The S&P 500 closed Friday at 7,398.93, another record high. The index is 9.2% above its 200-day moving average. Earnings have done the heavy lifting so far this year. The Q1-2026 earnings reporting season is winding down, with companies representing 1% of the S&P 500's market cap reporting this week and another 12% the following week.
Industry analysts' consensus Q1-2026 earnings forecasts for the S&P 500 companies in aggregate represent growth of 18.0% y/y, while their full-year estimates imply 2026 growth of 24.0%, well above the 11.7% and 13.6% posted in 2024 and 2025 (chart). The growth expected in 2027 is 14.9%.
The week ahead is dominated by inflation reports, with both April headline CPI (Tue) and PPI (Wed) expected to push above 3.5% y/y, as the average national retail gasoline price climbed to $4.58 per gallon, and nearby gasoline futures to $3.53, last week (chart).
The Trump-Xi meeting (Thu and Fri) is the most under-discussed event on the calendar and the most consequential, particularly with the Iran conflict still unresolved and Beijing's posture on the war and tariffs all in play. Finally, we will see the appointment of Kevin Warsh as Fed chair when Jerome Powell's term as chair ends (Fri).
With that said, here are the key releases most likely to shape investors' thinking this week:
- Inflation
The Cleveland Fed Inflation Nowcasting model has Tuesday's headline CPI rising 0.45% m/m, enough to push the annual rate to 3.56% y/y, up from 3.30% in March. Core CPI looks more benign, rising 0.21% m/m, with the annual rate edging down to 2.56% y/y from 2.60% (chart). More consequentially, May's preliminary Nowcast points to headline inflation rising to 3.89% y/y, a trajectory that would constrain Warsh from easing monetary policy from day one.
The ISM Prices-Paid Index, a six-month forward inflation signal, rose to 155.3 in April, the highest reading since December 2022, suggesting upside risk to April's Final Demand PPI inflation rate (chart). - Retail Sales
April retail sales (Thu) will arrive amid a chorus of predictions of an imminent consumer retrenchment, which weekly data refute. Redbook same-store sales rose 7.8% y/y for the week of May 1, the highest reading since late 2022 (chart). Spending is advancing, not retreating. - Unemployment
Initial jobless claims (Thu) rose to 200,000 for the week of May 1, with the four-week moving average at 203,200 (chart). Continuing claims came in at 1,766,000, with the four-week moving average at 1,794,000.
Friday's April payroll employment report beat expectations, confirming our assessment that the labor market is improving enough to keep the Fed on hold. The six-month average gain in payrolls climbed to 55,000 in April, the highest since May of last year. - Industrial Production
April industrial production (Fri) should show a solid increase given the recent strength of the national M-PMI (chart).
The bright spot should remain technology production, with communications equipment, computer and peripheral equipment, and semiconductor output all at record highs during March (chart).