Intro
In the last two weeks, markets experienced notable gains with the S&P 500 and Nasdaq posting their largest monthly increases in years, amid robust earnings from major tech companies. Geopolitical tensions in the Middle East contributed to record U.S. crude oil exports, while the Federal Reserve maintained its interest rate stance with a historically high level of internal dissent. Let’s dive in!
ClariVise Insights
- Stock Market Gains: The S&P 500 posted its biggest monthly gain since November 2020, while the Nasdaq’s largest since April 2020, driven by solid earnings and strong economic growth despite geopolitical tensions and oil price volatility.
- Inflation and GDP: Core inflation rose 0.3% in March, pushing the annual rate to 3.2%, the highest since November 2023, driven by higher energy prices. Q1 GDP grew 2% annualized, below estimates, while jobless claims hit a historic low, reflecting a mixed economic environment.
- Big Tech Earnings: The Magnificent Seven tech giants (Alphabet, Apple, Amazon, Microsoft, Meta, Nvidia, Tesla) reported strong earnings driven by AI growth, pushing the S&P 500 and Nasdaq to record highs. However, investors are beginning to differentiate among winners, favoring cash-generating firms like Alphabet and Amazon while pressuring higher-spending companies such as Meta and Microsoft.
Other News
- Interest Rate Hold: The Fed held interest rates steady at 3.5%-3.75% with a rare 8-4 split, marking the first four-member dissent since October 1992. Officials disagreed on signaling future rate cuts amid persistent inflation and economic uncertainty.
- Oil Exports Surge: The Port of Corpus Christi has become a critical hub for U.S. crude oil exports amid the Iran war, with exports rising over 30% to 5.2 million barrels per day in April. Ship traffic and tanker volumes have doubled, reflecting rerouted global supply chains due to Strait of Hormuz blockades.
- Fed Chair Powell’s Tenure: Jerome Powell’s eight years as Fed chair saw historic volatility, including COVID and inflation shocks, yet markets rallied broadly. The S&P 500 gained 14.7% annualized, with positive returns across stocks, bonds, commodities, and gold despite several sharp selloffs. See the graph below for the exact numbers:
- AI Spending Surge: Analysts project AI-related capital expenditures to exceed $1 trillion in 2027, driven by strong cloud demand and infrastructure buildouts. Despite high spending, revenue growth and backlog expansions signal positive ROI for major tech firms like Alphabet and Amazon.
- Medicare Advantage Changes: Millions face plan losses or network changes as insurers and providers end contracts, causing out-of-network care and higher costs. The Centers for Medicare & Medicaid Services dropped a proposed rule that would ease midyear plan switches for affected enrollees, increasing challenges in navigating coverage.
- Senate Prediction Market Ban: The U.S. Senate unanimously passed a rule banning senators from trading on prediction markets due to concerns over insider trading and sensitive event contracts. This move follows recent insider trading cases involving political candidates and military personnel on platforms like Kalshi and Polymarket.
Earnings Spotlight
Planning Points
Introducing 530A (Trump) Accounts for Kids
Trump Accounts are a new type of custodial traditional IRA designed specifically for children under 18 with Social Security numbers. Families can begin the account opening process now, with contributions available starting July 2026.
- These accounts allow parents, guardians, or close relatives to contribute up to $5,000 annually from combined sources, including individuals, employers, and charities, without requiring the child to have earned income.
- A one-time $1,000 government seed contribution is planned for eligible U.S. citizen children born between 2025 and 2028.
- Investments are limited to low-cost index mutual funds or ETFs with at least 90% U.S. equity exposure and capped expenses.
- Withdrawals are generally prohibited before age 18; after that, Trump Accounts follow most traditional IRA rules but remain separate for tax calculations.
- Contributions from different sources have distinct tax treatments; accurate recordkeeping is essential for managing future distributions.
- Trump Accounts are intended to complement existing savings vehicles such as 529 plans, custodial Roth IRAs, and UGMA/UTMA accounts, providing an additional tax-advantaged way to prepare children for long-term financial security.
Trump Accounts offer a new tax-advantaged way to invest in your child’s financial future starting. Reach out to us to explore whether this new option makes sense for your family.
Summary
Over the next two weeks, markets will focus on key economic data releases including inflation readings, retail sales, consumer sentiment, and broader labor market data, all of which will help shape expectations for future Fed policy. Geopolitically, attention will remain on U.S. trade negotiations and tensions with Iran, as risks of disruption in the Strait of Hormuz could continue to drive oil price volatility.
Footnotes
- Wall Street ends higher, S&P 500, Nasdaq notch biggest monthly gains in years (Investing.com)
- Core inflation rate hit 3.2% in March, as expected; GDP grew 2% in first quarter (CNBC)
- Big Tech Earningspalooza: Microsoft, Meta, Amazon and Alphabet Results Are Here (Investopedia)
- Fed holds rates steady but with highest level of dissent since 1992 (CNBC)
- U.S. crude oil exports surge to record as tankers flock to Gulf Coast during Iran war (CNBC)
- Jerome Powell’s Fed years were an everything rally: Chart of the Day (Yahoo Finance)
- AI boom: Big Tech capital expenditures now seen topping $1 trillion in 2027 (CNBC)
- Network shakeups hit Medicare Advantage, forcing retirees to pay up or find new care (Yahoo Finance)
- U.S. senators ban themselves from prediction markets trading (CNBC)
Disclosures
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual
Securities offered through Kestra Investment Services, LLC, member FINRA/SIPC (Kestra IS). Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS). ClariVise Private Wealth, Bluespring Wealth Partners, LLC, Kestra IS and Kestra AS are affiliated through common ownership by Kestra Holdings. Investor Disclosures: https://www.kestrafinancial.com/disclosure
