• Stocks rally to close out April with earnings in the spotlight – North American equity markets traded firmly higher on Thursday as investors digested the latest wave of corporate earnings, including results from tech giants Alphabet, Amazon, Meta and Microsoft. Results were generally positive, with all four companies reporting better-than-expected sales. However, shares of Meta and Microsoft declined 8.7% and 3.9%, respectively, as investors likely weighed whether higher capital expenditure guidance will ultimately translate into stronger profits, in our view. The TSX finished Thursday higher by 1.9% while the S&P 500 posted a 1.0% gain. It was also a busy day on the economic calendar, with domestic real GDP by industry growing by 0.2% in February, driven by strength in the manufacturing sector of the economy. South of the border, U.S. real GDP grew at a 2.0% annualized rate in the first quarter, headline Personal Consumption Expenditures (PCE) inflation rose 3.5% year-over-year in March, and core PCE increased 3.2%. Additionally, U.S. initial jobless claims declined to 189,000 last week, the lowest reading since 1969. Overseas, Asian markets were mostly lower overnight, while European markets traded higher after the Bank of England and European Central Bank left their policy rates unchanged. Bond yields declined, with the 10-year GoC yield finishing at 3.55% and the 10-year U.S. Treasury yield at 4.38%. In commodity markets, oil prices also closed lower, with WTI crude oil settling around $105 per barrel.
   
• Economic health check – In addition to a busy day of corporate earnings, Thursday also brought a slew of key economic data. Domestic real GDP by industry rose 0.2% in February, led by strength in the manufacturing sector, while the advance estimate for March real GDP was essentially unchanged. South of the border, U.S. first-quarter real GDP rose at a 2.0% annualized pace, below expectations for a 2.3% gain but an improvement from the 0.5% reading in the government-shutdown-impacted fourth quarter. Looking under the hood, a 4.4% rebound in government spending and a 10.4% gain in nonresidential investment were bright spots for the quarter. On the investment side, a 43.4% annualized jump in information-processing equipment played a large role in the strength in nonresidential investment, likely underscoring continued momentum in AI-related investment trends. Personal consumption, which makes up the lion’s share of U.S. GDP, grew at a 1.6% annualized rate, below the average quarterly gain of roughly 2.75% over the past three years. Thursday’s data also included the Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures price index for March. Headline prices rose 0.7% for the month, while core PCE — which excludes food and energy — increased 0.3%, in line with expectations. The March gain brought the annual change in core PCE to 3.2%, the highest since January 2024. Meanwhile, U.S. initial jobless claims declined to 189,000 last week, the lowest weekly reading since 1969. On balance, we would characterize Thursday’s data as evidence that economic activity remains steady in North America, supported by strong corporate investment trends and a stable labour market, despite the recent move higher in inflation. While the war in Iran poses downside risks to economic activity if it escalates further or extends well into the second half of the year, our base case calls for steady growth throughout 2026.
   
• Tech earnings in focus – Corporate earnings remain front and centre, with four members of the Magnificent 7* — Alphabet, Amazon, Meta and Microsoft — reporting results after the market close yesterday, and Apple set to report after the bell today. Results were broadly positive for the quarter, with all four companies topping expectations on both the top and bottom lines. However, the market reaction was mixed, with Meta and Microsoft closing sharply lower. In our view, this highlights the elevated bar for expectations and investor concerns around higher capital expenditure guidance for the year and whether that spending will translate into stronger profits over time. With nearly 60% of S&P 500 companies having reported first-quarter results, earnings for the index are now expected to grow 14.5% in the first quarter, up from expectations of roughly 12% at the end of March. We believe healthy profit growth, supported by resilient economic activity and strong AI investment trends, should provide a favourable backdrop for equity markets over the balance of the year.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet 
*Magnificent 7 represented by Apple, Amazon, Alphabet, Meta, Microsoft, NVIDIA and Tesla.}

• Stocks trade slightly lower with central-bank policy and corporate earnings in focus – North American equity markets closed mostly lower Wednesday, following the Bank of Canada and Federal Reserve's decision to leave their policy rates unchanged at today's meetings. Most sectors closed the day flat to lower, with energy leading amid another move higher in oil prices. Overseas, Asian markets were mostly higher overnight, led by a 1.7% gain in Hong Kong’s Hang Seng Index, while European equities finished modestly lower. On the economic front, U.S. investment trends appeared steady in March. Headline durable goods orders rose 0.8% for the month, above expectations for a 0.4% gain, while housing starts increased 10.8%, well ahead of expectations for a modest contraction. Government bond yields traded higher on the day, with the 10-year GoC yield rising to 3.60% and the 10-year U.S. Treasury yield at 4.41%. In commodities, oil prices closed higher, with WTI settling around $108 per barrel after reports surfaced that the U.S. is preparing to extend its naval blockade of Iranian ports.
   
• Bank of Canada and Fed hold rates steady – The Bank of Canada left its policy rate unchanged this morning at 2.25%, marking its fourth consecutive meeting on hold. In its statement, the BoC highlighted the war in the Middle East and U.S. trade policy as ongoing sources of economic uncertainty. The central bank noted that, in the current environment, it is prepared to look through the near-term inflationary impact of higher energy prices, but emphasized that it will not allow elevated energy prices to translate into persistently higher inflation. In the opening statement of his press conference, Governor Tiff Macklem acknowledged that if oil prices remain elevated, consecutive increases in the policy rate could become necessary. In response, short-term GoC yields rose, with the 2-year yield climbing 0.15% on the day to over 3%. In our view, the BoC is likely to remain on hold in the near term, particularly as uncertainty around CUSMA negotiations persists and economic activity remains subdued.
  
  South of the border, the Fed maintained its target range for the federal funds rate at 3.50%–3.75% at today’s meeting, as expected. The Federal Open Market Committee statement also maintained its easing bias, signaling that the next move in the policy rate is more likely to be lower than higher. However, three members voted to remove the easing bias from the statement, while one member voted to lower the federal funds target range by 0.25%, highlighting divergent views among FOMC members amid the uncertain economic backdrop. Additionally, Fed Chair Jerome Powell announced that he will continue to serve on the Fed’s Board of Governors after his term as Fed chair ends next month, at least until the investigation into the Federal Reserve is “fully and transparently resolved.” The announcement follows this morning’s Senate Banking Committee vote to advance Kevin Warsh’s nomination to take over as Fed chair when Powell’s term ends. With U.S. inflation running above target for five years and the labour market showing signs of stabilization, we believe the Fed is likely to remain on hold in the near term. However, if energy prices decline and geopolitical tensions ease toward year-end, we believe the Fed could deliver another interest-rate cut before the end of the year.
   
• Earnings in focus – First-quarter earnings season is in full swing this week, with more than 150 S&P 500 companies scheduled to report. Key reports include Amazon, Alphabet, Microsoft and Meta after today’s market close, followed by Apple after the close tomorrow. Results have been solid so far. S&P 500 first-quarter earnings are now expected to grow 14% year-over-year, up from estimates of roughly 12% at the end of March. Strong earnings growth is also expected to continue through the remainder of 2026, with full-year S&P 500 earnings projected to rise 18.7%, compared with expectations of about 15% at the start of the year. The upward revision has been driven largely by a nearly 40% increase in expected earnings per share for the energy sector, reflecting the higher oil-price backdrop. Materials and technology have also seen 2026 earnings estimates rise by more than 11%. While estimates have moved modestly lower in sectors that may be pressured by higher oil prices, including consumer staples and consumer discretionary, these downward revisions have been more than offset by stronger expectations in energy, materials and technology. Despite pockets of downward revisions since the start of the year, earnings growth is still expected to be positive across all 11 S&P 500 sectors in 2026. In our view, robust earnings growth, supported by healthy economic activity and continued strength in AI-related spending, should remain a key support for equity markets over the balance of the year.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet} 

• Markets close modestly lower, Nasdaq lags – Equity markets were lower on Tuesday, with the technology-heavy Nasdaq lagging the Canadian TSX and S&P 500. The weakness in the U.S. tech sector was in part driven by news that the tech giant OpenAI fell short of sales targets and new users for the quarter. This weighed especially on AI and data-center-focused stocks. In addition, oil resumed its upward climb as uncertainty around the blockades of the Strait of Hormuz lingers. WTI oil was up over 3.5% toward $100. From a Canadian sector perspective, energy and health care led the way higher, while materials and technology lagged. Government bond yields were also modestly higher, with the 10-year Canadian yield up about 0.01% to 3.5%. More broadly, the Canadian TSX is now up about 8% since its recent March 20 lows and is again approaching all-time highs. In our view, while uncertainty around geopolitics remains in place, markets seem focused on the solid fundamentals, including positive economic growth and corporate earnings forecasts which continue to be revised higher.
   
• S&P 500 earnings season set to hit its stride with Magnificent 7 – Five of the Magnificent 7 companies are on the earnings calendar this week, starting with Alphabet (Google), Amazon, Meta (Facebook) and Microsoft on Wednesday, followed by Apple on Thursday. More broadly, the early read on first-quarter earnings has been encouraging: With about 28% of S&P 500 companies reporting, 82% have beaten EPS estimates by an average upside surprise of 12%. EPS growth estimates have been revised up to 13.7%, from 12.1% at the end of the quarter. If achieved, this would mark the sixth straight quarter of double-digit earnings growth. Technology is again expected to lead by a wide margin, with earnings gains of more than 40% year-over-year, followed by materials and financials. Importantly, the breadth of growth is expected to be strong, as eight of the 11 sectors are projected to post year-over-year EPS gains. We believe wide earnings growth should help support more balanced market performance across sectors and help strengthen the case for portfolio diversification.
   
• Bank of Canada, Fed likely to remain on hold this week – The Bank of Canada (BoC) and Fed begin their April meetings on Tuesday this week. Market expectations point to the BoC holding its policy rate steady at 2.25% and the Fed maintaining the target range for the federal funds rate at 3.50%-3.75%. The larger focus is likely to be on the statement and commentary, specifically the extent to which both central banks are willing to look through the near-term impact of higher oil prices on inflation. Canada CPI was running at 2.4% through March, while core measures were slightly lower at 2.2%-2.3%, slightly above the 2% target. The Fed's preferred Personal Consumption Expenditure (PCE) inflation gauge for March will be released on Thursday, with forecasts calling for a rise to 3.6%, from 2.8% the prior month. With inflation well above the 2% target, the Fed will likely be on the sidelines in the near term. We believe the stabilizing U.S. labour market, showing some signs of strengthening, should give policymakers time to look for signs that inflation is temporary.

Mona Mahajan;
Investment Strategy

^{Source for all data: FactSet} 

• Markets close mixed with central banks, Magnificent 7 on deck – The TSX edged lower, while U.S. equity markets advanced on Monday as investors look ahead to the Bank of Canada's and Fed's April meetings and earnings results of five of the Magnificent 7 companies this week. Sector performance was mixed, with communication and financials leading gains, while consumer staples and real estate lagged. Bond yields rose, with the 10-year Government of Canada yield at 3.50% and the 10-year U.S. Treasury yield at 4.33%. Internationally, Asian markets were mostly stronger overnight with both Japan's Nikkei and South Korea's KOSPI indexes reaching record highs. In energy markets, WTI oil prices traded higher amid uncertainty around U.S.-Iran diplomacy and continued disruptions in the Strait of Hormuz. Meanwhile, the U.S. dollar softened against major currencies.
   
• Bank of Canada, Fed likely to remain on hold this week – The Bank of Canada (BoC) and Fed begin their April meetings on Tuesday this week. Market expectations point to BoC holding its policy rate steady at 2.25% and the Fed maintaining the target range for the federal funds rate at 3.50%-3.75%. The larger focus is likely to be on the statement and commentary, specifically the extent to which both central banks are willing to look through the near-term impact of higher oil prices on inflation. Canada CPI was running at 2.4% through March, while core measures were slightly lower at 2.2%-2.3%, slightly above the 2% target. The Fed's preferred Personal Consumption Expenditure (PCE) inflation gauge for March will be released on Thursday, with forecasts calling for a rise to 3.6%, from 2.8% the prior month. With inflation well above the 2% target, the Fed will likely be on the sidelines in the near term. We believe the stabilizing U.S. labour market, showing some signs of strengthening, should give policymakers time to look for signs that inflation is temporary.
   
• Earnings season set to hit its stride with Magnificent 7 – Five of the Magnificent 7 companies are on the earnings calendar this week, starting with Alphabet (Google), Amazon, Meta (Facebook) and Microsoft on Wednesday, followed by Apple on Thursday. More broadly, the early read on first-quarter earnings has been encouraging: With about 28% of S&P 500 companies reporting, 82% have beaten EPS estimates by an average upside surprise of 12%. EPS growth estimates have been revised up to 13.7%, from 12.1% at the end of the quarter. If achieved, this would mark the sixth straight quarter of double-digit earnings growth. Technology is again expected to lead by a wide margin, with earnings gains of more than 40% year-over-year, followed by materials and financials. Importantly, the breadth of growth is expected to be strong, as eight of the 11 sectors are projected to post year-over-year EPS gains. We believe wide earnings growth should help support more balanced market performance across sectors and help strengthen the case for portfolio diversification.

Brian Therien, CFA ;
Investment Strategy

^{Source for all data: FactSet} 

• Stocks mostly rise on peace hopes and tech outperformance – While the TSX was little changed, the S&P 500 and Nasdaq hit fresh record highs today after encouraging signs that the U.S. and Iran may return to the negotiating table for peace talks. The recent rally in oil prices, with WTI up 13% this week, paused following news that the Israel Lebanon ceasefire has been extended for three weeks, and that Iran’s foreign minister is expected to travel to Pakistan for a second round of negotiations. In Canada, retail sales rose 0.7% in February, slightly softer than expected, but the prior month sales were revised higher and gains were broad-based. Elsewhere, U.S. technology stocks led the gains, with semiconductors outperforming after Intel issued an upbeat outlook. Intel shares surged 23% to a new record high after the company delivered a sales forecast that significantly exceeded expectations. In Asia, Taiwan Semiconductor Manufacturing jumped 5% after regulators eased limits on single stock fund holdings. Meanwhile, bond and currency markets remained relatively quiet as investors look ahead to central-bank meetings next week.
   
• Depressed sentiment vs. still-solid fundamentals - Sentiment surveys, such as the University of Michigan consumer sentiment index, have fallen to their lowest levels on record, below those seen during both the 2008 financial crisis and the 2020 pandemic. Yet the hard economic data do not appear to reflect this degree of pessimism. Retail sales have remained resilient, highlighting a significant divergence between how consumers feel and how they behave. While technology-sector layoffs have attracted attention, labour-market indicators remain encouraging. Weekly initial jobless claims continue to run near historical lows, unemployment is steady, and private‑sector hiring appears to be regaining momentum. In Canada, the government's recently announced plan to suspend the federal gasoline tax until September 7 will provide a modest boost to household incomes. In the U.S., higher energy prices remain a headwind for households, but increased tax refunds stemming from the new tax bill are providing a meaningful offset. According to the latest IRS data, the average refund this year is approximately $3,400—an 11% increase from last year. Overall, we expect household stimulus to reach roughly $200 billion in 2026, more than offsetting an estimated $80–$100 billion increase in gasoline and other fuel spending driven by higher oil prices.
   
• Earnings strength is key behind market's resilience - While investor sentiment can change on a whim, trends in corporate profits are among the most durable drivers of market performance. We believe strong earnings growth is a key reason markets have become less sensitive to geopolitical headlines and swings in oil prices. TSX and S&P 500 earnings are expected to grow 21% and 14%, respectively, year-over-year in the first quarter. If realized, this would mark the strongest growth for the TSX since 2021 and the sixth consecutive quarter of double‑digit earnings growth in the U.S. The technology sector is leading the charge, with earnings projected to rise roughly 46%, driven by robust demand for artificial intelligence and the related infrastructure buildout. Other sectors are also expected to deliver solid growth, but markets will remain focused on mega‑cap technology next week. Microsoft, Amazon, Alphabet, and Meta are all set to report after the close on April 29, followed by Apple on April 30.

Angelo Kourkafas, CFA ;
Investment Strategy

^{Source for all data: Bloomberg.}