Weekly Roundup Apr. 27 - May 1
Fed Decision | Mag 7 Reports | U.S. GDP
By: Hollis Costa
May 3, 2026
Market Recap | S&P 500: +0.78% | NASDAQ Composite: +0.92% | Dow Jones Industrial: +0.05% | WTI Crude Oil: -6.13% | Gold: -1.42% | 10 Yr Treasury: +0.92% | VIX: -5.72%
Econ at a Glance
U.S. stocks finished on a strong note, with the S&P 500 and NASDAQ closing near record highs. The main driver of positive markets was AI and tech-related earnings reports. Crude oil dropped as the geopolitical situation in Iran remains uncertain. Gold also fell slightly following a big price rally; this could potentially be signaling a stronger dollar and rising interest rate expectations. The VIX, considered the consumer fear index, also dropped as geopolitical tensions seem to be easing despite no official resolution.
Fed Holds Rates
The Fed decided to hold rates steady this past week, as expected. However, this vote came with four dissenters, the highest the FOMC has seen since 1992. The dissenters did not agree with the Fed’s easing bias, expecting a rate cut at the next Fed meeting in June. The Fed cited elevated inflation as a result of higher energy prices, while also highlighting the uncertain outlook. This divide within the Fed illustrates an uncertain time even among experts, and this uncertainty will keep pressure on rate-sensitive assets.
Mag 7 Earnings
Four of the “Magnificent Seven” released earnings reports this past week. These reports were highly anticipated, as investors wanted to see if the vast amount of AI spending was actually going to pay off in revenue and growth, or simply continue inflating the bubble. Across the group (Microsoft, Alphabet, Amazon, and Meta), Q1 earnings were expected to rise by 45.7% year-over-year. While some companies lived up to the hype, others did not. Alphabet (parent company of Google) and Amazon both delivered strong reports, with revenue growing as a result of cloud growth. Meta showed some revenue growth, but investors seemed less enthusiastic due to concerns around potentially low margins. Microsoft also posted solid numbers, but investors remain uncertain whether the heavy spending is directly translating into returns.
U.S. GDP Reports
U.S. GDP was reported this past week. Real GDP grew from 0.5% in Q4 2025 to 2.0% in Q1 2026, but still came in below the 2.2% expected by economists. This growth can primarily be attributed to large AI spending, a rebound in government spending, and stronger U.S. exports. Inflation remained elevated in the report, with the personal consumption expenditures (PCE) price index increasing 4.5%, compared to 2.9% in Q4 2025. The PCE price index excluding food and energy rose 4.3%, compared to 2.7% in Q4 2025. Overall, this report offered some relief that the economy is still functioning well, but it isn’t quite booming.
Looking Forward
Next week will be about whether the market can continue justifying the AI-led rally after digesting the Mag 7 earnings, the Fed’s hold, and the stronger-than-expected GDP report. Traders will be looking for signs that heavy AI spending is translating into real growth, while also watching whether sticky inflation and higher rates begin to challenge valuations.
Glossary
Federal Reserve (The Fed): The central bank of the United States, responsible for setting monetary policy, including interest rates.
FOMC (Federal Open Market Committee): The group within the Fed that meets regularly to decide interest rate policy and guide the economy.
Dissenters (FOMC): Members of the FOMC who vote against the majority decision on interest rates or policy direction.
Magnificent Seven (Mag 7): A group of major tech companies driving much of the market’s performance: Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA, and Tesla.
GDP (Gross Domestic Product): The total value of all goods and services produced in a country, used to measure economic growth.
Real GDP: GDP adjusted for inflation, giving a more accurate picture of economic growth.
PCE (Personal Consumption Expenditures) Price Index: A key inflation measure tracked by the Fed, reflecting changes in prices consumers pay for goods and services.
