S&P 500: AI and earnings extend rally – Deutsche Bank

Deutsche Bank analysts highlight that United States (US) equities, including the S&P 500 and Nasdaq, have pushed to new highs, supported by strong AI-related earnings, resilient US data and easing Oil prices last week. Treasury yields were little changed overall, as softer survey data and inflation expectations tempered the impact of a solid April jobs report.

US indices at successive record highs

"US equities surged to new highs, with the S&P 500 (+2.34%, +0.85% on Friday) posting a sixth consecutive weekly advance, whilst the Nasdaq (+4.30%, +1.51% on Friday), Mag-7 (+3.87%, +0.81% on Friday) and Philadelphia Semiconductor Stock Exchange (+10.57%, +4.97% on Friday) rose to new highs as well."

"In addition to the slide in oil, the rally was also driven by strong earnings in AI and solid US data."

"The highlight on the latter was the April jobs report on Friday, which showed payrolls rising by +115k (+65k expected), though this was combined with slightly slower average earnings growth (+3.6% yoy vs +3.8% exp)."

"We did see some less positive survey data, including U Mich consumer confidence data for May (48.2 vs 49.5 est) on Friday and the NY Fed’s latest 1yr inflation expectations (3.64% vs 3.5% exp)."

"Put together, this left Treasuries little changed over the week, with 10yr yields down -0.9bps to 4.36% (-2.5bps Friday), while 2yr yields were up +1.0bps to 3.89% (-2.2bps Friday)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)