Author: Zac Martin, Senior Investment Analyst
Week Ending May 1st – Derby Pie
Muted first half of the week, with 4/7 Mags reporting Wednesday night. Thursday the S&P 500 climbed ~1% while the equal weight S&P 500 climbed ~1.5%, the rally seemed to be fueled by Mag 7 spending rather than Mag 7 earnings. For example, these companies reported record sales and profits, however, they guided an increase to their expected capital expenditures for 2026. The five largest hyperscalers are now expected to spend ~$700Bln in capital expenditures in 2026. This is roughly 2.4% of US GDP, and the market has begun to price in its downstream impacts. Industrials climbed ~2.75% due to this news as well as CAT earnings highlighting increased demand due to Datacenter buildout. Semiconductors also continued their climb due to being direct benefactors to AI CapEx, climbing ~1.4% on Thursday. Additionally, more economically sensitive companies, i.e. Small Caps, rallied ~2.1%. Finally, as a group, the Mag 7 closed in the red on Thursday, down ~0.5%, as investors continue to question the return that AI will bring to this magnitude of investment.
US Economic Growth: US Q1 2026 Real GDP increased at an annual rate of 2.0%, according to the Advanced Estimate. Personal Consumption sequentially decelerated to 1.6%, however, Private Domestic Investment continued its growth trend, accelerating to 8.7%, with equipment leading that growth. AI related investment continues to serve as a tailwind for the economy, as mentioned above, the downstream effects the hyperscaler’s capital spend are beginning to surface.
The Week Ahead:
- JOLTS Report for March (5/5)
- ADP Employment Survey (5/6)
- Nonfarm Payrolls & Unemployment Rate (5/8)
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