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QQQ surged 5.4% last week as AI optimism fueled tech-heavy risk-on trades.
Iran deal hopes and stable jobs data lifted Wall Street sentiment last week.
Strong Q1 earnings growth is supporting bullish momentum in SPY, XLK and VUG.
The S&P 500 recorded its sixth winning week in a row thanks to moderation in the Middle East tensions and the continued AI boom. The last week marked the strong jobs report and Iran deal hopes, factors that helped the key U.S. equity gauge to add 2.4% gains last week.
The tech-heavy Nasdaq-100 ETF Invesco QQQ Trust, Series 1 (QQQ - Free Report) jumped 5.4% last week. State Street SPDR Dow Jones Industrial Avg ETF Trust (DIA - Free Report) inched up just 0.5%.
Let’s find out the factors driving Wall Street’s risk-on sentiments.
Stability in Jobs Report
The U.S. economy added 115,000 nonfarm jobs in April, topping economists’ expectations of 55,000, though falling short of the revised 185,000 gain recorded in March. Federal Reserve Bank of Chicago President Austan Goolsbee described the labor market as stable rather than strong, as quoted on CNBC.
The latest data pointed to a labor market that remains resilient but continues to lose momentum compared to the rapid hiring pace seen in earlier years. The unemployment rate held steady at 4.3%.
Iran Deal Hopes
U.S. Secretary of State Marco Rubio said the United States was expecting a response on Friday from Iran on the proposal to end the war, as quoted on CNBC. The United States was awaiting response from Iran over proposals for ceasefire deal, per the Guardian.
Meanwhile, Kalshi traders now see a 58% chance a deal is reached by 2027, as quoted on CNBC. They also see a 47% chance an agreement is reached by September. Those levels are higher than before the Axios report, but still lower than the probability in the middle of April when there was more hope for a resolution to the conflict. In mid-April, odds that the two countries reach a nuclear deal by June were more than 70%, the same source revealed.
No Fed Rate Hike?
Markets currently expect the central bank to leave rates unchanged through the remainder of the year as inflation remains elevated and the labor market cools only gradually. Meanwhile, former Federal Reserve Governor Kevin Warsh is awaiting Senate confirmation to become the next Fed chair, per the above-said CNBC article.
Upbeat Earnings
The Q1 earnings season indicated a steadily improving earnings outlook. Estimates have moved higher for 7 of the 16 Zacks sectors since the quarter got underway. These sectors are: Tech, Energy, Basic Materials, Utilities, Industrials, Retail, and Business Services.
Through May 8th, we have seen Q1 results from 446 S&P 500 members or 89.2% of the index’s total membership. Total earnings for these 446 index members are up +21.2% from the same period last year on +10.3% higher revenues, with 79.6% beating EPS estimates and 78% beating revenue estimates.
Also, note that 2026 Q1 earnings are on track to be up +23.9% from the same period last year on +10.9% higher revenues, with 13 of the 16 Zacks sectors expected to enjoy positive earnings growth.
ETFs to Tap
Against this backdrop, investors can tap risk-on and tech-heavy ETFs like Vanguard Growth Index Fund ETF (VUG - Free Report) , (SPY - Free Report) , QQQ, and State Street Technology Select Sector SPDR ETF (XLK - Free Report) . These ETFs may continue to gain in the coming days, supported by their inherent strengths.
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Time for Risk-On Trades? ETFs in Focus
Key Takeaways
The S&P 500 recorded its sixth winning week in a row thanks to moderation in the Middle East tensions and the continued AI boom. The last week marked the strong jobs report and Iran deal hopes, factors that helped the key U.S. equity gauge to add 2.4% gains last week.
The tech-heavy Nasdaq-100 ETF Invesco QQQ Trust, Series 1 (QQQ - Free Report) jumped 5.4% last week. State Street SPDR Dow Jones Industrial Avg ETF Trust (DIA - Free Report) inched up just 0.5%.
Let’s find out the factors driving Wall Street’s risk-on sentiments.
Stability in Jobs Report
The U.S. economy added 115,000 nonfarm jobs in April, topping economists’ expectations of 55,000, though falling short of the revised 185,000 gain recorded in March. Federal Reserve Bank of Chicago President Austan Goolsbee described the labor market as stable rather than strong, as quoted on CNBC.
The latest data pointed to a labor market that remains resilient but continues to lose momentum compared to the rapid hiring pace seen in earlier years. The unemployment rate held steady at 4.3%.
Iran Deal Hopes
U.S. Secretary of State Marco Rubio said the United States was expecting a response on Friday from Iran on the proposal to end the war, as quoted on CNBC. The United States was awaiting response from Iran over proposals for ceasefire deal, per the Guardian.
Meanwhile, Kalshi traders now see a 58% chance a deal is reached by 2027, as quoted on CNBC. They also see a 47% chance an agreement is reached by September. Those levels are higher than before the Axios report, but still lower than the probability in the middle of April when there was more hope for a resolution to the conflict. In mid-April, odds that the two countries reach a nuclear deal by June were more than 70%, the same source revealed.
No Fed Rate Hike?
Markets currently expect the central bank to leave rates unchanged through the remainder of the year as inflation remains elevated and the labor market cools only gradually. Meanwhile, former Federal Reserve Governor Kevin Warsh is awaiting Senate confirmation to become the next Fed chair, per the above-said CNBC article.
Upbeat Earnings
The Q1 earnings season indicated a steadily improving earnings outlook. Estimates have moved higher for 7 of the 16 Zacks sectors since the quarter got underway. These sectors are: Tech, Energy, Basic Materials, Utilities, Industrials, Retail, and Business Services.
Through May 8th, we have seen Q1 results from 446 S&P 500 members or 89.2% of the index’s total membership. Total earnings for these 446 index members are up +21.2% from the same period last year on +10.3% higher revenues, with 79.6% beating EPS estimates and 78% beating revenue estimates.
Also, note that 2026 Q1 earnings are on track to be up +23.9% from the same period last year on +10.9% higher revenues, with 13 of the 16 Zacks sectors expected to enjoy positive earnings growth.
ETFs to Tap
Against this backdrop, investors can tap risk-on and tech-heavy ETFs like Vanguard Growth Index Fund ETF (VUG - Free Report) , (SPY - Free Report) , QQQ, and State Street Technology Select Sector SPDR ETF (XLK - Free Report) . These ETFs may continue to gain in the coming days, supported by their inherent strengths.