• Stocks in risk-off mode —U.S. and Canadian equity markets were lower on Wednesday after a nine-day winning streak for the S&P 500. The S&P fell about 0.7%, while the Canadian TSX was down about 1.0%. This comes as oil prices moved higher and U.S. bond yields climbed as well, dampening market sentiment. From a sector-leadership perspective, in the S&P 500, energy and consumer staples led the gains, while the technology and financials sectors lagged. U.S. small-cap stocks also underperformed on Wednesday, as uncertainty around U.S.-Iran negotiations and elevated oil prices likely weighed on the outlook for smaller companies. Overall, after a nice rally in U.S. and Canadian equities, we would expect some periods of volatility as investors digest recent gains. However, keep in mind that, historically, the period after U.S. midterm elections tends to be favourable for equity investors.
   
• Inflation remains uncomfortably elevated in Q1 — In last week's first-quarter U.S. GDP data, inflation saw a notable move higher. The personal spending deflator, the Fed's preferred measure of inflation, spiked to 3.5% over the first quarter as a whole. Worse, monthly data showed that this jumped even further in April, to 3.8%, and we expect another nudge higher in May. Some of this is an oil story, as gas prices push inflation higher. However, excluding energy prices, inflation was running at 3.3% in April, well above the Fed's target for 2%. Scratching further beneath the surface, core goods prices are running unusually hot at 2.8%, while core services inflation remains elevated at 3.5%. These data put the Fed in a tough spot, and it is interesting to see markets continue to price a hike within the next year, even as risk around oil prices seemingly ease. We think the bar for raising rates remains high, and we don't expect tighter policy unless we see signs of a further pick-up in price growth, particularly on the core side. Instead, we expect the central bank to stay on hold absent any growth scare. Bottom line, in our view: While bond yields have fallen from their highs, further material progress will likely be challenging in an environment of elevated inflation and solid growth.
   
• U.S. employment data takes centre stage — Labour-market data will be in focus for investors this week, beginning with Tuesday's JOLTS job openings release for April. Job openings rose to 7.6 million— the highest level since May 2024 — and signaling steady demand for labour, in our view. The ADP private employment report for May also pointed to steady gains, with 122,000 jobs added, versus forecasts for 120,000. The main event will be Friday’s nonfarm-payrolls and unemployment-rate data for May. Economists expect the recent trend of steady job growth and limited layoffs to have persisted, with nonfarm payrolls projected to rise by 100,000 and the unemployment rate holding at 4.3%. So far in 2026, job growth has stabilized, with payrolls averaging monthly gains of 76,000—an improvement from roughly 10,000 per month in 2025. Signs of firing also remain limited. The unemployment rate has held steady at 4.3% for two consecutive months and has been below 5% since 2021. Other measures of layoffs are similarly contained, with initial jobless claims averaging 211,000 this year versus a 30-year average above 300,000. We continue to view 2026 as a year of modest nonfarm-payroll growth—likely in the 50,000 to 100,000 range per month—alongside restrained layoffs, keeping the unemployment rate relatively stable. The key takeaway, in our view, is that steady labour-market conditions should continue to support healthy consumer spending and broader economic activity through the remainder of the year.

Mona Mahajan;
Investment Strategy

^{Source for all data: FactSet.} 

• Stocks close mostly higher with key labour-market data on the horizon — North American equity markets finished mostly higher on Tuesday, as investors focused on a busy week of labour-market data. U.S. JOLTS job openings for April came in well above expectations, rising to 7.6 million — the highest level since May 2024 — and signaling steady demand for labour, in our view. Attention will then turn to Friday’s domestic labour-force survey and U.S. employment report, which will provide a read on employment growth and the unemployment rate. The TSX outperformed, gaining more than 1% on the day, supported by strength in the materials and energy sectors. In the U.S., most S&P 500 sectors finished higher; however, communication services was the notable laggard, weighed down by shares of Alphabet following the company’s announcement that it plans to raise $80 billion through an equity offering to support AI-related investments. In bond markets, yields were little changed, with the 10-year GoC yield closing at 3.41% and the 10-year U.S. Treasury yield at 4.45%. Oil prices edged higher, with WTI crude closing around $94 per barrel, as uncertainty remains around the path forward for U.S.-Iran negotiations.
   
• Stocks rallied through May—what does history suggest lies ahead? — U.S. equities posted strong gains over the first five months of 2026, as resilient economic data and solid corporate profit growth outweighed the headwinds from higher oil prices and geopolitical uncertainty. The S&P 500 Price Index rose 10.7% through May, marking the strongest start to a year since 2021. Since 1970, there have been 14 instances in which the S&P 500 gained 10% or more over the first five months of the year.* In those cases, the index delivered an average return of 7.2% over the remainder of the year, with positive returns in 11 of 14 instances (79%)*. Looking at the five most recent occurrences (2024, 2021, 2013, 1998, and 1997), equities went on to gain an average of 13.1%, with returns positive in each case from June through December.* While there's no guarantee history will repeat itself in 2026, we believe a solid fundamental backdrop—supported by strong profit growth, steady economic activity, and stable labour-market conditions—provides a constructive environment for equities over the remainder of the year.
   
• Employment data takes centre stage — Labour-market data will be in focus for investors this week, beginning with today's U.S. JOLTS job openings release for April. Job openings rose to 7.6 million— the highest level since May 2024 — and signaling steady demand for labour, in our view. The ADP private employment report for May follows tomorrow, with the main event coming Friday in the form of Canada’s labour-force survey and U.S. nonfarm-payrolls data. In Canada, economists expect employment to increase by 10,000 in May, following an 18,000 decline in April, while the unemployment rate is projected to hold at 6.9%. Year-to-date, employment has contracted by an average of 28,000 per month, likely reflecting ongoing headwinds from protectionist U.S. trade policies and uncertainty surrounding CUSMA negotiations. South of the border, labour-market conditions have been more resilient. U.S. nonfarm payrolls are expected to rise by 100,000 in May, with the unemployment rate holding steady at 4.3%. So far in 2026, payrolls have averaged monthly gains of 76,000—an improvement from roughly 10,000 per month in 2025. Signs of layoffs also remain limited. The U.S. unemployment rate has held at 4.3% for two consecutive months and has remained below 5% since 2021. Other measures of labour-market churn are similarly contained, with initial jobless claims averaging 211,000 this year versus a 30-year average above 300,000.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data not cited: FactSet. 
Source for data cited: *FactSet, Edward Jones. S&P 500 Price Index.}

• Stocks close mostly higher despite geopolitical uncertainty — The TSX was little changed, while U.S. markets moved broadly higher on Monday, despite ongoing uncertainty surrounding the path forward for U.S.–Iran negotiations, as well as reports that the U.S. struck Iranian radar and drone sites over the weekend. Despite the geopolitical flare-up, the TSX finished the day roughly flat, supported by strength in the energy and technology sectors. In the U.S., a rally in technology shares—driven by NVIDIA’s unveiling of a new semiconductor chip designed for personal laptops—pushed all three major indices higher. Outside of technology, energy was the only other S&P 500 sector to finish in positive territory on Monday. Overseas, European markets were mostly lower, while Asian equities moved higher overnight, led by South Korea’s KOSPI Index, which gained more than 3% amid continued strength in global technology shares. Oil prices also edged higher, with WTI crude rising to $92 per barrel. Bond yields increased alongside geopolitical uncertainty, with the 10-year GoC yield rising to 3.44% and the 10-year U.S. Treasury yield climbing to 4.46%.
   
• Markets are back at all-time highs. Can the rally continue? — Equity markets have staged an impressive rebound following the March pullback, with the S&P 500 gaining roughly 20%, including dividends, since March 30, while the technology-heavy Nasdaq has advanced nearly 30%. Strong technology earnings and a de-escalation in the war with Iran have been the primary catalysts behind the rally, supporting investor risk appetite over the past two months. Historical seasonality trends suggest the momentum could continue into June. Since 1970, the S&P 500 has generated an average June return of 0.5%, with positive returns occurring 61% of the time.* While those results are not meaningfully stronger than the average month, seasonal trends have been particularly favorable in recent years. Since 2015, the index has gained an average of 1.5% in June, with positive returns in 82% of those years.* That momentum has also tended to carry into July, as the S&P 500 has averaged a 3.2% gain and posted positive returns in every July since 2015.* While there's no promise history will repeat itself this year, we continue to believe the fundamental backdrop for equities remains supportive. Steady economic activity and resilient earnings growth should continue to provide a constructive environment for equity markets, in our view.
   
• May performance recap — Equity markets built on April’s strong momentum in May, with the TSX gaining 2.5% and the S&P 500 gaining 6.5% last month in Canadian dollar terms. Investor sentiment was supported by strong corporate earnings growth and expectations for a diplomatic resolution to the war in Iran, which helped drive oil prices lower during the month. However, strength in equities was not limited to North America. Emerging-market equities gained 11%, led by technology-heavy regions such as Taiwan and Korea, which also continue to benefit from ongoing AI-driven semiconductor spending. Overseas developed large-cap stocks — primarily companies in Europe and Japan — also moved higher, gaining more than 4.4% for the month and benefiting from lower oil prices. Despite the volatility experienced in March and continued geopolitical uncertainty, each of our recommended equity asset classes has returned more than 9% year to date. Given the sharp rebound from the March lows, we believe a period of consolidation would be normal. Even so, the fundamental backdrop for equities remains constructive in our view, supported by strong corporate profit growth and healthy economic activity.

Brock Weimer, CFA;
Investment Strategy

^{Source: FactSet. 
*FactSet, Edward Jones. S&P 500 Price Index.} 

• Stocks add to gains on Middle East ceasefire optimism - Ongoing reports that the U.S. and Iran have reached an agreement to extend their ceasefire by 60 days continue to support investor sentiment. Major equity indexes were slightly higher on Friday and posted their ninth consecutive weekly gain. Oil prices were down about 1.5% today and almost 10% lower for the week, trading near $88 per barrel amid hopes that the Strait of Hormuz will reopen. AI-driven demand continues to support earnings, as illustrated by a 30% jump in shares of Dell Technologies. The company delivered a sales outlook well above consensus estimates, driven by strong demand for AI-related server infrastructure. Tech was a major driver behind the S&P 500's May strength rising 16%. Nonetheless, both the equal-weight S&P 500 and small-cap indexes reached new highs this month, suggesting early signs of broadening market leadership as bond yields retreat. In Canada, government bond yields and the loonie declined today after the economy posted a surprise GDP decline in Q1, the first back-to-back contraction since 2020.
   
• S&P 500 posts a ninth consecutive week of gains - Despite persistent geopolitical headline noise, U.S. equities have continued to move higher, with the S&P 500 logging 22 record highs so far this year. The rally has been largely tech-led and supported by resilient earnings, but the key question is whether it can be sustained. A nine-week winning streak is a rare occurrence historically. Over the past 70 years, this has only happened 12 other times. Notably, these streaks have tended to occur earlier in the bull market cycle, rather than at its end. Forward returns following similar periods have generally been positive. Three- and six-month and one-year returns were positive in most instances *. The key takeaway, in our view, is that while the market may pause in the near term to consolidate gains, this type of strength has not historically signaled that a peak is imminent.
   
• Canada GDP contracts in Q1 but Q2 posed for a rebound - Canada’s economy slipped into a technical recession in the first quarter, with real GDP falling 0.1% annualized following a 1.0% contraction in Q4. While volatile trade dynamics played a large role, including a surge in gold imports and weaker auto exports tied to tariffs and seasonal shutdowns, underlying domestic activity was also soft. Business investment declined for a fifth consecutive quarter and consumer spending slowed but remained modestly positive at 1.5%. Preliminary data point to a rebound, with GDP up 0.4% in April and tracking toward roughly 2% growth in Q2, supported by stronger energy and manufacturing activity. Overall, while the economy softened at the start of the year amid trade headwinds and tighter conditions, the downturn may prove to be short-lived. We expect the BoC to stand pat while trade negotiations with the U.S. ramp up.

Angelo Kourkafas, CFA;
Investment Strategy

^{*Bloomberg, Edward Jones; Source for all data not cited: Bloomberg, FactSet.} 

• Stocks gain with U.S. inflation in focus – Equity markets closed higher on Thursday after the April U.S. personal consumption expenditures, or PCE, inflation report came in largely in line with expectations. Additionally, U.S. initial jobless claims remained contained at 215,000 last week, while U.S. first-quarter real GDP was revised lower to 1.6% amid downward revisions to investment and consumer spending. On the corporate front, bank earnings were in focus today with TD Bank, Royal Bank of Canada and CIBC all announcing first-quarter results and exceeding analyst earnings estimates. The TSX logged a 0.3% gain for the day, while the S&P 500 outperformed, gaining 0.6%, supported by strength in the technology sector. Bond yields finished slightly lower, with the 10-year GoC yield falling to 3.43% and the 10-year U.S. Treasury yield at 4.45%. Oil prices ended only modestly higher, at around $89 per barrel, reversing larger gains from earlier in the day following reports that U.S. and Iranian negotiators reached a memorandum of understanding to extend the ceasefire and begin further negotiations on Iran’s nuclear program.
   
• U.S. inflation data in line with expectations – U.S. inflation was in focus on Thursday, with April personal consumption expenditures (PCE) inflation released this morning. Headline PCE rose 0.4% for the month, driven in part by a 5.5% increase in gasoline prices, and was up 3.8% from a year ago. Core PCE, which excludes food and energy, rose 0.24% for the month and 3.3% on an annual basis. The April reading brought the three-month annualized rate of core PCE to 3.8%, underscoring that near-term inflation pressures remain above the Federal Reserve’s 2% target. In our view, today’s data reinforces the likelihood that the Fed will remain on hold in the near term. That said, we believe the bar for rate hikes remains high, especially as labour-market conditions have come into better balance and annual wage growth has slowed from nearly 6% in 2022 to around 3.5% in April. Taken together, these conditions support a patient approach from the Fed, and in our view, policymakers are likely to hold interest rates steady this year.
   
• Tech-led rally has markets back to all-time highs. Where to from here? – After a volatile close to the first quarter, when the S&P 500 fell 9% from its prior all-time high, equities have staged an impressive rebound since April. The S&P 500 has gained more than 18% since March 30, while the technology-heavy Nasdaq has risen 28%. The rally has been even more pronounced in semiconductors, with the PHLX Semiconductor Index up 80% over the same period, supported by continued AI-related capital spending. While we would not characterize markets as cheap, valuations have not expanded meaningfully during this rally. In fact, both the S&P 500 and Nasdaq are trading at forward price-to-earnings multiples below where they began the year, while the PHLX Semiconductor Index’s forward multiple is little changed. This suggests that the recent move higher has been driven by strong corporate profit growth as opposed to expanding valuations. First-quarter S&P 500 earnings per share rose nearly 27% from a year ago, helped by strength in technology and AI-exposed areas of the market. Importantly, earnings growth has not been limited to tech. Cyclical sectors such as financials, industrials and materials also posted earnings growth of more than 20%, pointing to broader strength in corporate fundamentals. After such a sharp move higher, a period of consolidation would not be surprising. However, we believe the broader backdrop for equities remains supportive, underpinned by solid profit growth, steady economic activity and resilient labor-market conditions.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data not cited: FactSet.}