WP Weekly Insights (4/25 – 5/1)

Market Recap & Snapshot[i]

(Week ending May 1, 2026)

• Monday, April 27. Both the S&P 500 and Nasdaq closed just above flatline, which was enough for both indexes to notch fresh record highs.
• Tuesday, April 28. TheWall Street Journal reported that OpenAI missed revenue and user targets, raising concerns about the ChatGPT-maker’s ability to sustain AI spending and igniting a selloff in Tech shares a day ahead of “Wild Wednesday.”
• Wednesday, April 29. Four of the largest players in AI—Alphabet, Microsoft, Amazon, and Meta—all reported Q1 earnings almost simultaneously after the bell (more below). The Fed kept rates steady following Jerome Powell’s final meeting as chair.
• Thursday, April 30. Stocks put an exclamation point on an excellent month. The S&P 500 and small-cap Russell 2000 both closed at records, up 1% and 2.1% respectively. Brent crude, the global oil benchmark, reached $126/bbl during trading in Asia before pulling back to below $120. Brent has not been this expensive since the early days of the war in Ukraine. Oil prices have nearly doubled since the start of the year. Average US gas prices hit $4.30/gallon (and topped $6/gallon in California), marking the highest levels since summer 2022.[ii]

• Friday, May 1. The S&P 500 kicked off May with another record closing high by advancing 0.3% on the day. The beaten-down software sector led the way, with the iShares Expanded Tech-Software ETF (IGV) gaining 3.2%. The fund is still down 18% year to date (YTD), however, due to AI competition threats.
• April Highlights. The S&P 500 gained 10.4% for its best monthly performance since November 2020, a month during which news broke of a COVID vaccine. The Nasdaq also had its best month since 2020, closing out April up 15.3%. The PHLX Semiconductor Index—led by such names as NVIDIA, Taiwan Semi, Broadcom, Micron, AMD, ASML, and Intel—returned an astounding 38% for April in a move reminiscent of the dot-com boom era. The iShares MSCI South Korea ETF (EWY) was up another 65% through the first four months of 2026, following a 91% gain in 2025. Our model equity sleeve’s emerging markets (EM) position, the Nomura Emerging Markets Fund (DEMIX), has been heavily allocated to Korean tech giants, leading to strong outperformance versus its MSCI EM benchmark. Emerging markets equities have now outperformed the S&P 500 for five consecutive quarters.

The Persian Predicament

• The Strait of Hormuz is still closed, prolonging a global oil supply shock that has sent energy prices soaring. Iran’s de facto leaders have insisted that they will not negotiate to reopen the vital waterway while a US naval blockade of its ports remains in place. President Trump, meanwhile, says he won’t halt the US operation unless Tehran agrees to a peace deal to end the conflict, and that also addresses the country’s nuclear program. And around we go.

• The US could be heading toward a protracted period during which fighting in the Middle East is mostly benign, but without reaching any firm resolution to the conflict. All the while, traffic through the Strait of Hormuz may remain stifled if not nonexistent, keeping oil prices elevated.
• German Chancellor Friedrich Merz, frustrated by the strain that higher energy prices are causing for his country’s populace and economy, assessed that the US “is being humiliated by the Iranian leadership” in negotiations, or lack thereof, to end the conflict. Lamenting the dearth of a communicable American exit strategy, Merz demanded, “This war against Iran has a direct impact on our economic performance and must therefore be brought to an end as soon as possible.” One can only hope.
• The biggest development in the region came out of the United Arab Emirates (UAE), which announced its departure from the Organization of Petroleum Exporting Countries (OPEC). The closure of the Strait of Hormuz is hurting the Emiratis, formerly OPEC’s third-largest producer at 12% of total supply, much more than it is Saudi Arabia, the cartel’s leading nation, largest exporter, and production limit enforcer. The Saudis have been able to route exports through the Red Sea to avoid the dueling blockade that has brought shipments to a halt for many of their neighbors and allies.

• The UAE is both the financial and tech epicenter of the Gulf region. Cities like Dubai were also the Gulf’s primary tourism and expat attractions, that is, until Iran rained down missiles during the opening salvos of the war. Leaving OPEC indicates that they feel they have reached a level of economic diversification that no longer requires participation in the oil market’s price-fixing regime—at least once the Strait finally reopens. Until then, the UAE has reportedly asked the US for financial aid while the blockades prevent it from exporting a majority of its crude.
• Tension between the UAE and Saudi Arabia over oil production policy had been simmering for years. The UAE mulled quitting the cartel in the past so they could pump as much oil as they pleased, and the disruptions caused by the war with Iran ultimately forced their hand. So, what happens to the rest of OPEC? The cartel dominates the global oil market by strictly rationing production by member nations with the objective of keeping oil prices stable and, preferably, high. After the UAE’s departure, this ability has been markedly diminished. The Saudis now hold almost all of OPEC’s spare capacity, which means supporting oil prices means they alone will be on the hook for lost revenue from cutting output. An alternative strategy would be to maximize production, which would effectively eliminate higher-cost producers and dissolve the cartel. At some point after the Strait of Hormuz reopens, a freer global oil market should result in lower energy prices.
• The Trump administration claimed that the ceasefire with Iran was sufficient to pause the 60-day War Powers Resolution clock. Under the 1973 law, which was introduced toward the tail-end of the Vietnam War, the president is required to notify Congress within 48 hours of military action and must withdraw US troops 60 days later, unless Congress declares war. The duration of the Iran excursion reached 60 days as of May 1. Defense Secretary Pete Hegseth argued in front of the Senate Armed Services Committee that the countdown stopped on April 8, when the current ceasefire started. This prompted the following series of questions from Sen. Todd Young (R–IN), “It stopped from the ceasefire? Which ceasefire? Does the ceasefire still count if they don’t cease firing?” While the US has not conducted any further airstrikes since then, a blockade is technically considered an act of war under international law.[iii] At any rate, Congress will eventually need to be involved should the US military’s presence in the Gulf region drag on much longer. With midterm elections looming, the appetite for a war that has had such a direct and immediate impact on constituents’ pocketbooks is likely to be minuscule.
• Us exports of crude and petroleum reached a record of 12.9 million barrels during the week ending April 16, according to the Energy Information Administration. Buyers in Europe and Asia are paying a premium for US oil to help offset supply trapped in the Persian Gulf.[iv] The US is the world’s largest producer of oil and is close to becoming a net exporter of crude for the first time ever in weekly government data going back to 2001.[v] Foreign demand for US oil should have a positive effect on Q2 GDP as well as reduce the trade deficit, which has long been a subject of President Trump’s ire.
• The people of Iran are suffering more than anyone as a result of the conflict. Roughly 8% of its labor force has been directly or indirectly displaced since February 28, inflation—already at nosebleed levels before the war started—is running at a torrid 67% pace, and the rial hit a record low of 1.8 million to the dollar.[vi] Mass protests at the turn of the year over the dismal state of the economy were met with lethal force by the regime, which is now in tatters. Then the bombs started falling. Could the Iranian people rise up again and, this time, overthrow the Islamic Republic once and for all?

(A)simov (I)saac

• The Wall Street Journal reported that OpenAI, creator of ChatGPT, missed its own targets for new users and revenue, leaving some insiders concerned that the company may not be able to pay for $600 billion worth of future computing contracts should growth stumble. Stocks of partner firms SoftBank, which has an 11% stake in OpenAI, and Oracle felt the most pain. Increased competition from Anthropic and Google’s Gemini, rather than a broader AI deceleration, could be the predominant factor behind OpenAI’s internal struggles. OpenAI fired back with a statement claiming that it was “firing on all cylinders” and “aligned on buying as much compute” as possible. CFO Sarah Friar, who was cited in the WSJ report as having reservations about the company’s trajectory of spending, claimed that OpenAI sees a “vertical wall of demand” for its products. The company is preparing for an eventual IPO that could occur as soon as late this year.[vii]
• If Elon Musk has his way, that IPO will never occur. Musk is suing OpenAI for $180 billion in an Oakland court, alleging that CEO Sam Altman et al. essentially “stole” a charity. The company behind ChatGPT started in 2015 as a nonprofit research organization structured as a 501(c)(3). Musk was heavily involved in the early days as an investor and board member. Since then, OpenAI has restructured a couple of times, with the current version operating as a for-profit “public benefit corporation.” OpenAI’s argument is that training frontier AI systems requires far more capital than donations and grants could possibly supply. They also contend that Musk was included in discussions about transitioning the company to a for-profit model and was fully aware of the plan. Musk’s xAI and AI assistant Grok compete directly with OpenAI and ChatGPT.
• Wild Wednesday. Alphabet, Microsoft, Amazon, and Meta all reported Q1 earnings after the bell on Wednesday, April 29. Together, the tech giants comprise ~17% of the S&P 500.
• Google-parent Alphabet was the clear winner of this round, reporting earnings and revenue growth of 81% and 22%, respectively, from a year ago. Google Cloud was the star performer as sales hit $20 billion, up 63% from last year and beating the $18 billion expected. The unit’s operating margin increased to 33% from 18%, its order backlog nearly doubled from last year to $462 billion, and it’s growing faster than cloud rivals Azure (Microsoft) and AWS (Amazon). The strong results appear to justify the first quarter CapEx that doubled to $36 billion.[viii] Alphabet’s stock (GOOGL) jumped 10% on the report.
• Microsoft topped estimates on both the top and bottom line. Its cloud computing Azure unit posted growth of 40% from the prior year as it continues to monetize the massive demand for AI services. M365 Copilot, Microsoft’s workplace AI assistant, saw paid seats grow to over 20 million from 15 million last quarter. While free cash flow remains positive at $73 billion over the last 12 months, investors’ wariness of $190 billion of scheduled CY 2026 CapEx sent the stock down 4%.[ix]
• Amazon beat expectations on both earnings and revenue for Q1 as sales at its cloud business, AWS, leapt 28%, growing at the fastest pace in nearly four years. Growth in cloud services is vital for investors seeking return on investment (ROI) for enormous capital spending efforts. Earlier this year, management announced plans for $200 billion of CapEx in 2026, even as free cash flow has declined by 95% to $1.2 billion over the last 12 months.[x] The stock bounced around but finished mostly flat on Thursday, April 30.
• Meta Platforms fell 9% after its earnings report, even though Q1 performance was excellent and forward guidance was in line with expectations. Investors seemed to be spooked when the Instagram owner raised its 2026 CapEx forecast by $10 billion to $145 billion.[xi] Unlike Alphabet, Amazon, and Microsoft, Meta does not have a bustling cloud business to offset such immense cash outflows, which renders its spending risky in comparison to that of its rivals. Mark Zuckerberg also has a track record of overreaching on investment.
• These four heavy hitters in the AI space spent a collective $131 billion on AI data centers in Q1, according to Evercore ISI. There are not yet any signs of slowing or even flattening. ROI depends on the continued growth of OpenAI and/or its rivals.

• In contrast, Apple falls at the far end of the CapEx spectrum, spending just $6 billion during the quarter. The iPhone maker reported a “beat and raise” quarter that had its stock advancing 4%. Everything seems to be humming along, with strong results from its iPhone business as well as from Mac, iPad, and wearables. The cash flow monster added $100 billion to its share buyback program and increased its dividend.[xii]^,[xiii]  Conversely, Alphabet and Meta did not buy back any shares during the quarter. WP will be closely following Apple’s AI strategy. They seem to be comfortable staying in their lane of selling hardware and services versus diving headfirst into the AI arms race. All the while, they continue to build upon a cash pile that may ultimately allow them to outsource AI capabilities in the future, such as they’ve already done with Siri via a partnership with OpenAI.
• Big Tech’s earnings have been largely unaffected by the disruptions of the war in Iran, and their stocks have buoyed global equity markets throughout the conflict thus far.

Economic Data

• US real gross domestic product (GDP) grew at an annualized rate of 2.0% in the first quarter, according to the first of three readings from the Bureau of Economic Analysis (BEA), slightly missing estimates but significantly better than the 0.5% figure from the government shutdown-mired fourth quarter of last year. Business spending and investments, much of which can be attributed to the massive AI buildout, accounted for three-quarters of Q1 growth, doing much of the heavy lifting that is typically shouldered by the US consumer. Spending on information processing equipment alone contributed 0.8%. Consumption, which accounts for ~70% of US GDP, slowed to 1.6% in Q1 from 1.9% in Q4 2025.[xiv]Overall, the US economy turned in a solid quarter. The primary threat to continued economic growth is a protracted conflict with Iran that exacerbates the prevailing energy supply shock, which would likely apply upward pressure on inflation and additional stress on the consumer.
• While we are on the topic of inflation, the BEA also released its personal consumption expenditures price index for March, which jumped 3.5% on an annual basis, up from 2.8% in February[xv] on the back of rising energy costs due to the war in Iran. Core PCE inflation, which strips out volatile food and energy prices and is the Fed’s preferred measure of price growth, also rose to 3.2% in March from 3.0% in February.[xvi] Core inflation has not been at or below the Fed’s 2.0% target since February 2021.
• The S&P Cotality Case-Shiller Home Price NSA Index posted a 0.7% annual gain in February, slowing from 0.8% in January. Home prices have declined by 0.8% over the last six months, and more than half of major US metropolitan markets posted year-over-year price declines. the slowest rate of growth since June of 2023.[xvii] The average 30-year fixed rate mortgage was 6.30% as of April 30, which puts affordable monthly payments out of reach for many would-be buyers. Higher rates also make it much more costly for those who locked in rock-bottom mortgages during the pandemic era to even consider moving.

Central Bank Watch

• The Federal Open Market Committee (FOMC) unsurprisingly held its benchmark federal funds rate steady at 3.5% to 3.75% on Wednesday, April 29. But with four (out of 12) committee members dissenting, it was the most divided vote since 1992. Three of the four dissenters supported the rate decision but objected to phrasing in the post-meeting statement that appeared to hint at additional rate cuts in the future.[xviii] Rising energy prices due to the war in Iran are compounding the Fed’s five-year-long inflation problem, and it’s quite possible that there will not be any cuts at all in 2026. The Iran war and broader Middle East conflict are contributing to “a high level of uncertainty about the economic outlook,” Fed Chair Jerome Powell said.
• Speaking of Powell, Wednesday’s policy meeting was his last as Fed chair—but not his last at the Fed. He indicated that he would stay on as a Fed governor “for a period of time to be determined” (his 14-year term in this position is set to expire in early 2028). The Justice Department recently dropped a criminal investigation of Powell on the flimsy allegation that he misled Congress about cost overruns on Fed-building renovations.[xix] He likely feels a greater deal of protection from further “lawfare” if he continues on as a public servant.
• Also on Wednesday, the Senate Banking Committee advanced the nomination of Kevin Warsh to succeed Powell. A full Senate confirmation vote is expected in May. Mr. Warsh is set to inherit a divided FOMC.
• The European Central Bank (ECB) held its main policy rate steady at 2.0%. Euro area economies have been slowing this year while oil and gas prices soar as a result of the conflict in the Middle East, posing the risk of stagflation—a worst-case scenario for central bankers—in the EU if the war drags on.

Corporate Earnings & Stocks in the News

• Surging oil prices did not result in a windfall for Exxon Mobil and Chevron in the first quarter. Exxon’s net income declined 45% while Chevron’s tumbled 36% from the same period a year ago, although both beat analysts’ earnings expectations. Exxon CEO Darren Woods said that ~15% of his company’s oil production has been impacted by the war in Iran, and that it will take a couple of months for oil flows to ramp once the Strait of Hormuz reopens. Chevron’s CEO Mike Wirth made it a point to highlight that the oil giant is less exposed to the Middle East than its peers are due to greater geographic diversification in the Americas.[xx]
• Eli Lilly’s Q1 revenue surged 56% on strong demand for its weight-loss/diabetes drugs Zepbound and Mounjaro. An oral version of its GLP-1 medications, called Foundayo, performed well in Phase 3 trials (the current versions are injectables). Lilly is seeking approval for Foundayo in 40 countries. The pharma giant also upped its full-year earnings and revenue guidance and touted its oncology business. The stock was up 10% on the report.[xxi]
• We are nearly two-thirds of the way through the earnings season, and the S&P 500 is on track to report earnings growth of 27.1%, which would be more than double the 13.1% estimate from just before earnings season began and the highest growth rate since Q4 of 2021. Q1 will mark the sixth consecutive quarter of double-digit year-over-year growth. Positive EPS surprises from Alphabet, Amazon, and Meta were the main contributors over the past week.
• Valuations are being held in check even with the huge April rally in stocks. Put another way, earnings growth drives stock prices, which leads us to believe that the market for domestic stocks remains fundamentally grounded. The 12-month forward P/E ratio is now at 20.9, just slightly higher than the 5-year average of 19.9 and the 10-year average of 18.9.
• Spirit Airlines is again preparing to wind down operations after failing to procure a lifeline from the Trump administration. The budget carrier had already filed for Chapter 11 bankruptcy since late 2024 and will now liquidate.

Fiscal Policy

• The US House of Representatives passed a budget framework that ended the 74-day shutdown of the Department of Homeland Security (DHS), a period during which periodic TSA disruptions snarled airports across the country.

In Other News…

• The annual White House Correspondents’ Dinner was thrown into disarray when the Secret Service was thrust into action to disarm an intruder toting a shotgun. President Trump, the First Lady, and other political brass were quickly evacuated. Notably, one attendee forewent hiding under his table to instead finish his iceberg wedge. The annual roast was tentatively rescheduled for May.
• Saudi’s Private Investment Fund (PIF) reportedly pulled the rug out from underneath the flailing LIV Golf. The tour’s new CEO claimed to have sufficient funds to finish out the season, but the future beyond that looks bleak without PIF support or a large new investor. The purported objective put forth by LIV at its advent was to “grow the game” (and certainly not for individuals to pocket billions of dollars’ worth of contracts with the Saudis). What WP thinks would really grow the game? Having most of the world’s top players compete against each other in the same field week after week.
• Geologists announced that the Appalachian Mountains may contain a multibillion-dollar cache of lithium that could meet US demand for centuries. The US currently imports nearly half of its consumption of lithium—mostly from China—which powers batteries found in the iPhone, laptops, EVs, headphones, power tools, etc.[xxii]
• King Charles visited Washington and delivered a speech to Congress that advocated checks and balances and urged the US to reject isolationism.
• Kenya’s Sabastian Sawe and Ethiopia’s Yomif Kejeclha became the first humans to run a competitive marathon (London’s) in under two hours. That amounts to a four-minute and 34-second mile pace…for 26.2 miles.

The Week Ahead

• The Bureau of Labor Statistics (BLS) will release the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday, May 5, and its April jobs report on Friday, May 8. The consensus among economists polled by FactSet predicts that the U.S. economy added 50,000 nonfarm jobs in April, down from 178,000 in March. Economists expect the unemployment rate to have held steady at a very low 4.3%.
• Earnings season rolls on with Q1 results due from Palantir, AMD, Disney, Arm Holdings, Novo Nordisk, McDonald’s, and Wendy’s. Some 126 S&P 500 constituents will be reporting throughout the week.[xxiii]
• “Sell in May and go away?” As Coach Lee Corso would say, not so fast, my friend. Over the past 12 years, the S&P 500 has gained a median 6.3% from May through October, according to LPL Financial.[xxiv] It’s worth noting that Gregorian calendar-related trading strategies rarely, if ever, carry any statistical significance.

Economic and Index Definitions