This was one of the most densely packed weeks in recent memory. On Tuesday and Wednesday, the Fed held rates steady at 3.50–3.75% in what will be Jerome Powell’s final meeting as chair, with four dissents — the most since 1992. Wednesday evening, Microsoft, Meta, Alphabet, and Amazon reported Q1 earnings within 80 seconds of each other, and Apple followed on Thursday. Thursday also brought Brent crude briefly touching $126 a barrel — its highest in four years — after Trump announced the naval blockade would continue until Iran agrees to a nuclear deal. By Friday’s close, the S&P 500 had pushed to a fresh all-time high at 7,230. Let’s unpack all of it.
The Mag 7 Report Card
Wednesday after the bell, four of the five largest companies on earth reported earnings within an 80-second window. Bloomberg called it the most concentrated burst of market-moving information in stock market history, and it didn’t disappoint.
Alphabet was the clear winner. Revenue surged 22% to over $109 billion — marking 11 consecutive quarters of double-digit growth — and shares jumped as much as 6% in after-hours trading. Google Cloud continued to accelerate, and the company’s AI initiatives are translating into revenue faster than the Street expected.
Microsoft beat estimates by $0.21 per share with adjusted EPS of $4.27. Azure cloud revenue surged nearly 40% year-over-year, comfortably above estimates, and the company raised full-year guidance. Amazon’s AWS reported 28% revenue growth, beating estimates by 200 basis points.
Meta was the odd one out. The company beat on both the top and bottom line — adjusted EPS of $7.31 beat by $0.52, revenue of $56.3 billion beat by $860 million — but guided for flat revenue growth in Q2 and shares fell more than 5%. When you’re valued at 25x earnings, you don’t get credit for beating if the outlook disappoints.
Apple reported on Thursday, delivering Q2 revenue of $111.2 billion (up 17% year-over-year) and EPS of $2.01 (up 22%), both exceeding estimates. Gross margin hit 49.3%, and net income reached a record $29.6 billion for the March quarter. Strong iPhone sales and a robust performance in China pushed shares up 3% on Friday.
The common thread across all five reports: AI capital expenditure is not slowing down. Every single company raised its capex guidance for the year. The hyperscalers are spending at a pace that makes the late-1990s telecom buildout look modest. Whether the demand side of the AI equation can keep up with that spending is the trillion-dollar question, but for now, the market is rewarding companies that can demonstrate AI revenue today.
Brent at $126: The Blockade Tightens
International benchmark Brent crude briefly hit $126 a barrel on Thursday — the highest price in four years — after President Trump announced the U.S. naval blockade of Iranian ports would continue indefinitely until Iran agrees to a new nuclear deal. WTI topped out around $114 intraday and settled near $107. Friday brought some relief on reports of behind-the-scenes diplomatic contact, but this remains the largest disruption to global energy supply since the 1970s oil crisis, and the effects are showing up across the inflation data.
PCE: Energy Drives the Acceleration
Thursday morning’s Personal Income and Outlays report for March confirmed what the oil market has been telegraphing. The PCE price index — the Fed’s preferred inflation gauge — rose 0.7% month-over-month, nearly double February’s 0.4% pace. Year-over-year, headline PCE jumped to 3.5%, up sharply from 2.8% in February and 2.9% in both January and December. That’s the biggest monthly acceleration since 2022.
The BEA’s breakdown of consumer spending tells the story in one line item: gasoline and other energy goods accounted for $81.3 billion of the $195.4 billion increase in current-dollar PCE — more than 40% of total spending growth came from energy alone. Health care ($21.3 billion) and motor vehicles ($17.6 billion) were distant runners-up. Consumer spending rose 0.9% in nominal terms but only 0.2% in real terms, meaning most of the increase was prices, not volume.
Core PCE — excluding food and energy — was better behaved at 0.3% month-over-month and 3.2% year-over-year, but even that is above the Fed’s 2% target. The personal saving rate fell to 3.6%, the lowest in over a year, suggesting consumers are dipping into savings to cover higher prices rather than cutting back on spending. Personal income rose a healthy 0.6%, but real disposable income fell 0.1% — wages are growing, but inflation is growing faster.
With oil still above $100, the April PCE report will be worse. The Fed knows this, and it’s the backdrop against which the Warsh transition will play out.
Stocks: Records Despite Everything
The S&P 500 closed Friday at 7,230 — a fresh all-time high — gaining about 1% for the week. The S&P is in a breakout and momentum indicators are strong but not yet overbought, and the weekly MACD is crossing to a bullish signal. The technology sector is alive and well and driving the bus to new all-time highs.
The Fed, the Curve, and What Comes Next
The FOMC voted 8–4 to hold the federal funds rate at 3.50–3.75%, and those four dissents tell you everything about where the Fed stands. Governor Miran wanted to cut by 25 basis points, arguing policy remains too restrictive. On the other side, Cleveland’s Beth Hammack, Minneapolis’s Neel Kashkari, and Dallas’s Lorie Logan voted to hold but objected to the easing bias in the statement — they wanted language reflecting that the next move could be a hike. Four dissents at a single meeting is extraordinary; the last time it happened was October 1992.
Powell’s press conference carried the weight of a farewell address. He confirmed he plans to stay on the Board of Governors to ensure the investigation into the Federal Reserve is resolved “with transparency and finality.” Kevin Warsh advanced from the Senate Banking Committee on a 13–11 party-line vote — the first fully partisan Fed chair vote in the committee’s history. The full Senate is expected to vote the week of May 11, ahead of Powell’s May 15 term expiration.
Warsh inherits a divided committee and a $6.7 trillion balance sheet that he has publicly committed to shrinking. During his confirmation hearings, Warsh said he wants to reduce the balance sheet by a couple trillion dollars over time, “slowly and deliberatively,” in concert with the Treasury. It’s a delicate needle to thread, and it will be the defining project of Warsh’s tenure alongside rate policy.
In the bond market, the 10-year Treasury closed the week at 4.42% with the 2-year at 3.92%, putting the 2s/10s spread at 50 basis points. The curve is steepening as the long end is being repriced higher on oil-driven inflation expectations, not on growth optimism. The market has priced out all rate cuts for 2026 and is assigning roughly 30% probability to a hike by early 2027. If Warsh signals willingness to cut rates despite 3.5% PCE inflation, the long end could sell off further as the market prices in a policy mistake. If he maintains Powell’s caution, the curve keeps steepening on energy/inflation fundamentals. For fixed income, the belly of the curve — 3-to-5-year maturities — continues to offer the best risk-adjusted carry.
Putting It Together
Earnings were strong, the economy is growing, and the S&P hit a record. On any other week, you’d call that a win. But the fine print tells a different story. The Fed is the most divided it’s been in 34 years. Brent is at $126 and the blockade is open-ended. PCE inflation jumped to 3.5% in March and the GDP deflator hit 4.5% in Q1. The most consequential transition in Fed leadership since Volcker-to-Greenspan is two weeks away, and the incoming chair is promising to shrink a $6.7 trillion balance sheet while navigating an oil shock.
The market is telling you it can handle the known risks. The question is whether the unknown risks — an Iran escalation, a Warsh policy surprise, a balance sheet misstep — are already priced. At 7,230 on the S&P, the margin of safety is thin. We’re keeping equity exposure concentrated in quality large-caps with pricing power, staying short duration in fixed income, and holding elevated cash as an option on whatever comes next.
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President, Kisco Capital
