The President Who Cried Ceasefire

The S&P 500, Nasdaq Composite and Dow Jones Industrial Average all ended the week higher by +2.4%, +4.5% and +0.2%, respectively, powered by strong first-quarter (Q1) earnings results and optimism surrounding the second ceasefire proposal sent to Iran during the week.  As of Sunday, Iran has responded with a counteroffer with early indications pointing to yet another impasse. Last week was defined by a stark contrast between Wall Street and Main Street; 1Q earnings saw the S&P 500’s sixth consecutive quarter of double-digit revenue growth, while higher fuel prices and increasing consumer costs continued to weigh on lower-end consumers. 

As of Friday, 89% of S&P 500 constituents reported 1Q earnings, with 84% of companies beating earnings-per-share (EPS) estimates (a five-year average of 78%) with a blended revenue growth rate of +11.1% year over year. Sector outperformance included communication services, information technology, consumer discretionary and materials, while health care and energy sectors underperformed their consensus estimates. Interesting fact of the week: The market cap required for S&P 500 inclusion has nearly tripled in seven years from $8.2 billion in 2019 to $22.7 billion in 2026.

Among the most prominent winners this year have been central processing unit (CPUs) and memory companies. Broadly thought of as obsolete relative to more powerful GPUs and cloud computing, the two subsectors have reemerged in 2026 due to new AI “agents” and their compute shift from GPU-intensive single inference queries towards CPU-intensive orchestration and memory-heavy context management. Two popular examples include Sandisk and Intel, which have surged year to date +558% and +239%, respectively. Sandisk’s most recent earnings report saw revenues of approximately $6 billion, a +251% year-over-year increase, while generating +$23.03 a share of profit (relative to net losses a year prior).

Shifting to Main Street, this week Kraft Heinz CEO Steve Cahillane detailed the grim reality of everyday Americans, stating: “Consumers are literally running out of money toward the end of the month.” The newly anointed CEO has promised a greater shift towards value as Americans who purchase ketchup rather than caviar are finding it increasingly difficult to afford essential goods and services.

Quantifying this sentiment, April Federal Reserve economic data shows a record $1.1 trillion in consumer revolving credit outstanding (around $3,250 per American), average new car sales and starting loan balances of $50,000 and $42,000, respectively, and 30-year mortgage rates have retraced back to 6.5% after declining to 6.0% as recently as January.

Aside from big ticket items, the AAA nationwide gasoline index hit $4.50 per gallon (2025 average of $3.14) this week, quickly approaching the $5 high from June 2022. Looking at commercial fuels, diesel has increased to $5.65 a gallon (2025 average of $3.53) and sits only -$0.15 below its all-time high. The jet fuel blended average index across major markets has increased by +101% (versus 72% for Brent oil) relative to 2025, with Middle Eastern (+111%), European (+106%) and Asian (+110%) regional markets getting hit the hardest. 

Speaking of running out of gas, the 43-year-old Spirit Airlines crash-landed early last week amid rising jet fuel costs, multiple failed restructurings and a rejected government bailout. According to bankruptcy proceedings, the conflict in Iran added an incremental +$100 million in fuel costs in March and April, causing executives to take off their oxygen masks and head for the exit row. Aside from the approximately 17,000 employees at Spirit Airlines who lost their jobs, Spirit’s departure signifies another budget airline bankruptcy that helped dampen prices across the industry. Expect more turbulence ahead.   

Iran responded to the U.S. ceasefire proposal Sunday to effectively end the conflict in Iran, with people familiar with the matter commenting that there are still significant gaps between the two parties. Last week both sides traded concentrated campaigns on shipping vessels and missile silos, bringing into question the validity of the ceasefire altogether.

The United States called for the immediate reopening of the Strait of Hormuz, along with significant concessions on Iran’s nuclear and uranium enrichment programs. Iran’s response Sunday requested stronger guarantees that the transferred uranium would be returned if negotiations fail, shorter suspension of its uranium enrichment efforts (the United States requested a 20-year suspension) and no stoppage of its nuclear facilities. President Trump’s social media diatribe Sunday afternoon didn’t help sentiment, stating: “For 47 years the Iranians have been ’tapping’ us along, keeping us waiting, killing our people with their roadside bombs, destroying protests, and recently wiping out 42,000 innocent, unarmed protestors, and laughing at our now GREAT AGAIN Country. They will be laughing no longer!”

Between negotiating the Iran conflict, Trump is also planning to meet with China’s Xi Jinping this Thursday in China, marking the first trip by a sitting U.S. president to mainland China in over a decade. The original meeting was postponed in April due to the conflict in Iran.  

What to Watch This Week: The ongoing U.S.-Iran negotiations for a proposal to agree to a framework for a possible ceasefire will again be a major catalyst this week. On the economic front, the Consumer Price Index, the Producer Price Index and retail sales for April are all due this week, providing an inflation update on the second full month of conflict. Existing home sales will also be noteworthy with peak selling season coinciding with a 30-year mortgage rate headwind that has retraced back to 6.45% in recent months.  

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