General Market News

The U.S. economy grew at a 2% annualized rate in the first quarter of 2025, rebounding from sluggish fourth-quarter growth of 0.5%, according to the Bureau of Economic Analysis. The growth was primarily driven by AI-related investment in equipment and data centers, consumer spending on healthcare services, and increased government spending following the resolution of a federal shutdown. The figure fell slightly short of the 2.3% forecast by economists.

• AI buildout was a major growth driver, with investment concentrated in computers, related equipment, and intellectual property like software, while residential and nonresidential structures declined
• Consumer spending rose mainly in healthcare services (hospital, nursing home, and outpatient care), with real final sales to private purchasers increasing 2.5% compared to 1.8% in Q4
• Economists warn that while AI investment may boost long-term productivity, it could add near-term inflationary pressures, and growth remains unevenly distributed across 'affluent consumers, AI-investment and exports'

Federal Reserve Chair Jerome Powell will remain as a Fed governor after his term expires in May, creating an unprecedented situation where he will serve alongside incoming Chair Kevin Warsh at the June FOMC meeting. This marks the first time in nearly 80 years that a sitting and former Fed chair will conduct business together, raising potential for policy tensions as Warsh has publicly called for rate cuts while current economic conditions show elevated inflation at 3.2%.

• Three regional Fed presidents dissented at the last meeting, potentially signaling resistance to premature rate cuts that Warsh has advocated for
• Core inflation remains at 3.2% in March, well above the Fed's 2% target, while jobless claims hit their lowest level since 1969, providing little justification for policy easing
• Powell pledged to 'keep a low profile' and not act as a 'shadow chair,' though analysts note the situation stems from broader concerns about central bank independence

President Donald Trump announced he will remove tariffs and restrictions on whiskey and bourbon trade cooperation between Scotland and Kentucky. The move reverses barriers that had limited inter-country trade, particularly involving wooden barrels used in whiskey production. This comes after the U.S. and UK signed a 2025 deal allowing a 10% baseline tariff on most British goods.

• Trump cited long-standing demand to restore 'great Inter-Country Trade' particularly related to wooden barrels used in whiskey production
• The U.S. and UK previously signed a 2025 trade deal that permits Washington to impose a 10% baseline tariff on most British imports
• The announcement specifically targets removing barriers to Scotland-Kentucky collaboration on whiskey and bourbon production

Tech investor Jack Selby warns that markets are underpricing the risk of Middle East sovereign wealth funds pulling back from AI investments due to ongoing conflicts. Middle East investors account for roughly 25% of global AI investments committed over the next five years, and their potential withdrawal could significantly impact data centers and tech companies. Selby also cautions that the eventual AI bubble burst could result in losses orders of magnitude larger than the dot-com crash.

• Middle East funds represent approximately a quarter of global AI investments for the next five years, with half dedicated to regional data centers and half to worldwide projects and infrastructure
• If UAE, Saudi Arabia and other Middle Eastern countries divert capital to domestic rebuilding amid prolonged conflict, the lost funding could severely impact data center projects and both public and private tech companies
• Selby predicts the AI bubble bust will be 'at least one more zero, probably two and three more zeros' larger than the dot-com crash, representing tens or hundreds of billions in losses due to current overinvestment

The U.S. biodiesel industry faces significant challenges meeting the EPA's record-high biofuel blending mandates requiring a 60% production increase in 2026. The EPA set targets of 5.4 billion gallons for 2026 and 5.7 billion for 2027, up from 3.35 billion in 2025, but industry experts and the EIA forecast potential supply deficits that could raise diesel prices and deplete compliance credit reserves.

• Monthly credit generation reached only 651 million in March versus the 915 million needed, with experts warning of 'big deficits' building into 2027
• The EIA forecasts combined 2026 supply of 5.05 billion gallons (1.52 billion biodiesel + 3.53 billion renewable diesel), falling short of the 5.4 billion gallon requirement
• Despite 6.85 billion gallons of total operable capacity, actual 2025 production was only 2.9 billion gallons, with industry citing feedstock supply constraints, tariff-driven construction costs, and uncertainty over the 45Z clean fuel credit program as barriers to expansion

Billionaire hedge fund manager Bill Ackman blamed retail investors for a sharp drop in his newly listed closed-end fund's stock price following its Wall Street debut on Wednesday. Ackman said he and his employees invested hundreds of millions of dollars in the new vehicle and expects the price to recover.

• Ackman attributes the fund's weak debut performance to retail trader activity rather than institutional investor behavior
• Ackman and his employees committed hundreds of millions in capital to the new closed-end fund vehicle
• Institutional investors in the fund include hedge fund manager Marc Lasry and Meta CEO Mark Zuckerberg's family office

The U.S. Senate unanimously passed a rule immediately banning senators from trading on prediction markets. The decision addresses growing concerns about potential insider trading on platforms like Kalshi and Polymarket, as well as ethical issues surrounding event contracts involving death or violence.

• The ban took effect immediately following the unanimous Senate vote on Thursday
• The rule targets prediction market platforms such as Kalshi and Polymarket amid insider trading concerns
• The move also addresses ethical concerns about event contracts that can involve death or violence

The first full week of May 2026 will feature significant employment data releases, including the ADP employment report on Wednesday and the U.S. employment report on Friday. Multiple Federal Reserve officials, including John Williams, Austan Goolsbee, Mary Daly, Michelle Bowman, and Christopher Waller, are scheduled to speak throughout the week. A busy earnings season continues with reports from major companies including McDonald's, Pfizer, PayPal, Uber, and Palantir Technologies.

• Key economic data includes the ADP employment report (Wednesday), weekly jobless claims (Thursday), and the full U.S. employment report with hourly wages data (Friday)
• Additional economic indicators scheduled: U.S. trade balance, ISM services PMI, job openings, new home sales, construction spending, and consumer credit data
• Multiple Fed officials will provide market commentary, culminating in a panel discussion Friday featuring four Fed representatives including governors Bowman and Waller

US inflation accelerated sharply in March 2025, with the Fed's preferred PCE price index rising 0.7% monthly and 3.5% annually—the highest since May 2023—driven primarily by a 24.1% surge in gasoline prices amid the Iran war. The data reinforces expectations that the Federal Reserve will maintain elevated interest rates well into next year, as the central bank held rates at 3.50%-3.75% citing conflict-related inflation concerns.

• The PCE index jumped 0.7% in March, the largest monthly gain since June 2022, pushing the annual rate to 3.5% from 2.8% in February, well above the Fed's 2% target
• Gasoline prices surged 24.1% in March due to the Iran war, reaching nearly four-year highs this week and driving the inflation spike
• Core PCE inflation (excluding food and energy) held steady at 3.2% annually, while inflation-adjusted consumer spending rose only 0.2%, signaling slower economic growth ahead in Q2

The US economy grew at a 2% annual rate in Q1 2026, rebounding from a 0.5% expansion in Q4 2025 that was hampered by a 43-day federal government shutdown. However, consumer spending slowed to 1.6% growth and the outlook remains uncertain due to the Iran conflict, which has blocked the Strait of Hormuz and driven up energy prices.

• Federal government spending surged 9.3% annually in Q1, adding over half a percentage point to growth after subtracting 1.16 points in Q4 2025 during the shutdown
• Consumer spending, representing 70% of economic activity, decelerated to 1.6% growth from 1.9% in the prior quarter, with spending on goods falling slightly
• Business investment rose 8.7% driven by AI spending, while residential investment fell 8% for the fifth consecutive quarter; imports surged 21.4%, subtracting 2.6 percentage points from GDP growth

The U.S. Consumer Financial Protection Bureau finalized regulations to replace a Biden-era rule that required banks to collect demographic data on small business loan applicants. The Trump administration had delayed the 2023 regulation's implementation following bank industry complaints that it was burdensome and could reduce small business lending. The new rule represents a rollback of the previous data collection requirements.

• Bank lobby groups had argued the original 2023 rule was invasive and could reduce the volume of small business loans offered
• The Trump administration repeatedly pushed back the regulation's effective date, citing ongoing court challenges
• The finalized replacement rule scales back demographic data collection requirements for small business lending

Major US equity indices declined in Q1 2026 despite resilient economic data, as markets grappled with geopolitical volatility including a new war with Iran and potential Strait of Hormuz closure. The Supreme Court struck down Trump's emergency tariff powers, leading to a new 10% global tariff, while the Federal Reserve held rates steady amid political pressure on Chair Powell.

• S&P 500 companies delivered 14.0% year-over-year earnings growth in Q4, marking the fifth consecutive quarter of double-digit growth and exceeding the 8.3% expected at quarter start
• Geopolitical tensions escalated significantly with the start of war with Iran in late February, US capture of Venezuelan President Maduro, and strained NATO relations over Greenland purchase attempts
• Silver experienced extreme volatility with a 31.4% single-day decline on January 30, while the Supreme Court's 6-3 ruling against emergency tariff powers prompted a new 10% 'global tariff' policy

The CBOE Volatility Index (VIX) whipsawed between 17.32 and 18.73 as investors processed mixed signals from mega-cap tech earnings, massive AI spending increases, and Federal Reserve dissent. Four major hyperscalers collectively raised 2026 AI capital expenditure guidance from $670 billion to $725 billion, while the Fed held rates at 3.5-3.75% with an 8-4 vote split, the widest dissent since 1992.

• Meta fell 9% after raising 2026 capex to $125-$145 billion, while Alphabet rallied 6% on earnings that beat expectations with $5.11 EPS versus $2.63 expected and 63% Cloud growth
• Combined hyperscaler spending (Microsoft at $190B, Amazon at $200B, Meta at $125-$145B, Alphabet at $180-$190B) jumped $55 billion higher than pre-earnings estimates
• Market rotation accelerated away from AI-heavy mega-caps into cyclicals and small caps, with Dow proxy DIA up 1% and QQQ down 0.5% amid sticky inflation and WTI crude at $99.89

Major central banks including the Federal Reserve, European Central Bank, and Bank of England held interest rates steady this week but signaled potential rate hikes ahead due to inflation concerns stemming from rising energy prices linked to the U.S.-Israeli conflict with Iran. The Fed maintained an 'easing bias' despite three dissenters, while markets now expect rate increases from the ECB and BoE later this year.

• The Fed kept rates unchanged in an 8-4 vote, with three policymakers opposing the 'easing bias' language, suggesting the dovish stance may be removed as soon as June
• Australia's RBA leads G10 central banks with a 4.1% policy rate after two hikes this year, and markets see an 80% chance of another increase next week as inflation remains at 4.1%
• The ECB and BoE both held rates but signaled growing inflation concerns, with the ECB expected to hike as soon as June and markets pricing multiple increases across developed economies this year

The Federal Communications Commission voted on April 30 to advance a proposal banning all Chinese labs from testing electronic devices like smartphones, cameras, and computers for use in the United States. The FCC also took an initial vote on a separate proposal to bar three major Chinese telecom companies from operating data centers in the U.S. and potentially ban telecom carriers from connecting with those Chinese carriers.

• The ban on Chinese testing labs would affect certification of electronic devices including smartphones, cameras, and computers intended for the U.S. market
• A second proposal targets three major Chinese telecom companies, seeking to bar their U.S. data center operations and restrict American carriers from connecting with them
• The measures represent an expansion of the U.S. government's technology crackdown on China amid ongoing national security concerns

European Central Bank President Christine Lagarde rejected comparisons between the current euro zone economy and 1970s stagflation, despite rising inflation and slowing growth. She emphasized fundamental differences in monetary frameworks, unemployment levels, and inflation patterns between the two periods. The ECB acknowledged intensified risks but maintains growth projections of 0.9% for 2026.

• Lagarde cited key differences from the 1970s: different monetary and fiscal frameworks, lower unemployment today, and non-persistent inflation patterns
• The ECB projects euro zone growth of 0.9% in 2026, 1.3% in 2027, and 1.4% in 2028 under baseline scenario
• An adverse scenario based on oil prices near $120 per barrel would reduce 2026 growth to 0.6%, though Lagarde maintains the economy is not in stagnation or recession

Chicago grain futures reversed earlier gains on Thursday, tracking a retreat in crude oil prices after they hit a four-year high above $126 per barrel. Soybeans, corn, and wheat all declined 0.6-1.5% as oil prices fell, impacting grains tied to biofuel production. The moves come as commodity funds have been net sellers of corn, wheat, and soymeal.

• Soybeans fell 0.6% to $11.90/bushel, corn dropped 0.7% to $4.74/bushel, and wheat declined 1.5% to $6.53/bushel, with all commodities still near multi-year highs despite the pullback
• Oil price strength had buoyed grain prices due to biofuel linkages, as soybeans and corn serve as feedstocks for biofuel production
• Indonesia will tighten import regulations starting May 8, requiring government approval for feed wheat shipments, which analysts say could reduce demand and ease upward price pressure

The Dow Jones Industrial Average rose 314 points (0.64%) on Thursday as strong corporate earnings from companies like Alphabet, Amazon, and Caterpillar offset concerns about elevated oil prices and persistent inflation. The gains were partially capped by sharp declines in Meta (down 9.8%) and Microsoft (down 3%) following disappointing earnings reports.

• Major indices showed mixed performance: Dow up 0.64%, S&P 500 up 0.22%, Nasdaq 100 up 0.06%, with strong earnings from Alphabet (cloud strength), Amazon, and Caterpillar (up 7.4%) supporting sentiment.
• Oil prices eased but remained elevated with Brent crude above $110/barrel and WTI above $104/barrel amid US-Iran tensions and potential military action briefings to President Trump.
• The Federal Reserve held rates steady at 3.5%-3.75% citing persistent inflation, while markets positioned for strong monthly closes with S&P 500 up 9.3% and Nasdaq up 14.3% for April.

Stock futures rose Thursday morning as investors assessed earnings reports from major tech companies including Alphabet, Amazon, Meta, and Microsoft, all of which beat Wall Street expectations. The major indexes are poised to close April with their biggest monthly gains since 2020, with the Nasdaq up 14% and S&P 500 up 9% for the month. Investors are also awaiting key inflation data and GDP figures, along with Apple's earnings report due after the closing bell.

• All four tech giants (Amazon, Microsoft, Meta, Alphabet) beat revenue and profit estimates, though stock reactions varied based on AI spending plans and executive commentary
• West Texas Intermediate crude oil futures fell roughly 2% to around $105 per barrel, while gold rose nearly 2% to $4,645 an ounce and the 10-year Treasury yield slipped to 4.39%
• March PCE inflation data and first-quarter GDP are scheduled for 8:30 a.m. ET, with expectations of 0.7% monthly price increase and 2.2% quarterly GDP growth

The Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures (PCE) index, remained elevated in March 2026, rising 3.5% year-over-year and 0.7% monthly. Core PCE, which excludes food and energy, increased 3.2% annually and 0.3% monthly, meeting economist expectations but signaling persistent inflation pressures for consumers and Fed policy.

• PCE index rose 0.7% monthly and 3.5% annually in March, both in line with LSEG economist forecasts
• Core PCE increased 0.3% monthly and 3.2% year-over-year, matching expectations and indicating stubborn underlying inflation
• Elevated inflation measures suggest continued price pressures facing consumers and potential implications for Federal Reserve monetary policy decisions