• 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}

Monday, 5/4/2026 p.m.

• Markets slide as Middle East tensions flare – Equity markets fell today as renewed tensions in the Middle East pushed oil prices higher. The U.S. and Iran exchanged fire as the U.S. military sought to establish a passage through the important Strait of Hormuz, with separate Iranian missile strikes fired at the U.A.E. In response, WTI oil hit $105 per barrel at the close of the session, up 3% over the day as investors price a greater risk of more prolonged disruptions to energy markets from this conflict. Equities moved lower, with the Dow Jones Industrial Average index down more than 1% and the S&P/TSX index 0.8% lower, although better performance among tech stocks helped cushion declines in the S&P 500 index and the Nasdaq too. Bonds sold off sharply in the face of higher oil prices, with the yield on the two-year U.S. Treasury note up to 3.95% and markets no longer pricing any material chance of Fed rate cuts this year. The move in Canadian bonds was even larger, with the 2-year yield up more than 10 basis points (0.10%) today to 3.05%, and markets pricing more than two 25 basis point (0.25%) hikes in 2026.
   
• Renewed military action casts doubt over ceasefire – Coming into this week the conflict in the Middle East remained in stalemate, with the ceasefire between the U.S. and Iran announced in early April having held, but with few signs of material progress toward a more lasting peace agreement emerging. Iran's latest peace plan, sent over the weekend, called for reparations, Iranian oversight of traffic through the Strait of Hormuz, and no compromises around its nuclear program, and was quickly rebuffed by President Trump. Today's military action follows a U.S. push to open a channel through the Strait of Hormuz, challenging Iran's control over this waterway. The U.S. military characterized today's conflict as 'defensive', and it is not clear that the ceasefire with Iran has been broken. However, the limited progress toward a peace deal, and renewed military tensions in the Persian Gulf, highlight the risk of a more prolonged or larger disruption to global energy markets, which could threaten the increased optimism priced into equity markets in recent weeks.
   
• Growth and earnings backdrop remain supportive – We think rising market optimism in part reflects a growth backdrop that, so far, looks resilient to the oil price spike, and further signs of improving corporate earnings growth. U.S. first-quarter GDP delivered solid-looking underlying growth, helped by resilient household consumption and strong business investment. Meanwhile, the labour market looks to be in good shape, in our view, and consensus expects this Friday's nonfarm-payroll report to support this assessment, with a gain of 60,000 jobs in April seen keeping the unemployment rate steady at 4.3%. Admittedly, Canadian activity rates remain more subdued, with growth tracking a sluggish 1.5% gain in the first quarter and payrolls expected to rise by just 10,000 in April, according to the Bloomberg consensus. Still, we think there are few signs of a hard landing in the Canadian economy, and we continue to expect growth to brighten later this year, helped by an easing in trade policy uncertainty with the U.S. and supportive fiscal policy settings. Overall, the fundamentals around growth and earnings remain supportive for stocks, in our view, even if oil prices continue to pose some downside risk to the outlook.

James McCann;
Investment Strategy

^{Source for all data: Bloomberg, FactSet}

• U.S. stocks hit new highs – U.S. equity markets kicked off May on the front foot, building on a rally over April which was the strongest seen in a single month since 2020. The S&P 500 was up 0.3% over the session, pushing this large-cap index to a new record high, while the Nasdaq index, which has been bolstered by strong performance in the tech sector over recent weeks, was up an even better 0.9%. In Canada, stock markets were steady at the close of the week, with the S&P/TSX index trading 1.7% shy of its all-time highs. WTI oil prices fell over the day, helped by reports that Iran has delivered a new peace proposal to the U.S., but at $102 per barrel these remain elevated. Bonds were little changed, with the yield on the 10-year U.S. Treasury note trading at 4.38%. Gold prices were steady around $4,600 per ounce, and the dollar continues to drift lower against a basket of trade-weighted international currencies, with the rally in the greenback seen through March following the outbreak of the conflict in Iran having now fully reversed.
   
• Stalemate in the Middle East – The ceasefire between the U.S. and Iran continues to hold, but we are seeing limited signs of progress toward a more permanent peace agreement that enables the reopening of the Strait of Hormuz. Markets reacted positively this morning to reports that Iran has delivered a new peace proposal to the U.S. via intermediaries in Pakistan. However, subsequent commentary from both sides indicated that reaching an agreement remains challenging. Iran's foreign minister warned that the U.S. should not pursue "excessive demands" while President Trump commented that Iran is "asking for things I can't agree with". Reports have surfaced that the commander in chief has been briefed on another round of potential military strikes. In our view, we likely need to see more concrete signs of progress start to emerge from these talks to avert further increases in oil prices which could threaten some of the increasing optimism priced into markets.
   
• A big data week – We think market optimism in part reflects hopes for a normalization in global energy supplies over coming months but also increasing confidence over the economic and earnings backdrop. Data over the past week support these hopes, with the economy so far resilient in the face of higher oil prices, and corporate earnings growth coming in even stronger than expected. Next week's U.S. labour-market report will help provide further insight into the economic picture, with consensus expecting a solid if unspectacular gain in payrolls of 60,000 in April, consistent with low unemployment insurance claims over the month and solid labour-market signals across a range of survey data. In Canada, expectations are tilted toward a marginal 5,000 gain in employment over the month, building on the rebound seen in March after a weak start to 2026. If delivered, this would be consistent with a slow-but-steady labour-market backdrop. Meanwhile, the final run of first-quarter earnings reports will help provide further insights into profitability across the corporate sector. In our view, the fundamentals around growth and earnings remain supportive for stocks, even if oil prices continue to pose some downside risk to the outlook.

James McCann;
Investment Strategy

^{Source for all data: Bloomberg, FactSet}

• 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}