• Stocks close higher as earnings season winds down – Equity markets finished higher on Thursday, as investors digested the latest earnings results from tech-giant NVIDIA and retailer Walmart. NVIDIA reported better-than-expected first-quarter results, highlighting ongoing strength in AI-spending trends, while Walmart posted better-than-expected sales for the quarter, but issued cautious forward guidance. On the economic front, U.S. initial jobless claims for last week were little changed at 209,000, highlighting stable labour-market conditions. Oil prices settled lower, reversing gains at the open, as optimism around a potential diplomatic solution to the war in Iran grew following reports that a mediated ceasefire agreement could be announced later today. In bond markets, Canadian yields closed modestly lower, with the 10-year Government of Canada yield finishing at 3.55%, while the U.S. 10-year Treasury yield declined slightly to 4.55%.
   
• Earnings in focus – Wednesday evening, investors received an update from tech-giant NVIDIA, which reported both earnings and revenue ahead of expectations in the first quarter, driven in large part by a 92% year-over-year increase in data-center revenue. In our view, the results help reinforce that robust AI-related spending trends remain intact. Management also stated that production shipments of its next-generation Vera Rubin chip are expected to begin in the second half of this year. In addition, the company raised its second-quarter revenue guidance, announced an additional $80 billion share-repurchase authorization, and increased its quarterly dividend from $0.01 to $0.25 per share. On the consumer side, Walmart also reported first-quarter results this morning, with revenue exceeding expectations while earnings came in broadly in line with analyst estimates. Looking ahead, management struck a somewhat more cautious tone, issuing forward earnings guidance below expectations as higher-for-longer energy prices cloud the consumer outlook. More broadly, the earnings backdrop appears to remain supportive, with the S&P 500 expected to deliver earnings growth of more than 20% this year and all 11 sectors projected to post positive growth. While we think markets could experience a period of consolidation following the sharp rally since late March, we continue to believe the combination of resilient earnings growth and a supportive economic backdrop should provide a constructive environment for equities over the balance of the year.
   
• Initial public offering (IPO) activity heats up – Yesterday, SpaceX publicly filed its IPO paperwork, drawing significant attention from investors and the financial media. While the size of the offering and potential valuation were not disclosed, prior reports have suggested the company could seek to raise up to $75 billion—making it the largest IPO in history—with shares expected to begin trading on the Nasdaq as soon as next month. In addition to SpaceX, AI platform company OpenAI is reportedly preparing to file IPO paperwork in the coming days or weeks, with a potential listing later this year. While high-profile IPOs often attract significant investor interest and media attention, post-listing performance has historically been volatile. Among the 30 largest IPOs of companies included in the Russell 3000 over the past 20 years, average performance has lagged the S&P 500 in their first year of trading and volatility has been elevated.* In our view, while the allure of buying into a new publicly traded company is exciting, it is important that investors maintain a long-term perspective and focus on investments that align with their objectives and risk tolerance.

Brock Weimer, CFA;
Investment Strategy

^{Source for all date not cited: FactSet
Source for data cited: *FactSet, Edward Jones}

• Markets surge as oil price slide – Equities rallied today in response to claims that negotiations over a peace agreement between Washington and Tehran are in "the final stages". These comments from President Trump helped push WTI oil prices nearly $10 lower to $98 per barrel, although there has been no signal from Iranian leadership around their willingness to strike a deal. The small-cap Russell 2000 index was the best performer, jumping 2.4% over the session, while major U.S. and Canadian large-cap indexes were up between 1%-1.5%. Lower energy prices also sparked a rebound in government bond markets following painful sell-offs over recent sessions. The yield on the 10-year U.S. Treasury note dropped 10 basis points (0.10%) over the day, recouping some of the recent lost ground, with equivalent Canadian bonds delivering an even larger 12 basis point (0.12%) rally. The U.S. dollar sold off against a trade-weighted basket of currencies as risk sentiment improved, while gold prices ticked up above $4,500 per ounce, albeit still well down from the $5,400 peak back in January.
   
• NVIDIA earnings in focus – A strong first-quarter earnings season is nearing its conclusion, with more than 90% of S&P 500 companies having reported results and earnings on pace to grow 26% year-over-year. However, there remain some big hitters still to report, not least NVIDIA, the world's most valuable company, which will report results after market close today. Estimates are pointing to revenue of nearly $80 billion in the first quarter, underpinned by extraordinary sales growth of 80% - the best seen in more than a year. However, while investors will likely be focused on short-term momentum, we think the outlook for longer-term sales forecasts will be just as important. On this note, we expect that signals around the manufacture of its new Rubin chips, potential growing competition from tech peers, and the push for a reentry to China's AI processor market will all be in close focus. More broadly, NVIDIA remains at the center of the AI investment boom and will continue to be used by markets as a bellwether for the sector. 
   
• Incoming Fed Chair Kevin Warsh to inherit a divided FOMC - Three members of the Fed's rate-setting committee dissented in April against the monetary policy "easing bias" in the FOMC statement, preferring instead to signal that the next move in interest rates could be higher or lower. This might sound like a technicality, but forward guidance around the direction for policy is seen as an important part of the Fed's toolkit. Minutes from the April meeting showed that "many" members supported the views of the dissenters, raising the likelihood that the guidance around the direction for policy will change at the upcoming June meeting. Markets have already priced out the prospect for Fed rate cuts and are increasingly considering the possibility of hikes in the face of faster inflation and an improving labour market. The minutes showed that most FOMC members thought that the fed funds rate should remain on hold for longer given the inflation backdrop and warned that if above-target inflation were to become entrenched, then higher interest rates would be needed. However, we think this represents a tail risk at present, and instead we expect the central bank to hold rates unchanged as it navigates a path through an energy price shock that will raise short-term inflation while also weighing on growth.

James McCann;
Investment Strategy

^{Source for all data: Bloomberg, FactSet.} 

• Stocks close lower following domestic inflation report – North American equity markets closed lower on Tuesday, despite a lower-than-expected consumer price index (CPI) reading for April. S. stocks underperformed, as rising S. bond yields weighed on sentiment and the S&P 500 took a pause after a more than 15% rally since its March low. Overseas, Asian markets were mixed overnight, with Japan’s Nikkei and Korea’s KOSPI posting declines, while European equities closed little changed. On the corporate front, home-improvement retailer Home Depot reported first-quarter results today, with earnings and sales in line with expectations, and reiterated its forward guidance. Management noted that despite ongoing consumer uncertainty and affordability challenges in the housing market, underlying demand has remained relatively stable compared to 2025. In fixed income, Canadian government bond yields were little changed, with the 10-year GoC yield closing at 3.71% while the 10-year S. Treasury yield climbed higher to 4.66%. In commodity markets, oil prices were little changed, with WTI crude holding near $104 per barrel, as there has been limited incremental progress toward resolving the conflict in Iran.
   
• Inflation edges higher on rising energy costs, but core measures remain contained – Domestic headline CPI rose 2.8% year-over-year in April, up from a 2.4% annual increase in March but below economist expectations of a 3.2% gain. Higher energy costs were a key driver of the acceleration, with energy prices rising 19.2% year-over-year in April, following a 3.9% increase in March. However, excluding the impact of energy prices suggests that underlying price pressures remain relatively subdued. CPI excluding food and energy was unchanged in April and declined by 0.1% in March, bringing the three-month annualized rate to just 0.26%—the lowest level since the immediate aftermath of the pandemic in 2020. A closer look at core inflation measures closely monitored by the Bank of Canada—CPI-median and CPI-trim—also points to easing price pressures. CPI-median rose 2.1% year-over-year in April, the lowest reading since December 2020, while CPI-trim increased 2.0%, the lowest since February 2021. In our view, the combination of contained underlying inflation and a soft April employment report is likely to keep the Bank of Canada on hold in the near term.
   
• Earnings season winds down with NVIDIA and Walmart in focus – A strong first-quarter earnings season is nearing its conclusion, with more than 90% of S&P 500 companies having reported results and earnings on pace to grow 26% year-over-year. This week will offer key updates on both AI-spending trends and consumer health. Tech giant NVIDIA is scheduled to report after the market close on Wednesday, while retailers Walmart, Target and Lowe’s are set to report later this week, providing insight into how consumers are faring amid the higher energy-price backdrop. Home Depot reported in-line results this morning and reiterated full-year guidance highlighting that despite ongoing consumer uncertainty, demand has remained stable compared to last year. At the index level, first-quarter earnings results have been robust, with 84% of companies reporting better-than-expected earnings, above the five-year average of 78%. The average earnings surprise has been 18%, also well above the five-year average of 7.3%. Strength has been led by technology, communication services and consumer discretionary, each of which is on pace to deliver earnings growth of more than 36%. However, cyclical sectors have also contributed meaningfully, with industrials, materials and financials all on track to post earnings growth above 19% in the first quarter. Looking ahead, the profit backdrop remains solid, with full-year earnings growth expected to exceed 20%. While higher-for-longer energy prices pose downside risks to corporate profits over the remainder of the year, we believe steady economic activity, healthy S. labour-market conditions, and robust technology-spending trends should support strong profit growth over the balance of the year, providing a constructive backdrop for equity markets.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet.}

• Markets edge lower as bond yields rise – With Canadian markets closed in observance of the Victoria Day holiday, U.S. equity markets pulled back modestly on Monday. Sector performance was mixed, with energy leading gains, supported by higher oil prices, while the technology and industrial sectors lagged. Internationally, Asian markets finished mostly lower overnight, while European markets advanced. In energy markets, WTI oil traded higher amid continued disruptions in the Strait of Hormuz. Meanwhile, the U.S. dollar weakened against major currencies after posting solid gains last week.
   
• Bond yields extend move higher – Government bond yields have risen across major developed markets, including those in the U.S., Japan, France, the U.K. and Germany. In the U.S., the move partly reflects concerns that inflation could remain elevated for longer, particularly if higher oil prices feed through to broader price pressures. This has reduced confidence that the Federal Reserve (Fed) will be able to cut rates in the near term. Markets are now pricing in the possibility that the Fed's next move could be a rate hike rather than a cut, potentially sometime next year. Inflation expectations — a key component of bond yields — have also risen. Market-implied 10-year inflation expectations in Treasury Inflation Protected Securities (TIPS) markets have climbed to about 2.5%, accounting for about half of the recent rise in 10-year Treasury yields. We think policymakers will remain on the sidelines in the near term with the Fed's preferred core Personal Consumption Expenditures (PCE) inflation gauge running at 3.2% — still well above the 2% target. Recent energy-price pressures further complicate the case for rate cuts. At the same time, we think a steady labour backdrop gives policymakers room to remain patient and assess whether inflation pressures will prove temporary and when they may begin to ease.
   
• Focus shifts to NVIDIA as strong earnings season winds down – Attention will soon turn to artificial intelligence (AI) chip giant NVIDIA, which is scheduled to release quarterly results on Wednesday. Consensus estimates call for earnings per share of $1.75, representing growth of 116% from the same quarter a year ago. Given NVIDIA’s central role in the AI investment theme, its results and guidance could have an outsized impact on technology sentiment and broader market leadership. More broadly, earnings have continued to come in well ahead of expectations. About 84% of companies have beaten EPS estimates by an average upside surprise of 18%. This outperformance has driven a significant upward revision to earnings-growth estimates, with EPS tracking at 26%, compared with 12% at the end of the quarter. If sustained, this would mark the sixth straight quarter of double-digit earnings growth. We believe these strong results demonstrate that fundamentals remain supportive of equity markets, even as inflation and interest-rate risks remain near-term headwinds. Technology continues to lead earnings growth, with EPS up more than 50% year-over-year, while communication services and materials are also posting robust EPS gains of more than 40% from a year ago. With 10 of the 11 sectors posting year-over-year EPS gains, growth has also been broad-based. We believe wide earnings growth should help support more balanced market performance across sectors, help reduce reliance on a narrow group of market leaders, and help strengthen the case for portfolio diversification.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.}

• Stocks pull back from record highs as yields rise and tech rally stalls - Major equity indexes finished broadly lower today, weighed down by profit-taking in technology in the U.S. and materials in Canada, alongside a rise in government bond yields amid renewed inflation concerns. Developments from the Trump–Xi summit in China suggest an extension of the current trade truce, though without any major breakthroughs or material updates, including on Iran. The tone of discussions was constructive, reducing the risk of further tariff escalation, with reports indicating a potential new Board of Trade mechanism aimed at boosting bilateral trade, initially focused on roughly $30 billion of nonsensitive goods. Beyond this, however, there were no developments significant enough to shift the broader narrative around U.S.–China relations. In rates, the two-year GoC yield rose to 3.06%, while both oil prices and the U.S. dollar rose relative to the loonie.
   
• Bond markets under pressure amid rising oil prices - Risk sentiment was dented today by a global rise in bond yields, driven by a combination of inflation concerns, rising expectations for central-bank rate hikes, and growing worries around government debt as countries look to cushion the impact of higher energy prices. Canada 30-year GoC yields are at their highest level since 2009. Japan’s 30-year yield has reached 4% for the first time since 1999, while political uncertainty in the U.K. has pushed 30-year gilt yields to a 28-year high. Following a week of elevated inflation readings, including U.S. producer prices rising at the fastest pace since 2022, markets are now pricing in roughly a two-thirds probability of a Fed rate hike in December. While central banks cannot directly resolve a global energy shock by hiking interest rates, the prospect of fiscal stimulus appears to be complicating the inflation outlook. Measures such as a potential U.S. gas tax holiday, relief efforts in Japan, and increased public spending in the U.K. are beginning to weigh on bond investor sentiment. In recent months, equities and bonds have responded to divergent narratives. Equity markets have been supported by a technology-led rally and strong earnings, while bond markets have focused more on inflation risks, higher oil prices, and policy uncertainty. The recent rise in yields may be approaching levels that begin to weigh on equity performance. That said, we continue to believe the Fed will avoid overreacting to what may prove to be a temporary energy-driven inflation shock. Prior to the conflict, global oil supply was exceeding demand, and when conditions normalize in the Strait of Hormuz, oil prices are likely to retrace toward prior levels.
   
• Spotlight on NVIDIA as earnings season wraps up - AI remains a key engine of growth, with sustained investment supporting earnings momentum across sectors and reinforcing expectations for continued profit expansion. NVIDIA, whose chips are central to the AI buildout, is set to report earnings next week. With the company now accounting for nearly 9% of the S&P 500, both results and forward guidance will be closely scrutinized by investors. U.S. earnings season is drawing to a close, with roughly 90% of S&P 500 companies having reported. The overall takeaway is broadly positive, with results coming in well above expectations. This outperformance has driven a meaningful upward revision in earnings growth, with EPS now tracking near 26%, up from roughly 12% at the end of the quarter. These results help reinforce the view that corporate profits remain a key driver of equity market returns, helping offset a modest compression in valuations this year and providing a counterbalance to ongoing geopolitical uncertainty. We think that as long as earnings momentum remains strong, investors have good reason to avoid becoming overly negative and to look through, rather than react to, day-to-day headline noise.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source for all data: Bloomberg, FactSet.}