This Week in Markets - May 4: The Tape Says Yes. The Headlines Say Slow Down.
Records into a heavy catalyst week. The discipline is selectivity, not size.
Welcome back to another weekly market prep with The Dividend Journal! If this is your first time here, great timing. This newsletter is your one stop shop to stay ahead of the market and step into the week fully prepared.
Markets just printed all-time highs across the S&P 500 and Nasdaq on Friday, with the Russell 2000 closing up 2.21% to confirm breadth. April was the strongest month for both the $SPX and $NDX since 2020. Underneath the tape: an active war with Iran, Brent above $110, Q1 core PCE at 4.3%, and Fed funds still pinned at 3.75% with no realistic cut path on the horizon.
This week brings a loaded earnings calendar with $PLTR, $AMD, $DIS, $UBER, $ARM, $SHOP, $APP, and a dozen more, plus a respectable macro slate headlined by JOLTS, ISM Services, and ADP. The signal-to-noise ratio is the highest it has been all year. The discipline this week is selectivity, not size.
Let's get into it.
📊 Last Week Recap
The indexes ended April with statement closes. The $SPX finished Friday at 7,230.12, the $NDX at 25,114.44, and the $RUT at 2,812.82, with the VIX sitting at 16.99. Clear divergence forming with tech leading while SPY 0.00%↑ drags. Apple ripped 3% Friday on a Q2 beat and raised guide, capping a week where mega cap earnings quietly carried the tape higher even as the headlines stayed loud.
Sector mix tells the story. Tech and semis led on AI re-acceleration. Financials caught a bid on yield curve steepness. Energy held on the Iran tail. Defensives lagged. That rotation is the textbook profile of a healthy bull tape, not a top.
The macro picture got more complicated. Q1 GDP came in at 2.0%, an acceleration from 0.5% in Q4, with consumer spending and investment doing the heavy lifting. But core PCE jumped to 4.3% and the gross domestic purchases price index rose 3.6%. Translation: the economy is reaccelerating and inflation is reaccelerating with it. Powell announced he is stepping aside at the end of his term, with Kevin Warsh expected to take over the Fed chair.
Oil stayed volatile. WTI traded between $100 and $106 as the war with Iran drove headline by headline moves, and the Strait of Hormuz remained effectively shut. Energy majors $XOM and $CVX beat on EPS but missed on revenue, with stymied production weighing on the top line.
The most important signal of the week was Friday's small cap participation. When the $RUT joins a move at ATHs, that is the breadth confirmation momentum traders wait for.
📅 This Week's Economic Calendar
The macro slate is heavier than it looks. Three releases matter for tape direction.
Tuesday, May 5: JOLTS Job Openings (March), ISM Services PMI (April), New Home Sales (March).
Wednesday, May 6: ADP Employment Report (April).
Friday, May 8: Unemployment Rate
Earnings this week, courtesy of Earnings Whispers:
🔥 The AI Earnings Test
The two biggest single-stock prints of the week are PLTR 0.00%↑ Monday after the close and AMD 0.00%↑ Tuesday after the close. Together they are the AI hardware and software read going into NVDA 0.00%↑ later this month.
$PLTR consensus is $0.28 EPS on $1.54B in revenue, which would be 115% YoY EPS growth and 74% revenue growth. U.S. commercial revenue (the AIP read) grew 137% YoY last quarter, and that single number is what Wall Street is anchored on. The stock is down roughly 22% YTD and trading inside a descending channel from the November highs.
$AMD is the more important read for the tape. AMD has been heavy for months, and the data center number will tell you whether the broader AI hardware spend is as durable as $NVDA's pricing suggests. A clean beat and raise here resets the entire AI infrastructure narrative for the next quarter. A miss takes a bite out of $NVDA before it even reports later this month, and the rotation out of semis would be sharp.
The pattern to respect on both names is the post earnings hold. If $PLTR gaps up Tuesday and holds above 145 into the close, that is your continuation signal. Same for $AMD on Wednesday. The trade is the reaction, not the print.
🔥 Wednesday's Mega Slate
Wednesday is the heaviest day of the week for single stock vol. Before the open, $DIS reports Q2 (streaming profitability and parks are the two lines that matter) and $UBER reports Q1 (take rate and free cash flow are the differentiators). After the close, $ARM, $APP, $FTNT, $MAR, and $DASH all hit.
📈 Market Update
We closed Friday with an inverted daily hammer, but this also happened last year. We ended up still grinding higher. S&P clearly diverging here from tech risk on names and small caps.
Very strong close with semis still leading the charge. We are likely going to see some rotations in the market while participants digest the move we’ve made.
Sector setup: XLK 0.00%↑ and SMH 0.00%↑ continue to lead, with semis specifically extending out of a multi week base. $XLF holds firm on the curve. $XLE is a wildcard, reactive to every Iran headline. $XLU and $XLP sit near the bottom of the relative strength rankings, which is consistent with risk on rotation, not defensive positioning.
The only counter signal is the gap between price action and macro reality. We are above 7,200 on the $SPX while a war is active, oil is above $100, and inflation is reaccelerating. Either price is wrong, or the consensus on macro is too pessimistic. Tape says the second.
Until the daily 21 EMA on $SPX breaks, this is a long side trend environment. Manage size from there.
