Weekly Recap: One Big Trade? 📊

Markets were characterized by a “melt-up” mentality for most of the week, with the S&P 500 and Nasdaq pushing higher until Thursday. However, Friday’s OpEx (Options Expiration) session brought a wave of weakness, causing major indices to give back their weekly gains and finish essentially flat.

The prevailing narrative continues to be the massive divergence between Technology/AI and the rest of the market. As Goldman Sachs recently noted, technology accounts for 85% of the S&P 500’s year-to-date return. Excluding tech, the index is up a mere 3%. We aren’t in a “market of stocks” right now; we are in “one big trade.”

Asset Performance: WTI Leads the Charge 🛢️

While equities stalled, the energy complex caught a massive bid. WTI Crude surged +10.5% on the week, a move that is beginning to stoke fresh inflation fears as we head into the U.S. driving season.

• Equities: S&P 500 and Nasdaq were flat.
• Currencies: The U.S. Dollar (DXY) remains remarkably strong, gaining +1.4% WTD.
• Crypto: A rough week for digital assets, with Bitcoin (BTC) down -1.3% and Ethereum (ETH) sliding -3.8%.

  

   

The Yield Monster Returns 📈

Fixed income saw a significant shakeup this week. The U.S. 10-year yield surged to 4.59%, a jump of 24 bps on the week. This move wasn’t isolated to the states—yields rose globally across the UK, Germany, and Japan.

Watch this space: Future bond auctions will be critical to see if the market can digest this supply at these higher rates.

Macro & Fed Expectations: A Hawkish Tilt 🦅

Recent data has not been “Fed-friendly.” Retail Sales came in stronger than expected, and both CPI and PPI prints were hotter than the market anticipated.

This sticky inflation is shifting the goalposts. Market expectations have now priced in a 25bps rate hike for March 2027. The “higher for longer” mantra is slowly evolving into “higher for even longer.”

Sector & Factor Breakdown 🔍

The performance gap between sectors remains cavernous:

• Winners: Energy (+6.7% WTD) and Health Care (+1.1%) were the rare bright spots.
• Losers: Consumer Discretionary (-3.1%) and Real Estate (-2.7%) were hit hardest by rising rates.
• Factors: AI Datacenter Electrification and Semiconductors remain the YTD leaders, though very few “factors” managed to stay green this week.

  

   

   

Technical Outlook: Rejection at the Top? 📉

• S&P 500: We are seeing a notable rejection candle on the charts. After a multi-month rally, the inability to hold Thursday’s highs is a signal to monitor closely.

  

   

• VIX: Volatility is creeping back up, currently sitting at 18.43%.
• VWAP: The weekly Volume Weighted Average Price for the ES1 (S&P 500 Futures) was 7447.1. We closed the week below that level, down -0.20% from the 5-day anchor.

The Week Ahead: The “Nvidia” Show 📺

The upcoming week is packed with catalysts, but one stands above the rest: Nvidia (NVDA) earnings on Wednesday.

Economic Catalysts:

• May 19: Pending Home Sales
• May 20: FOMC Meeting Minutes (Crucial for rate path clarity)
• May 21: Flash PMIs
• May 22: Univ. of Michigan Sentiment

Earnings to Watch: The retail sector is in focus with Target, Lowe’s, and TJX, but all eyes are on NVDA. The implied move for Nvidia this earnings cycle is 5.8%, slightly higher than its recent historical realized volatility of 4.7%.

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