor and plans to keep a low profile as he waits for the Department of Justice to close ongoing investigations. On energy-induced inflation, Powell said that textbook oil shocks are historically short-lived, and the Fed will continue to look at tariff related issues before considering lowering rates.

Fed Dissenters Explain: On Friday, the three members of the Fed who dissented at the FOMC meeting made issued statements to explain their position. In an essay published on the Minneapolis Fed website, President Kashkari said he believes the FOMC should offer a policy outlook that signals that the next rate change could be either a cut or a hike, depending on how the economy evolves. Cleveland Fed President Hammack said the economy has been resilient so far this year and rising oil prices add to broad-based inflationary pressures. She added that uncertainty around the economic outlook has increased and makes the future path for monetary policy more uncertain. Dallas Fed President Logan said she’s increasingly concerned over how long it will take to return inflation to the Fed’s 2 percent target. She also said the FOMC’s policy guidance should reflect that the risks of the next move being a rate cut or a hike are evenly balanced.

Q1 Earnings Recap: Through Friday May 1, 315 companies in the S&P 500 have released first quarter results, with over 81 percent beating expectations. Aggregate earnings for this group are up 28.4 percent from a year ago, solidly ahead of the 12.4 percent projected at the end of March. Reflecting the solid results, analysts have revised earnings expectations higher and now expected quarterly results of 25.8 percent when all is said and done. On the sector level, communication services and consumer discretionary have posted the biggest upside surprises and also the strongest growth rates. According to Bloomberg, consensus expectations are for S&P 500 earnings to grow by 21.6 percent for all of 2026, and by 14.3 percent in 2027.

Economic Roundup: The number of Americans filing claims for jobless benefits dropped last week, with initial jobless claims falling 26,000 to a seasonally adjusted 189,000, the lowest level in over 50 years. Meanwhile, a new reading on the Fed’s favored inflation gauge shows energy prices boosted overall inflation, while inflation excluding energy price increases also rose. The Personal Consumption Expenditures (PCE) index rose 3.5 percent in March on a headline basis, in line with expectations. That was up from 2.8 percent in February before the war. On a “core” basis, which excludes volatile energy and food prices, inflation rose 3.2 percent, also in line with expectations, and up from 3 percent in February. Meanwhile, U.S. economic growth fell short of Wall Street's expectations in the first quarter as spending slowed amid inflationary pressures that economists said will likely keep consumers under pressure. Real gross domestic product (GDP) in the world's largest economy rose at an annual rate of 2 percent in the March quarter, according to an advance estimate released by the Bureau of Economic Analysis. The consensus was for a 2.3 percent gain in a survey compiled by Bloomberg. Consumer spending growth eased to 1.6 percent in the first quarter from 1.9 percent in the previous three-month period, but topped Wall Street's views for a 1.4 percent rise.

Outlook: Despite the recent market volatility and uncertainty surrounding the duration of the Iran war, we maintain a constructive view on the market and do not believe the situation in the Middle East—at least at this point—is enough to derail the current bull market. Our focus remains on what actually drives stock prices—earnings, the economy, and interest rate policy—all of which we think remain supportive. The U.S. economy is growing, earnings are forecast to grow at a double-digit pace this year and next, and the Fed is expected to maintain an easing bias with expectations of at least one more rate cut this year.

The Week Ahead: The focal point of this week’s data calendar will be on the April jobs report due Friday. According to Bloomberg, economists are expecting nonfarm payrolls to increase by 60,000 and for the unemployment rate to hold steady at 4.3 percent. Other labor market indicators due will include the JOLTS report on Tuesday and the ADP report on Wednesday. Other economic reports of interest include the ISM services index on Tuesday, and the University of Michigan’s consumer survey for May on Friday. It will be another busy week of earnings reports with 125 members of the S&P 500 scheduled to release results. Amongst this group will be updates from technology names Palantir and Advanced Micro Devices and big consumer stocks Walt Disney and McDonald’s. The Fed speaking calendar will pick up with nine presentations on the docket.

— By Michael Schwager, Chief Market Strategist, Managing Director

Definitions

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since Oct. 1, 1928.

Standard and Poor's 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Nasdaq Composite Index is a broad-based capitalization-weighted index of stocks in all three Nasdaq tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of Feb. 5, 1971.

This material contains opinions of the author, but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC.