The stock market goes into the last week of May from yet another position of power, with the S&P 500 surfing the 7,500 mark after a busy earnings season.

While not a straight shot up and to the right, the S&P 500 (^GSPC) and tech-heavy Nasdaq (^IXIC) rose yet again for the week, joined by the Dow (^DJI), which set new records and has 51,000 in its sights for the first time.

With earnings season done, the stock market moves into digestion and distraction territory as investors integrate the whole of corporate data with extracurricular corporate news, economic releases, the bond market’s not-so-subtle signals, and whatever distractions, surprises, and unknown unknowns emerge.

As we all know, there’s always something, and headlines will rush in to fill a calendar void.

This earnings season is nearly done and dusted, though a few key companies are set to report quarterly results this coming week.

It’s a calm week until Wednesday, when the hot semiconductor trade will hear from Marvell Technology (MRVL), which is up 120% so far this year. Salesforce (CRM), which has failed to harness the year’s AI boom, also reports on Wednesday.

Thursday brings us Costco Wholesale (COST), Dell Technologies (DELL), and a few retailers like Dollar Tree (DLTR), Best Buy (BBY), and The Gap (GAP) for a consumer snapshot.

The economic calendar will be calm in the shortened week with the Conference Board's consumer confidence reading on Tuesday, following the University of Michigan's dismal sentiment release on Friday. The Fed's preferred inflation gauge, the Personal Consumption Expenditures index, will come out on Thursday, capping the week's top-tier economic data agenda.

The quarter's earnings season is essentially complete. Even before Nvidia and the retailers opened their books, earnings growth was booming, tracking at 26% year over year, the highest since 2021, according to Savita Subramanian's team at Bank of America.

As we all heard last week from the retail CEOs, many executives spoke in their earnings calls with a funereal, somber tone, perhaps in deference to those on the wrong side of the K-shaped economy.

But don’t let it fool you.

“Despite a slightly more cautious tone on earnings calls, guidance was above average,” Subramanian wrote, pointing to outlook revisions that were much above historical trends.

While there’s plenty of chatter questioning the stock market’s valuation, we’d remind anyone who will listen that this is why: It’s because a lot of money is expected to come in, bolstered by the credibility that stems from having largely delivered on similar promises in the recent past.

Investors have had multiple Lucy-and-the-football moments over the past week (and before), where hopes of an imminent Iran deal lifted investor spirits. At this point, the market is probably mostly in an “I’ll believe it when I see it” mindset, having been burned at least one too many times when buying the rumor.

Secretary of State Marco Rubio has been a voice of realism, reminding us that it’s not over until it’s over.

Regardless, the market is monitoring a deal to open the Strait of Hormuz, if not an official path to peace. President Trump said on Saturday that an agreement “had been largely negotiated,” which included reopening the Strait of Hormuz, and would be announced soon.

While surging oil prices have not seemed to dampen this earnings season, inflation has fundamentally changed this year’s trajectory for the Federal Reserve, led by its new chair, Kevin Warsh.

As the politicians have noted, the war with Iran has turned into a fundamental consumer issue.

This is the last week before a slew of jobs data, but last week's news of even more layoffs amid yet another big week for the AI trade has us thinking about the two things together.

One of our reporters, Emma Ockerman, wrote about how tech CEOs are framing the mass AI-driven layoffs. Cost-cutting and efficiency have been a great way historically for tech companies (and any company, really) to receive a standing ovation from investors in the stock market.

But that is not the company line happening amid today’s layoffs.

Mark Zuckerberg, the same CEO whose “year of efficiency” got him the biggest standing O of anyone that year (2023), has framed Meta's massive layoffs as innovation, noting that "companies that lead the way will define the next generation."

That’s a nice way to keep morale high for those remaining on board. But it's becoming the common refrain from Big Tech as it trims its payroll, with execs saying things like, “The way we work at Cloudflare has fundamentally changed.”

For now, however, layoffs are still low, even if the loud announcements from the tech world make the headlines. Those key players in the AI space have become early adopters of a holistic corporate AI, like a 19th century biochemist injecting himself with his own creation.

Clearly, it’s having an effect. The big question: When and how will it ripple through the rest of the economy?

Economic data: Market closed for Memorial Day.

Earnings calendar: Trip.com Group (TCOM), Viasat (VSAT)

Economic data: ADP weekly employment change, week ended May 9 (42,250 previously); Chicago Fed national activity index, April (-0.2 previously); Philadelphia Fed non-manufacturing activity, May (-16.5 previously); FHFA housing price index, month-on-month, March (0.0% previously); Conference Board consumer confidence, May (92.5 expected, 92.8 previously); Conference Board present situation (123.8 previously); Conference Board expectations, May (72.2 previously); Dallas Fed manufacturing activity, May (-2.3 previously)

Earnings calendar: AutoZone (AZO), Elbit Systems (ESLT), Zscaler (ZS), Pony AI (PONY)

Economic data: MBA mortgage applications, week ended May 22 (-2.3% previously); Richmond Fed manufacturing index, May (3 previously); Richmond Fed business conditions, May (-6 previously); Dallas Fed services activity, May (-9.9 previously)

Earnings calendar: Marvell Technology (MRVL), Salesforce (CRM), PDD Holdings (PDD), Bank of Montreal (BMO), Synopsys (SNPS), Snowflake (SNOW), Agilent Technologies (A), DICK’S Sporting Goods (DKS), HP (HP), U-Haul (UHAL), Bath & Body Works (BBWI), Abercrombie & Fitch (ANF)

Economic data: PCE price index, month-on-month, April (+0.5% expected, +0.7% previously); PCE price index, year-on-year, April (+3.9% expected, +3.5% previously); Core PCE price index, month-on-month, April (+0.3% expected, +0.3% previously); Core PCE price index, year-on-year, April (+3.3% expected, +3.2% previously); Personal income, April (+0.4% expected, +0.6% previously); Personal spending, April (+0.5% expected, +0.9% previously); Durable goods orders, April preliminary reading (+2.5% expected, +0.8% previously); Initial jobless claims, week ended May 23 (209,000 previously); Continuing claims, week ended May 26 (1.782 million previously); GDP annualized, quarter-on-quarter, first quarter (+2% expected, +2% previously)

Earnings calendar: Costco Wholesale (COST), Royal Bank of Canada (RY), The Toronto-Dominion Bank (TD), Dell Technologies (DELL), Autodesk (ADSK), MongoDB (MDB), NetApp (NTAP), Burlington Stores (BURL), Dollar Tree (DLTR), Li Auto (LI), Okta (OKTA), Best Buy (BBY), The Gap (GAP), Uranium Energy Corp. (UEC), SentinelOne (S)

Economic data: Advance goods imports, month-on-month, April (+3.5% previously); Advance goods exports, month-on-month, April (+3% previously); Retail inventories, month-on-month, April (+0.6% previously); Wholesale inventories, month-on-month, April preliminary reading (+1.3% previously); MNI Chicago PMI, May (51.2 expected, 49.2 previously)

Earnings calendar: No notable earnings.

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