Market looks ahead to endgame

The prospect of a cooldown in the Middle East took some of the heat off oil prices, helping propel the US stock market to its best week in nearly a year. But aborted US-Iranian negotiations over the weekend triggered another spike in energy prices, raising the prospect of renewed equity market volatility at the start of a new earnings season.

Last week marked the S&P 500’s (SPX) biggest weekly return since April 2025—when the market was attempting to rebound from the “Liberation Day” tariff shock—and the first time since 2022 that the index posted back-to-back weekly gains of 3% or more.

Most of the rally occurred last Wednesday, when the SPX jumped 2.5%—and crude oil prices tumbled 16%—after news of a two-week US-Iran ceasefire. The market padded its gains on Thursday, but slipped on Friday as the Consumer Price Index (CPI) posted its biggest monthly increase in nearly four years:

The headline: SPX closes Friday near five-week high.

The fine print: On the heels of more hot inflation data, a record-low consumer sentiment reading on Friday, and failed US-Iran negotiations over the weekend, oil prices and geopolitics still hold the key to near-term market momentum. In the absence of clear progress, avoiding major (negative) surprises in the Middle East may help the market focus some of its attention on a new earnings season.

The number: 0.9%, the CPI’s month-over-month increase in March—its biggest jump since June 2022.

The scorecard: The Nasdaq 100 (NDX) tech index led the US market last week:

Sector returns: The strongest S&P 500 sectors last week were communication services (+5.8%), consumer discretionary (+5.8%), and tech (+4.8%). The weakest sectors were energy (-4.1%), health care (+0.4%), and consumer staples (+0.5%).

Yields and the dollar: The 10-year US Treasury yield fell 0.02% to 4.32% last week. The US Dollar Index (DXY) dropped 1.38 to 98.65.

Commodity futures: After trading as high as $117.63 last Monday, May WTI crude oil (CLK6) tumbled to $91.05 intraday on Wednesday, ending the week down $12.89 at $95.78. June gold (GCM6) climbed $89.40 to $4,769.10. Biggest gains: May copper (HGK6) +5.2%, May milk (DCK6) +5.2%. Biggest declines: May heating oil (HOK6) -14.2%, May WTI crude oil (CLK6) -13.8%

Crypto: Last week’s risk-on sentiment was on full display—Bitcoin rallied 8.3% to $72,880, while Ethereum climbed 8.5% to $2,241.

More inflation data (PPI) shares space on the economic calendar with housing data, the Fed Beige Book, and assorted manufacturing numbers:

●Monday: Existing Home Sales
●Tuesday: NFIB Business Optimism Index, Producer Price Index (PPI)
●Wednesday: Import and Export Prices, NY Empire State Manufacturing Index, NAHB Housing Market Index, EIA Petroleum Status Report, Fed Beige Book
●Thursday: Philadelphia Fed Manufacturing Index, Industrial Production and Capacity Utilization

Big banks signal the start of Q1 reporting season, but the earnings calendar also includes Netflix (NFLX) and several other high-profile names from the tech, pharma, and consumer arenas. Some highlights:

●Monday: Fastenal (FAST), Goldman Sachs (GS)
●Tuesday: Blackrock (BLK), Citigroup (C), Johnson & Johnson (JNJ), JPMorgan Chase (JPM), Kinder Morgan (KMI), CarMax (KMX), Wells Fargo (WFC)
●Wednesday: First Horizon (FHN), J.B. Hunt Transport (JBHT), Morgan Stanley (MS), PNC Financial  (PNC)
●Thursday: Alcoa (AA), Abbott Laboratories (ABT), Bank of New York Mellon (BK), KeyCorp (KEY), Marsh & McLennan (MRSH), Netflix (NFLX), PepsiCo (PEP), Travelers Companies (TRV), US Bancorp (USB)
●Friday: ASML (ASML), Fifth Third Bancorp (FITB)

The two-week rally as of Friday represented rarified air for the SPX—the index has posted back-to-back 3%-plus up weeks only 17 other times over the past 69 years.

While exceptionally large market moves such as this are often susceptible to at least partial retracements, within this small sample the SPX was more likely than not to follow through to the upside over the next few weeks: It closed higher the next week 10 of 17 times with a 0.8% median return, and after four weeks it was higher in 11 cases with a 2% median return—roughly twice the size of the median return for all four-week periods. The third week after a two-week surge was the most likely to experience weakness, with the index falling in nine of 17 cases and posting a median return of -0.4%:¹

In the 11 cases the SPX was higher after four weeks, its median net return was 3.2%. In the six cases it was lower after four weeks, its net return was -1.6%.

The same follow-through tendency was also evident after the 39 previous times the SPX posted a two-week, 7%-or-larger gain, except that it was a little more bullish: After four weeks, the index was high in 27case, with a median net return of 2.8%.

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¹ All figures reflect S&P 500 weekly closing prices, 1957-2022. Supporting document available upon request.