May 4, 2026

The market just ended another incredible higher period overall, with both the S&P and Nasdaq ending higher than ever, at five straight weeks to the upside and best kevels since October 2024. It was the second-best April for the S&P since 2000.

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On the other hand, oil prices recently hit their highest level since the start of the war in Iran, bringing forth concerns about inflation and a global energy crisis.

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Yet it was the best month for the stock market of for the President’s second term. The S&P 500 ended April nearly 10 percent higher than where it ended March.

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The last time the index rose more than 10 percent in a month was November 2020, Biden was elected and early trials for Covid-19 vaccines showed promising results. On Friday, the S&P 500 rose a further 0.3 percent, notching a fifth straight week of gains for the first time in roughly 18 months. The index is 14 percent higher than its low at the end of March and more than 5 percent higher than when the war first began.

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It seems incongruous that the oil market can be sending such a dour signal while stocks reflect a strong sense of investor optimism.

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But in this unusual moment, bullish and bearish market signals can both be true.

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While the stock market reacts to day-to-day news, it is primarily concerned with how that news affects the longer-term outlook for company earnings. Stocks initially fell when the United States and Israel attacked Iran on February 28th, reflecting uncertainty about the war’s duration, its impact on energy supplies and the fallout for corporate America.

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Stocks began to rise again after the administration and Iran started to de-escalate at the end of March, moving toward a cease-fire on April 8. The standoff between the countries has not ended, a peace agreement has not been reached, but for stock investors, the expectation is that the disruption to oil markets and supply chains won’t last much longer.

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And the economic impact of the war, at least as far as the United States is concerned, has been manageable. Data on Thursday showed that the U.S. economy grew at an annual pace of 2 percent in the first three months of this year, boosted by spending on infrastructure by many of the big tech companies that have led the S&P stock index to repeated new highs.

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This week, GOOG, AMZN, MSFT and META, which collectively account for 20 percent of the S&P’s market value, said they had spent a combined $130 billion on data centers. The share prices of these members of the so-called Magnificent 7, a group of companies including AAPL, NVDA and TSLA, rose nearly 15 percent in April.

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Strong earnings in other industries have also buoyed the market. Roughly a third of the companies in the S&P have reported their financial results for the first quarter, and their average growth in earnings stands at roughly 15 percent, on course for a sixth straight double-digit quarterly rise.

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Oil prices are a much shorter-term measure of investor sentiment than stock indexes. The oil market is primarily traded using futures contracts, which are derivatives that fix the price today for delivery at a specified date in the future. The most frequently cited oil prices refer to the next month or two. That means that changes in the war that could extend or shorten its duration by a few weeks show up in the price of oil but not necessarily in the stock market. Oil traders are fixated on the price of a barrel of crude in July, for example, while pension fund managers are thinking about market returns many years in the future.

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This week, a deadlock over the future of Iran’s nuclear program appeared to threaten the fragile cease-fire with the United States, helping to push the price of Brent crude, the international oil benchmark, to a four-year high, of over $120 per barrel on Thursday.

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But investors appear to anticipate some sort of resolution the further out they look. Futures contracts for deliveries of Brent crude in December still trade below $90 a barrel.

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Over the past year, Chair Jerome H. Powell has frequently said that the Federal Reserve faced “no risk-free paths” as it confronted a series of economic shocks that simultaneously lifted inflation while denting growth.

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The same could be said for his momentous decision to stay on at the Fed as a governor after his term as Fed chair ends May 15th.

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In choosing to stay, Mr. Powell used the one tool of leverage he had left to push back on an administration that has aggressively attacked the central bank for its refusal to bend to the president’s demands for lower interest rates. Unless another Fed governor departs, the President will not have another vacancy to fill until Mr. Powell’s term ends in January 2028, interfering with the president’s plans to get more of his supporters on the powerful board of governors.

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The move, which Mr. Powell announced on Wednesday at his final news conference after eight years as chair, drew an immediate rebuke from the administration.

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On Thursday, the President seemed to soften his approach, saying that he did not care if Mr. Powell stayed on and only was concerned about getting Mr. Warsh into the top job.

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The question now is whether Mr. Powell’s continued presence will further inflame tensions between the administration and the central bank, leading to even more intense attacks that will keep the institution on the defensive.

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Mr. Powell made clear on Wednesday that he wanted nothing more than to leave the Fed. Yet he said he had “no choice” but to stay and guard against further encroachments on the institution where he has served for nearly 14 years, first as a governor and then as chair. The last time a chair whose term had expired stayed on as a governor was in 1948.

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“I’m literally staying because of the actions that have been taken,” Mr. Powell said when asked about whether his decision would be viewed as a political act. “I have long planned to be retiring.”

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He said he took Mr. Warsh at his word that he would stand up to political pressure from the president. Mr. Powell also vowed to keep a “low profile as a governor,” despite retaining a vote on decisions around rates and other policies.

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Mr. Powell spent much of his news conference explaining that his decision to stay rested on a belief that the central bank’s independence was fundamentally “at risk” amid a litany of legal threats that were far from over.

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“These legal actions by the administration are unprecedented in our 113-year history, and there are ongoing threats of additional such actions,” he said. “I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors.”

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Top of mind for Mr. Powell is a criminal investigation that the Justice Department began against the Fed regarding renovations to its headquarters in Washington and whether he lied to Congress about the plans. Federal prosecutors ended the inquiry on Friday, but maintained that they could reopen it at any point. Jeanine Pirro, the U.S. attorney for the District of Columbia, said on Thursday that there was “no question” the Justice Department would appeal a federal judge’s recent ruling that ended those issued to the central bank. For now, the Fed’s inspector general is looking into the renovation, an inquest that Mr. Powell requested in July.

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“You’ve got billions of dollars in cost overruns on a very small project,” she said, adding that prosecutors would await the “decision” by the Fed’s internal watchdog and “based upon that decision we will then decide what we are going to do.”

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Mr. Powell has long stipulated that he would not leave the Fed until the Justice Department’s investigation was “well and truly over, with finality and transparency.” But a mounting concern is whether Mr. Trump will now use the allegations leveled in the investigation to try to fire Mr. Powell, having already accused him of “incompetence” and questioned whether he committed fraud.

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A president can remove a Fed official only for cause, which legal experts interpret to mean gross misconduct or a dereliction of duty. The issue is being debated by the Supreme Court after the president’s attempt to fire Lisa D. Cook, a governor, in August.

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Getting back to the markets, shares of MU is already ahead by 600% in a year and ahead by 29% to $540 from just a few weeks ago. Before the rise, it had the lowest price-earnings ratio in the S&P at 5 and now it is at 5.8. Those earnings are projected to gain 10 times over the next few years.

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STX has gained more than 700% in a year as its cloud drives retain 80% of cloud storage and is gaining from a tremendous increase in flash memory prices.

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And how about old-timer INTC, up 360% in the past year and not one analyst has a position in it.

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Earnings this week continue with: today – PLTR; Tuesday – AMD, DUK, DD, PFE; Wednesday – CVS, MET, NYT and Dow component DIS; Thursday – AKAM, DDOG, GILD, MSTR and Dow component MCD.

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Economic reports will have: Tuesday – March JOLTS openings, March new home sales; Friday – the April non-farms payroll report which is supposed to show a gain of 50,000 versus 178,000 the prior month and the same unemployment rate of 4.3%; the May U. of Michigan Consumer Sentiment Survey which is projected to gain to 51 versus 49.8 the month before.