US equities closed mixed today with modest index moves, as investors positioned ahead of Friday’s US jobs report and weighed still‑elevated inflation pressures against resilient earnings and AI‑driven growth.
Macro backdrop
US investors are focused on the April nonfarm payrolls report due Friday, with consensus looking for a marked slowdown in job creation versus earlier in the year; a weaker print would revive hopes for Fed rate cuts, while a strong number would reinforce “higher for longer” policy. Recent data show core PCE inflation running around 3% year‑over‑year, keeping the Fed well above target and making any easing path contingent on clear disinflation and a cooling labor market. In North America, growth remains firm as business investment and consumer spending are still holding up despite higher rates, but central banks are increasingly sensitive to energy‑driven upside risks to inflation.
Earnings and micro themes
We are past the peak of Q1 reporting, but earnings revisions remain a positive macro offset, with S&P 500 profit growth tracking in the mid‑teens year‑over‑year and TSX earnings expected to exceed 20%. The upside has been concentrated in AI‑levered technology and infrastructure names, where capex and demand visibility remain strong, while rate‑sensitive financials and selected cyclicals continue to lag on margin pressure and higher funding costs. Investors are also looking ahead to the next wave of reports, including energy and mid‑cap names, with tomorrow’s focus including Enbridge and macro‑sensitive data such as US consumer sentiment.
Market moves and anomalies
Major US indexes sit near record levels after a powerful April rally that saw the Nasdaq gain over 15% and the S&P 500 more than 10%, the strongest monthly gains in several years; that backdrop makes today’s muted tape feel more like consolidation than trend change. Under the surface, leadership remains narrow: AI and communication‑services names have driven most of the YTD advance, while defensives like consumer staples and select industrials have quietly outperformed financials and healthcare, which are still negative for the year. The main anomaly remains the coexistence of rich equity valuations with a back‑up in bond yields, as higher long‑term rates on inflation concerns have not yet triggered a broad equity de‑rating.
Key investor concerns today
The central tension is whether sticky inflation and rising energy prices will force the Fed and the Bank of Canada to keep policy restrictive long enough to undercut the current earnings cycle. Higher oil and December crude futures near post‑conflict highs are feeding into inflation expectations and term premiums, driving volatility in Treasuries and global sovereign bonds. Geopolitical risk in the Middle East and policy uncertainty in select EMs (for example, Colombia’s pension and fiscal debates) remain in focus but are, for now, secondary to the path of US inflation, wages, and AI‑driven capex.