Jobs day, semiconductor earnings, and stock market momentum: What to watch this week

Investors enter the week coming off a solid start to May on Friday and earnings reports last week from five of the seven “Magnificent 7” companies.

And there’s plenty to look forward to in a busy week of labor market data and another slew of major first quarter results.

The S&P 500 (^GSPC) closed Friday up 0.3% for a gain of just under 1% for the week, while the tech-heavy Nasdaq (^IXIC) finished Friday up 0.9% for a 1.1% return over the five-day stretch. Both indexes closed at new record highs on Friday.

The Dow Jones Industrial Average (^DJI) fell 0.3% on Friday but still managed to gain 0.5% on the week.

Calendar highlights

Another packed week awaits investors, with a deluge of key earnings reports and labor market data set to cross the tape over the next five days.

On the economic data calendar, all eyes will be on Friday’s April jobs report, where economists are once again predicting a fairly muted 60,000 jobs added after several months of whipsawing extremes — including March’s 178,000 jobs added previously.

In addition, we’ll get readings on business conditions from the Institute for Supply Management on Tuesday, more labor data from ADP and Challenger, Gray & Christmas, and a vibe check on market sentiment from the University of Michigan on Friday.

On the earnings calendar, results from major semiconductor manufacturers Lattice Semiconductor Corporation (LSCC) on Monday, Advanced Micro Devices (AMD) on Tuesday, and Arm Holdings (ARM) on Wednesday will give investors another read on the state of the AI trade. Also in focus will be earnings reports from Alex Karp’s Palantir (PLTR), media company Paramount Skydance (PSKY), Danish pharmaceutical giant Novo Nordisk (NVO), and a basket of other major names.

Earnings growth shows the economy is poised to ‘thrive’ — not ‘survive’

The US may be at war, but you won’t find many signs in the US equity market.

The S&P 500 and tech-exposed Nasdaq hit multiple record highs in the past week.

Microsoft (MSFT), Amazon (AMZN), Meta Platforms (META), and Alphabet (GOOG, GOOGL) raised their AI spending plans from $670 billion to nearly $725 billion. Earnings outside of tech have been equally strong.

“US earnings season reveals corporates continue to print massive profits,” Capital.com analyst Kyle Rodda wrote in emailed commentary.

“The markets continue to price-in a peaceful outcome to the war in the Middle East, a US Federal Reserve that will largely ‘look through’ the energy crisis rather than hiking rates in response to it, and earnings growth that will not only survive the energy shock but thrive in spite of it,” Rodda said.

Not only have earnings reports out so far largely exceeded expectations, LPL Financial chief technical strategist Adam Turnquist noted, but corporate commentary has also been by and large more constructive than perhaps anticipated, even in the face of softer survey-based economic data.

Yes, the tech sector continues to provide much of the firepower in the equities space.

But the other 491 stocks in the S&P 500 — excluding the “Magnificent Seven,” plus Broadcom (AVGO) and Micron (MU) — should be on track to deliver solid results and growth as well, UBS head of US equities David Lefkowitz noted.

“The macro drivers of the bull market remain in place,” Lefkowitz said.

Semiconductor stocks on deck for Q1 earnings

In a banner week for Big Tech stocks, solid earnings reports from five of the Magnificent 7 companies further bolstered investor confidence in the AI trade, especially as spending by the world’s biggest companies is projected to keep soaring.

This week, investors will get a look at another piece of the pie: the semiconductors underpinning the AI boom. Lattice Semiconductor Corporation will kick things off with first quarter results on Monday, followed by reports from Advanced Micro Devices on Tuesday and Arm Holdings on Wednesday.

If the Magnificent 7 companies provide the buyer’s perspective, semiconductor designs are a bellwether for the supply side of the AI build-out. The sector has been a bright spot for the equity market even as other pockets have taken a hit from the effects of the war in Iran.

The PHLX Semiconductor Index (^SOX) surged more than 40% and had its best month since February 2000 in April — extending the record-setting semiconductor run that has been driving the AI trade. AMD is up 70% over the past month heading into earnings. Lattice is up 25%, and Arm is up 40%

The sector’s lofty performance has put it at risk for a potential pullback, noted Steve Sosnick, chief strategist at Interactive Brokers. But that said, he added, “If key components of SOX can continue to deliver positive surprises … it becomes much more difficult to bet against.”

‘Growing the labor pie with AI’

Perhaps the biggest question around AI is just how large an effect it will have on the US labor market. Depending on who you ask, AI might push vast swaths of the white-collar worker population into obsolescence, or there might be nothing to worry about.

Investors will get a few more data pieces to help answer that question this week, with Friday’s jobs report set to headline the week.

If the pattern of alternating adds and losses to the job market over the past 10 months were to hold, Friday’s numbers — expected to show 60,000 jobs added — would actually show a loss of jobs on the month in what has become a dizzying pattern for investors to make sense of. That said, economists argue that the data is pointing in the right direction for a solid print on Friday.

Weekly and daily data from ADP show “hints of acceleration,” initial jobless claims touched their lowest level since 1969 on Thursday, and “sluggish hiring” in more AI-exposed sectors hasn’t translated into widespread job losses, according to BNP Paribas senior US economist Andrew Husby — a sign of what he calls “growing the labor pie with AI.”

“We suspect positive labor-market outcomes are underappreciated, even while acknowledging a high degree of uncertainty amid still-evolving geopolitical risks,” Husby wrote.

Before Friday’s jobs report, investors will also get JOLTS job openings, quits, and layoffs data on Tuesday; ADP private employment figures on Wednesday; and a read on job cuts from the outplacement firm Challenger, Gray & Christmas on Thursday in a packed week for labor market data.

“The economy is not a zero-sum game where AI tools replace a fixed supply of workers and the tasks they perform,” Husby said.

“Instead, forward-looking expectations of stronger economic opportunities and performance generate more demand in the present, wealth effects boost spending and investment picks up, which cycles back into more demand for labor,” he said.

Economic and earnings calendar

Monday

Economic data: Factory orders, March (+0.3% expected, +0% previously); Durable goods orders, March final reading (+0.8% previously)

Earnings calendar: Palantir (PLTR), Vertex Pharmaceuticals (VRTX), The Williams Companies (WMB), Diamondback Energy (FANG), ON Semiconductor (ON), Coterra Energy (CTRA), Loews (L), Tyson Foods (TSN), BWX Technologies (BWXT), RB Global (RBA), Lattice Semiconductor (LSCC), Paramount Skydance (PSKY), Pinterest (PINS), Firefly Aerospace (FLY)

Tuesday

Economic data: Trade balance, March (-$59.7 billion expected, -$57.3 billion previously); Imports, month-on-month, March (+4.3% previously); Exports, month-on-month, March (+4.2% previously); S&P Global US Services PMI, April final reading (51.3 previously); S&P Global US Composite PMI, April final reading (52 previously); ISM services index, April (53.7 expected, 54 previously); ISM services, prices paid, April (73 expected, 70.7 previously); ISM services, new orders, April (58 expected, 60.6 previously); ISM services, employment, April (50 expected, 45.2 previously); JOLTS job openings, March (6.7 million expected, 6.9 million previously); JOLTS quits level, March (2.9 million previously); JOLTS layoffs level, March (1.7 million previously)

Earnings calendar: Advanced Micro Devices (AMD), HSBC (HSBC), Arista Networks (ANET), Eaton Corporation (ETN), Shopify (SHOP), Pfizer (PFE), Anheuser-Busch (BUD), Duke Energy (DUK), KKR & Co. (KKR), Cummins (CMI), Suncor Energy (SU), Emerson Electric (EMR), EOG Resources (EOG), American Electric Power Company (AEP), Marathon Petroleum Corporation (MPC), Energy Transfer, (ET) Ferrari (RACE), Occidental Petroleum (OXY), Strategy (MSTR), Electronic Arts (EA), Ambev (ABEV), PayPal (PYPL), Live Nation Entertainment (LYV), Prudential (PRU)

Wednesday

Economic data: MBA mortgage applications, week ended May 1 (-1.6% previously); ADP employment change, April (+62,000 previously)

Earnings calendar: Arm Holdings (ARM), Novo Nordisk (NVO), Walt Disney (DIS), Uber Technologies (UBER), AppLovin (APP), CVS Health (CVS), Equinor (EQNR), Marriott International, (MAR) Apollo Global Management (APO), DoorDash (DASH), Warner Bros. Discovery (WBD), Cenovus Energy (CVE), MetLife (MET), Exelon (EXC), Nebius Group N.V., (NBIS) NRG Energy (NRG), Axon Enterprise (AXON), Atmos Energy (ATO), Restaurant Brands (QSR), Kraft Heinz (KHC), Albemarle (ALB), NiSource (NI), Global Payments (GPN), Royal Gold (RGLD), Flutter Entertainment (FLUT)

Thursday

Economic data: Challenger job cuts, year-on-year, April (-78% previously); Initial jobless claims, week ended May 2 (189,000 previously); Continuing claims, week ended April 25 (1.78 million previously); New York Fed 1-year inflation expectations, April (+3.42% previously)

Earnings calendar: Shell (SHEL), McDonald’s (MCD), Gilead Sciences (GILD), McKesson Corporation (MCK), Howmet Aerospace (HWM), Airbnb (ABNB), Monster Beverage Corporation (MNST), Motorola Solutions (MSI), Cloudflare (NET), Sempra (SRE), CoreWeave (CRWV), Cheniere Energy (LNG), Wheaton Precious Metals (WPM), Targa Resources (TRGP), Vistra Corp. (VST), Coinbase Global (COIN), Rocket Lab Corporation (RKLB), Datadog (DDOG), Block (XYZ), Rocket Companies (RKT), Consolidated Edison (ED), EchoStar (SATS), Kenvue (KVUE), Expedia (EXPE), Formula One Group (FWONA, FWONK)

Friday

Economic data: Change in nonfarm payrolls, April (+60,000 expected, +178,000 previously); Change in private payrolls, April (+80,000 expected, +186,000 previously); Change in manufacturing payrolls, April (+15,000 previously); Unemployment rate, April (4.3% expected, 4.3% previously); Average hourly earnings, month-on-month, April (+0.3% expected, +0.2% previously); Average hourly earnings, year-on-year, April (+3.8% expected, +3.5% previously); U. Mich. sentiment, May preliminary reading (48.8 expected, 49.8 previously); U. Mich. current conditions, May preliminary reading (52.5 previously); U. Mich. expectations, May preliminary reading (48.1 previously); U. Mich. 1-year inflation, May preliminary reading (+4.7% previously); U. Mich. 5-10 year inflation, May preliminary reading (+3.5% previously)

Earnings calendar: Toyota Motor (TM), Enbridge (ENB), Sony Group (SONY), Ubiquiti (UI), AngloGold Ashanti (AU), PPL Corporation (PPL), Fidelity National Information Services (FIS), TELUS Corporation (TU), Plains All American Pipeline, L.P. (PAA), TeraWulf (WULF), Oshkosh Corporation (OSK), Fluor Corporation (FLR), Trump Media & Technology Group (DJT), Wendy’s (WEN)

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