The S&P 500 achieved its seventh consecutive weekly gain, albeit narrowly, closing up 0.13% for the period. This marks the longest winning streak since December 2023. While the index touched record highs on Monday, Wednesday, and Thursday, a significant 1.24% drop on Friday tempered the week’s momentum. Market participants were left with uncertainty following the high-profile summit between President Donald Trump and Chinese President Xi Jinping, which yielded few definitive advantages for the United States. Additionally, escalating oil prices and rising bond yields added pressure to the market. On the brighter side, a strong performance in technology stocks provided crucial support to the week’s record-setting sessions, with the Information Technology sector emerging as one of the four S&P 500 sectors to post gains for the week. The sustainability of these weekly gains remains a key question for the upcoming trading period.
Here’s a deeper dive into the three primary forces shaping Wall Street over the past five sessions:
**The Trump-Xi Summit: A Landscape of Ambiguity**
The much-anticipated summit between President Trump and President Xi concluded with Wall Street grappling with more unanswered questions than concrete resolutions. Boeing, a bellwether for U.S.-China trade relations, experienced its worst week, shedding 7%. President Trump alluded to a significant commitment from China to purchase Boeing aircraft, stating aboard Air Force One that China had agreed to order “approximately 400, 450 engines, 200 planes, and a promise of up to 750 if they do a good job.” This figure of 200 planes was reiterated in a Fox News interview. However, these numbers fell short of Wall Street’s expectations, which had been anticipating closer to 500 aircraft. Notably, neither China nor Boeing has issued official statements confirming these details, leaving a vacuum of clarity. Despite the subdued reaction, industry analysts believe that under CEO Kelly Ortberg, Boeing is poised for a turnaround.
The summit also touched upon the critical semiconductor industry, a sector that saw a downturn for Nvidia and other chip stocks on Friday. President Trump indicated that discussions included AI guardrails and the potential approval of Nvidia’s H200 chips for sale in China. While he expressed optimism about potential developments, he also acknowledged China’s ambition to develop its own indigenous semiconductor capabilities. Despite this uncertainty, Nvidia shares managed to eke out a 4.7% gain for the week. A positive note from the summit was Chinese President Xi Jinping’s assurance to American CEOs traveling with President Trump that the “door to business in China will open wider,” as reported by state-backed newspaper Xinhua. This sentiment resonated with industry leaders like Tesla and SpaceX CEO Elon Musk and Apple CEO Tim Cook, who were also part of the delegation. Apple itself saw its shares rise by over 2% for the week.
Geopolitical tensions, specifically the U.S.-Iran conflict and the blockade of the Strait of Hormuz, were also on the agenda. However, similar to other discussions, no substantial agreements were reached. Secretary of State Marco Rubio informed NBC News that President Trump discussed the situation with President Xi but did not solicit assistance in resolving the ongoing conflict. Regarding Taiwan, President Xi cautioned President Trump that mishandling the issue could place the “entire relationship [with the U.S.] in great jeopardy,” according to Xinhua. President Trump, in turn, remained non-committal on whether the U.S. would defend Taiwan from China.
**Interest Rate Outlook: A Tightrope Walk for the Fed**
New Federal Reserve Chairman Kevin Warsh faces a challenging economic environment characterized by persistent inflationary pressures. Crude oil prices surged last week, driven by ongoing geopolitical uncertainties surrounding the Iran conflict. Bond yields also trended upward, fueled by concerns about the Fed’s ability to lower interest rates to meet President Trump’s objectives. Compounding these worries, a pair of robust inflation reports cast further doubt on the prospect of immediate interest rate cuts. The April Consumer Price Index (CPI) exceeded expectations on Tuesday, largely due to war-related energy price hikes. Wednesday brought an even hotter wholesale inflation report, with the Producer Price Index (PPI) registering its largest annual increase since 2022.
These economic releases coincided with Federal Reserve Chairman Kevin Warsh’s confirmation by the Senate. Jerome Powell’s term as Fed chair officially expired on Friday, though he is slated to continue his tenure as a governor at the central bank for another two years. The latest inflation data presents a complex scenario for Warsh’s mandate to foster economic growth through lower interest rates. A premature reduction in rates could potentially reignite inflationary pressures. Market veteran Jim Cramer noted that the market might face increased volatility ahead, given stocks trading near all-time highs and a still-stringent monetary policy environment. He articulated on Tuesday night, “This stock market won’t be able to rally for long without the oxygen of lower interest rates.”
**The Enduring Strength of the AI Trade**
Despite the market’s headwinds last week, the Artificial Intelligence (AI) sector demonstrated remarkable resilience. The robust investor appetite for AI stocks was once again evident with the highly successful initial public offering (IPO) of Cerebras. Cerebras, an AI hardware company asserting its flagship product outperforms Nvidia’s GPUs, debuted on Thursday, marking the largest IPO by a U.S. tech firm in years. The company successfully sold 30 million shares, raising a substantial $5.5 billion. Cerebras experienced a stellar first trading session, jumping 68% by the closing bell on Thursday. While shares saw a 10% decline on Friday, this was amidst a broader tech stock sell-off, suggesting it was not an isolated systemic issue. Analysts do not perceive Cerebras as a direct threat to Nvidia, viewing them as competitors primarily focused on different aspects of AI processing, with Cerebras emphasizing ultra-fast inference for daily AI workloads.
The IPO was not the sole indicator of strength within the AI narrative. Cisco Systems, a formerly favored stock, delivered an exceptional earnings report on Wednesday evening. Investors responded positively to the networking giant’s surging AI order backlog. Cisco management significantly raised its projected AI infrastructure and hyperscaler orders for fiscal year 2026 to $9 billion, up from an initial forecast of $5 billion. This development was viewed favorably for Club holding Broadcom, which boasts a substantial networking business expected to benefit immensely from the burgeoning AI spending wave. Broadcom shares reached a record high close on Thursday following the Cisco earnings announcement. However, Broadcom experienced a modest decline for the week, influenced by Friday’s market pressures.
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