Powell's Last Stand: Fed Holds, GDP Misses, Records Continue

U.S. equity markets posted their fourth consecutive weekly gain, defying a chorus of bearish data points, as investors digested Powell's final FOMC meeting as Chair, a soft Q1 GDP print, hot PCE inflation, and earnings from four members of the Magnificent Seven. The S&P 500 rose +1.02% for the week to close at 7,237.85, another fresh all-time high. The Nasdaq added +1.18% to 25,114.44 (also a new record), while the Dow Jones gained +0.72% after touching the 50,000 level intraweek. The Russell 2000 climbed +0.90% and now leads all indexes YTD at +12.20%.

Wednesday was the most consequential day of the year so far. The Fed held rates at 3.50% to 3.75% for the third consecutive meeting, but the vote came in at an unusually divided 8-4 split: the most dissents since October 1992. Chair Powell signaled this was likely his final meeting at the helm, though he confirmed plans to remain on the Board of Governors through January 2028. Kevin Warsh, Trump's nominee, advanced through the Senate Banking Committee on a party-line vote and is expected to assume the chairmanship by mid-May.

GDP Misses, PCE Spikes

Thursday brought the most challenging data day in months. Q1 GDP grew at an annualized 2.0% versus consensus of 2.3%, and the second straight quarterly miss. While that was a sharp acceleration from Q4 2025's revised 0.5%, growth came largely from a government-spending bounce-back rather than organic strength. The Fed's preferred inflation gauge, PCE, jumped to 3.5% year-over-year (up from 2.8% in February), with core PCE accelerating to 3.2%. The combination of slowing growth and reaccelerating inflation prompted renewed stagflation chatter from analysts, though Powell deflected the term in his press conference.

Big Tech Earnings: Mostly Wins

Microsoft, Alphabet, Meta, and Amazon all reported Wednesday after the close. Microsoft and Alphabet beat handily on AI capex commentary and Cloud growth. Meta delivered solid ad-revenue numbers but disappointed on Reality Labs spending. Amazon's AWS growth slightly missed expectations, sending shares lower in extended trading. Apple reported Thursday after the close: revenue of $111.2B (vs. $109.7B expected), iPhone revenue hit a March-quarter record at $57B, with strong China growth. Shares rose more than 3% in extended trading. Friday brought a key positive: oil prices fell after reports that Iran sent a peace response through Pakistani mediators in response to the latest U.S. amendments to a draft agreement.

Jobs Friday, ISM Services, and the Warsh Era Begins

With the FOMC, Q1 GDP, March PCE, and four members of the Magnificent Seven now in the rearview mirror, focus turns to the labor market and the Fed leadership transition. Friday May 8 brings the April employment report: economists expect roughly +150K nonfarm payrolls against a backdrop of slowing job creation. With Q1 GDP at 2.0% and PCE accelerating to 3.5%, a soft jobs print could pull rate-cut expectations forward, while a hot number would push them out further.

Mon May 4: Factory Orders & Earnings Continue

March factory orders release at 10:00 AM ET. Palantir reports Q1 earnings after the close: a key bellwether for AI software demand following the IBM/ServiceNow disappointments.

Tue May 5: ISM Services PMI & Strategy Earnings

ISM Services PMI for April at 10:00 AM ET will provide the first comprehensive read on services sector health post-FOMC. Strategy (MSTR) reports Q1 results: with approximately 713,500 BTC under fair-value accounting, every dollar of bitcoin price flows directly through to earnings.

Wed May 6: ADP Employment, Trade Balance

ADP private payrolls at 8:15 AM ET serves as the unofficial preview to Friday's jobs report. The U.S. trade balance for March releases concurrently. Disney reports earnings after the close.

Fri May 8: Jobs Day & Warsh Confirmation Possible

The April employment report at 8:30 AM ET is the week's pivotal release. Powell's term as Chair ends May 15, so the full Senate vote on Kevin Warsh could come this week. The transition itself is symbolic, but Warsh's tone in any post-confirmation public remarks would meaningfully shift market expectations.

Watch oil prices as the leading indicator for everything else: WTI at $102.17 with Brent above $106 keeps inflation pressure elevated. The S&P 500 at 7,230.12 defends a fresh all-time high. A meaningfully soft jobs print or a credible breakthrough in the Iran peace negotiations could push the index toward 7,350. A hot jobs number combined with a hawkish Warsh debut could trigger the first material correction since the war began.