US markets hit record highs as earnings surge and Iran deal speculation mounts
With the earnings season effectively complete, Wall Street is digesting robust corporate results while monitoring key economic data and potential diplomatic breakthroughs in the Middle East.
US equity markets have extended their winning streak, with the S&P 500 trading near the 7,500 mark and the Dow Jones Industrial Average targeting 51,000 after setting new records. The Nasdaq Composite also rose, buoyed by a strong earnings season that has seen year-on-year growth tracking at 26%, the highest level since 2021 according to Bank of America. As the market moves into the final week of May, attention is shifting from corporate reporting to economic data releases and geopolitical developments that could influence investor sentiment.
Earnings season is described as nearly complete, with only a handful of key companies remaining to report. This week’s calendar features Marvell Technology, which has surged 120% year-to-date, and Salesforce, which has struggled to capitalise on the artificial intelligence boom. Thursday will bring results from Costco Wholesale, Dell Technologies, and major retailers including Dollar Tree, Best Buy, and The Gap, offering a snapshot of consumer spending trends. Despite a cautious tone from some retail executives, guidance remains above average, supporting the market’s current valuation.
Investors are now focused on the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures index, due on Thursday. The data will be critical in assessing the trajectory for monetary policy under new Fed chair Kevin Warsh. Earlier in the week, the Conference Board’s consumer confidence reading will be released on Tuesday, following a dismal sentiment survey from the University of Michigan on Friday. These indicators are vital as the market digests the implications of recent price pressures on the broader economy.
Geopolitical speculation is also dominating the outlook, particularly regarding a potential agreement to reopen the Strait of Hormuz. President Donald Trump stated on Saturday that the deal has been largely negotiated and would be announced soon. However, Secretary of State Marco Rubio urged caution, noting that the situation is not over until it is over. While surging oil prices have not yet dampened earnings, the potential for a diplomatic resolution remains a key variable for market stability.
In the technology sector, major firms are reframing recent workforce reductions as innovation-driven measures rather than simple cost-cutting. Meta CEO Mark Zuckerberg has described layoffs as necessary to define the next generation of the company, a narrative being adopted by other tech leaders. While layoffs remain relatively low overall, the shift in messaging highlights the industry’s focus on efficiency and AI integration. As the market moves past the earnings rush, these structural changes and external risks will likely drive volatility in the coming weeks.
