The Market Brief
U.S. equity futures edged near flat Friday morning, pausing after a rally driven by strong megacap tech earnings pushed Wall Street indexes to record highs.
Impact Snapshot
🟥 ISM Manufacturing PMI - 10:00am
Macro Viewpoint
Major U.S. stock indexes held near record highs Friday, completing a sharp rebound from the geopolitical anxiety that gripped markets following the outbreak of conflict in the Middle East.
Investors will look to a fresh batch of earnings reports and new employment data to sustain the U.S. equity rally next week, even as rising oil prices and a more hawkish Federal Reserve continue to weigh on sentiment.
A broadly strong corporate earnings season has been the primary driver of that resilience, giving bulls enough cover to push through competing headwinds.
Prime Intelligence
After the V-shaped recovery from the March lows, driven by systematic re-risking and short covering as hedge funds were forced to chase the market higher, equities needed a new catalyst to sustain the advance. Earnings and buybacks filled that role, with tech leading the push.
The punchline: Ten stocks drove roughly 72% of the S&P 500’s 12% rally since March 30th!
As we enter May, the historical record tells an interesting story, with NDX outperformance on full display.
Over the April-end to May-end window, the S&P 500 has historically delivered modest gains going back to 1928. The NDX, over the same calendar window since 1985, has historically seen meaningfully stronger performance.
May ranks as the 3rd best month for NDX and simultaneously one of the worst for SPX. We think this divergence can persist, supported by the continued focus on secular growth, a busy IPO calendar, and earnings season catalysts.
The Market Brief
In today’s brief we break down the systematic flows that quietly engineered the market’s V-shaped recovery, and what it means for what comes next.
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