Monday, 5/11/2026 p.m.

• Stocks edge higher to begin the week – North American equity markets closed slightly higher on Monday, with both the TSX and S&P 500 posting modest gains, while the latter finished at a fresh all-time high. It was a quiet day on the economic calendar, with U.S. existing-home sales for April the only major release and results in line with expectations as existing home sales were little changed from the March reading. However, investors will be watching the April U.S. consumer price index (CPI) report tomorrow, followed by U.S. retail sales on Thursday, to assess the latest trends in inflation and consumer spending. On the geopolitical front, the U.S. rejected Iran’s counterproposal over the weekend to end the war. Market reaction was fairly muted, with oil prices modestly higher and equities posting slight gains. Bond yields also finished the day higher, with the 10-year GoC yield at 3.54% and the 10-year U.S. Treasury yield at 4.41%.
   
• Price-check ahead – Inflation data will be front and centre for investors this week, with the U.S. consumer price index (CPI) for April set to be released tomorrow morning. Economists expect headline CPI to rise 0.6% in April and 3.7% on an annual basis, as elevated oil prices continue to feed into headline inflation. Core CPI is expected to increase 0.3% month-over-month and 2.7% year-over-year. With inflation having run above target for the past five years, we expect the Fed to remain on hold in the near term. Additionally, last Friday’s jobs report showed that U.S. employment growth has remained solid in recent months, with nonfarm payrolls increasing by 115,000 in April and the unemployment rate holding steady at 4.3%. In our view, the combination of elevated inflation and steady labour-market conditions is likely to keep the Fed in wait-and-see mode before pursuing further monetary easing. However, if energy supply disruptions normalize, we believe the Fed could still deliver a rate cut in the back half of 2026.
   
• Strong earnings growth has overshadowed the war in Iran – After a pullback in March, during which the S&P 500 fell roughly 9% from its prior all-time high, equity markets have rallied since the beginning of April. The S&P 500 has closed higher for six consecutive weeks and recently climbed to new all-time highs. In Canada, the TSX has posted a weekly gain in five of the past seven weeks and remains slightly off its March 2 all-time high. In our view, the sharp rebound has been driven primarily by ongoing de-escalation in the Iran conflict and robust earnings results. With 90% of S&P 500 companies having reported first-quarter results, 84.3% have exceeded analysts’ earnings expectations, above the five-year average of 78%, while the average upside surprise has been 18.6%, also well above the five-year average of 7.3%. For the quarter, S&P 500 earnings are on pace to grow by 26%, with full-year earnings expected to rise by 21%. Earnings growth in the TSX has been strong as well, with analysts calling for first-quarter earnings growth of 24% and full-year earnings growth of 26%. Given the sharp rally in recent weeks, along with lingering uncertainty in the Middle East, we believe a period of consolidation over the coming weeks would be reasonable. However, the longer-term outlook remains supported, in our view, aided by steady economic growth and strong corporate profit growth.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet.}

• U.S. stocks reach another record, TSX rises as well - The S&P 500 posted its sixth consecutive weekly gain supported by solid employment data and renewed optimism around a potential Iran peace deal. The TSX was also higher, but gains are more muted after a disappointing jobs report. In the U.S. better‑than‑expected jobs data underscored the economy’s resilience, while oil prices were little changed as markets await Iran’s response to a proposed 14‑point peace plan. The U.S. administration indicated that recent U.S. strikes on Iranian military facilities do not alter the ceasefire status, reinforcing hopes that oil flows through the Strait of Hormuz will resume. U.S. technology shares once again led the market higher, driven by continued strength in semiconductor stocks. Meanwhile, the Canadian dollar and government bond yields were lower on the day, with the 10‑year yield around 3.47%.
   
• Canada labour market softness to keep the BoC on hold - Canada’s economy shed 17,700 jobs in April, more than reversing the 14,100 job gain in March, while the unemployment rate rose to 6.9% from 6.7%. Full‑time employment declined for a third consecutive month, with job losses concentrated in information, culture and recreation, construction, and other services. These declines were partially offset by gains in health care and social assistance as well as accommodation and food services. Overall, the data point to ongoing labour‑market softness and push back against expectations for BoC rate hikes later this year. Against a backdrop of elevated geopolitical and trade uncertainty, we believe the BoC is likely to remain on hold as policymakers assess the balance between cooling labor‑market momentum and inflation risks.
   
• Solid U.S. job growth eases labour-market concerns - The U.S. economy added 115,000 jobs in April, well above expectations of 55,000, while the unemployment rate held steady at 4.3%. Healthcare and social assistance once again led job gains, but hiring broadened across additional sectors, an encouraging sign of improving labor‑market breadth. Overall, stronger job gains and steady unemployment reinforce the economic resilience narrative. The first back‑to‑back increase in payrolls in nearly a year validates other timely labor‑market indicators that have been signaling not just stabilization, but improvement in employment conditions. These trends remain supportive of consumer spending, even in the face of higher energy costs. With downside risks to the labor market easing, the Fed is likely to remain firmly on hold in the near term as it waits to see how energy‑driven inflation pressures evolve. We still believe one rate cut is possible in 2026, but it would likely come late in the year, assuming energy markets have normalized by then. In the meantime, equity performance should continue to be driven primarily by earnings trends and ongoing AI‑related investment.
   
• Earnings continue to drive market returns - With roughly 80% of S&P 500 companies having reported first‑quarter results, overall earnings growth is now on track to exceed 25%, marking the sixth consecutive quarter of double‑digit earnings growth. TSX earnings growth is equally as impressive at 25%, with about 70% of the companies beating expectations. This strength has been driven by a combination of solid revenue growth, particularly among technology companies in the U.S., and historically high profit margins across many sectors. In aggregate, results have largely validated the view that corporate profits remain a key driver of market returns, helping offset a modest decline in valuations this year and providing an important counterbalance to ongoing geopolitical uncertainty. After such a strong advance in stocks, upside and downside risks now appear more evenly balanced in our view, and a pause in the rally would be a reasonable expectation. Even so, the earnings backdrop continues to provide an important cushion. As long as corporate profits keep accelerating, investors have good reason to avoid becoming overly negative and to tune out, rather than react to, the daily headline noise.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source for all data: Bloomberg}

• Markets close lower as oil prices rebound – The TSX and U.S. equity markets finished lower on Thursday as investors await Iran's response to a proposed diplomatic framework that could guide peace talks. Sector performance was broadly lower, with energy and materials leading the pullback. Bond yields rose, with the 10-year Government of Canada yield at 3.54% and the 10-year U.S. Treasury yield at 4.38%. Internationally, Asian markets were mostly stronger overnight, led by Japan's Nikkei, which reached a record high. Meanwhile, the U.S. dollar strengthened modestly against major currencies.
   
• Jobless claims remain low – U.S. initial jobless claims rose to 200,000 last week but remained below the 205,000 consensus estimate. Continuing claims — which reflect the total number of people receiving benefits — declined to 1.77 million, suggesting more workers are finding new employment. Taken together, we think these figures are consistent with other recent data pointing to a stable labour market. Slower job creation, paired with a moderate pace of layoffs, should help keep wage gains running modestly above inflation, in our view. Friday's U.S. employment report should provide additional insight, with consensus estimates calling for 65,000 job gains, sufficient to hold the unemployment rate steady at 4.3%. Canada's April employment report will also be released tomorrow, expected to show 10,000 jobs added and the unemployment rate remaining unchanged at 6.7%.
   
• Strong earnings season entering the home stretch – With about 85% of S&P 500 companies reporting, earnings results continue to come in better than expected. About 85% have beaten EPS estimates by an average upside surprise of 19%. As a result, EPS growth estimates have been revised up significantly to 28%, from 12.1% at the end of the quarter, which would mark the sixth straight quarter of double-digit earnings growth. We believe these strong results demonstrate that fundamentals remain supportive of equity markets. Technology is leading earnings gains, up more than 50% year-over-year, reflecting demand tied to artificial intelligence and cloud-computing infrastructure. Communication services and materials are also posting strong EPS growth, both up more than 40% from a year ago. Importantly, growth has been broad-based, as 10 of the 11 sectors are posting year-over-year EPS gains. 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 close at highs as hopes for an Iran peace deal rise – U.S. and Canadian equities were sharply higher on Wednesday, with the S&P 500 and Nasdaq closing at all-time highs. The rally was driven by reports that a U.S.–Iran deal could come in the days ahead. Oil prices fell on this news, with WTI down about 7% toward $95 levels. In fixed income, U.S. Treasury yields moved lower as declining energy prices reduced near-term inflation concerns, supporting bond prices. Globally, equity markets were broadly higher, with European stocks gaining and several Asian markets advancing as risk sentiment improved. Overall, markets continue to be underpinned by strong and accelerating corporate earnings and resilient economic fundamentals, even as investors navigate ongoing geopolitical uncertainty.
   
• Earnings trends set the tone for markets – First-quarter earnings season is in full swing, with roughly 70% of companies in the S&P 500 having already reported and more than 70 additional companies scheduled to report over the next three days. Results have been strong, with S&P 500 earnings per share on pace to grow 25% year-over-year in the first quarter, double the 12% growth expected at the end of March. A key driver has been continued strength in AI-related investment trends, with the technology and communication services sectors expected to deliver earnings growth of roughly 50% for the quarter. More recently, labour-market conditions have shown signs of stabilization, with nonfarm payrolls rebounding by 178,000 in March and initial jobless claims posting one of their lowest readings on record last week. While risks surrounding the war in Iran remain, we believe robust earnings growth and steady economic activity create a favourable backdrop for equity markets over the balance of the year.
   
• Economic data remains solid – Recent economic data help reinforce what earnings have been telling us. The U.S. economy remains on solid footing. Real GDP grew at a 2% annualized pace in the first quarter, rebounding from the drag caused by last year’s government shutdown. Beyond the headline number, the details were even more favourable, with final sales to private domestic purchasers, a measure that strips out inventory swings, government spending, and trade effects, rising 2.5%, pointing to heathy private‑sector activity. Consumer spending slowed modestly but remains resilient. Rising incomes and higher tax refunds helped offset higher gasoline costs. While energy prices may increasingly weigh on spending as refund season fades, there is no evidence yet of broad deterioration in consumer demand. Elsewhere, business investment was the clear standout. Spending on IT equipment and software alone added roughly 1.5% to GDP growth, reflecting continued AI investment. Taken together, the data suggest that while higher oil prices may act as a headwind if they persist, there is currently little indication that the U.S. economy is cracking.

Mona Mahajan;
Investment Strategy

^{Source for all data: FactSet}

• Stocks finish mixed as Middle East tensions cool – North American equity markets were mixed on Tuesday, while oil prices moved lower, as we believe a lack of further escalation in tensions with Iran supported sentiment toward U.S. stocks. The TSX, however, was weighed down by Shopify shares after the company issued disappointing guidance following its first-quarter earnings announcement, in our view. On the economic front, U.S. JOLTS job openings were little changed from the prior month in March at roughly 6.9 million, suggesting stable demand for labour, while the ISM services PMI declined slightly to 53.6 but remained well above the expansion-contraction threshold of 50, signaling steady business activity, in our view. Bond yields closed slightly lower, with the 10-year Government of Canada yield finishing at 3.60% and the 10-year U.S. Treasury yield at 4.42%.
   
• Earnings and economic trends set the tone for markets – First-quarter earnings season is in full swing, with roughly 70% of S&P 500 companies having already reported, compared with roughly 30% of companies in the TSX. Results have been strong, with TSX earnings on pace to grow 22% year-over-year in the first quarter, supported by solid profit growth in the materials sector. S&P 500 earnings per share are on pace to grow 25% year-over-year, double the 12% growth expected at the end of March, with continued strength in AI-related investment trends serving as a key driver. The technology and communication services sectors within the S&P 500 are expected to deliver earnings growth of roughly 50% for the quarter, highlighting ongoing momentum in technology spending. On the economic front, investors will get an updated read on labour-market conditions beginning today with U.S. JOLTS job openings, while Friday’s Canadian labour-force survey and U.S. nonfarm-payrolls report will round out the week. More recently, labour-market conditions have shown signs of stabilization, with U.S. nonfarm payrolls rebounding by 178,000 in March and initial jobless claims posting one of their lowest readings on record last week. In Canada, employment growth has slowed; however, with labour-force growth also easing, the unemployment rate has remained contained at 6.7% for the past two months. While risks surrounding the war in Iran remain, we believe robust earnings growth and steady economic activity create a favourable backdrop for equity markets over the balance of the year.
   
• Middle East tensions remain in focus – Markets began the week with a modest risk-off move, as military action in the Strait of Hormuz on Monday raised concerns about the durability of the fragile ceasefire between the U.S. and Iran announced in early April. However, stocks rebounded on Tuesday, aided, in our view, by a lack of further escalation and rhetoric from both the U.S. and Iran that points to a preference for a diplomatic solution rather than a further escalation in military action. In response, equity markets closed higher, while oil prices traded lower. Heightened tensions with Iran could slow the pace of gains we have seen in equity markets in recent weeks, particularly after the S&P 500 and Nasdaq each posted their strongest monthly performance in April since the post-pandemic rebound in 2020. However, we believe the longer-term outlook remains favourable for equity markets, supported by steady economic activity and strong corporate profit trends.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet}