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- Recent economic data indicate stable growth, supported by resilient consumer spending and ongoing business investment.
- Labor market data last week continued to reflect slower but stable employment conditions, with low layoffs and steady unemployment expectations.
- Corporate earnings continued to show broad strength last week, with most sectors reporting profit growth, which provided continued support for equity markets.
1. Steady Economic Growth Continues
Economic data released last week continued to indicate that the U.S. economy remains in relatively solid condition. Underlying private-sector activity remained healthy, with consumer and business demand holding up despite higher borrowing costs and elevated energy prices.
Consumer spending moderated slightly but remained resilient overall. Higher household income levels and larger tax refunds helped offset the impact of elevated gasoline prices.1 While higher energy costs could place greater pressure on spending in the months ahead, current data have not shown a broad weakening in consumer demand.
Business investment remained a major source of strength. Spending on technology equipment and software continued to contribute meaningfully to economic activity, supported in part by ongoing investment tied to artificial intelligence infrastructure and related technologies.1 Recent corporate earnings reports have also reinforced the view that businesses continue to invest in productivity and long-term growth initiatives.
Taken together, the latest data point to an economy that is slowing gradually rather than contracting. While growth has moderated in certain areas, overall economic conditions remain stable and supportive of broader market fundamentals.
2. Labor Market Remains Stable Despite Slower Hiring
The labor market showed further signs of stability last week, even as hiring activity continued to cool. Initial jobless claims increased to 200,000 but remained below expectations, indicating layoffs are still limited by historical standards.2 At the same time, continuing claims declined to 1.77 million, suggesting many unemployed workers are finding new positions without extended periods out of work.2
Recent labor data have indicated a gradual moderation in employment conditions rather than a sharp slowdown. Employers appear to be adding jobs at a slower pace while avoiding significant workforce reductions. This combination has helped keep overall labor market conditions relatively balanced. Wage growth has also continued to run modestly above inflation, supporting consumer spending without showing signs of major acceleration.3
3. Corporate Earnings Continue to Support Market Strength
The earnings season remained strong last week, with most S&P 500 companies continuing to report results above expectations.4 Roughly 85% of companies have released quarterly earnings, with majority exceeding profit forecasts. This prompted analysts to raise overall earnings growth estimates significantly from earlier projections.4 Current estimates now point to one of the strongest quarters for corporate profit growth in recent years, which would mark the sixth consecutive quarter of double-digit earnings expansion.4
Technology companies continued to lead overall earnings gains, supported by ongoing investment in artificial intelligence and cloud infrastructure. Communication services and materials companies also posted strong year-over-year profit growth. Importantly, earnings growth has not been limited to a small number of industries. Ten of the 11 major sectors within the S&P 500 reported annual earnings increases, reflecting relatively broad participation across the market.4
Broad-based earnings growth may help support more balanced equity market performance over time. It also reduces some dependence on a narrow group of large companies and reinforces the benefits of maintaining diversified portfolios across sectors.
For the period ending 5/8/26.
* Small-cap stocks are represented by the Russell 2000® Index. International stocks are represented by the MSCI EAFE. Bonds are represented by the Bloomberg US Aggregate Bond Index. Oil is represented by WTI Oil (West Texas Intermediate Oil), a benchmark for light, sweet crude oil and a primary measure for pricing oil contracts and futures in the U.S.
Sources
1 U.S. Bureau of Economic Analysis
2 U.S. Department of Labor
3 U.S. Bureau of Labor Statistics
4 FactSet
Disclosures
Cary Street Partners is the trade name used by Cary Street Partners LLC, Member FINRA/SIPC; Cary Street Partners Investment Advisory LLC and Cary Street Partners Asset Management LLC, registered investment advisers. Registration does not imply a certain level of skill or training.
Any opinions expressed here are those of the authors, and such statements or opinions do not necessarily represent the opinions of Cary Street Partners. These are statements of judgment as of a certain date and are subject to future change without notice. Future predictions are subject to certain risks and uncertainties, which could cause actual results to differ from those currently anticipated or projected.
These materials are furnished for informational and illustrative purposes only, to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. Materials have been compiled from sources believed to be reliable; however, Cary Street Partners does not guarantee the accuracy or completeness of the information presented. Such information is not intended to be complete or to constitute all the information necessary to evaluate adequately the consequences of investing in any securities, financial instruments, or strategies described herein.
Cary Street Partners and its affiliates are broker-dealers and registered investment advisers and do not provide tax or legal advice; no one should act upon any tax or legal information contained herein without consulting a tax professional or an attorney.
We undertake no duty or obligation to publicly update or revise the information contained in these materials. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. You should not view the past performance of securities, or information about the market, as indicative of future results.
A Composite PMI is a single index that tracks economic activity by combining the performance of both the manufacturing and services sectors, providing a comprehensive overview of overall business conditions.
Nothing contained herein should be considered a solicitation to purchase or sell any specific securities or investment-related services. It should not be assumed that any of the securities transactions or holdings discussed were, or will prove to be, profitable.
The Consumer Price Index (CPI) measures the monthly change in prices paid by U.S. consumers. The Bureau of Labor Statistics (BLS) calculates the CPI as a weighted average of prices for a basket of goods and services representative of aggregate U.S. consumer spending. The CPI is a measure of inflation and deflation. The CPI report uses a different survey methodology, price samples, and index weights than the producer price index (PPI).
Additional Disclosures: International and Foreign Securities, Fixed Income Investments, the Consumer Price Index, the Producer Price Index.
Comparative Index Descriptions: The Standard & Poor’s (S&P) 500 Index, The Russell 2000® Index, The NASDAQ Composite Index, The MSCI EAFE Index, Dow Jones Industrial Average® (Dow Jones or DJIA), The Bloomberg Barclays US Aggregate Bond Index (US Agg Bond), The CBOE Volatility Index (VIX). CSP2026001_19
