Good Morning,
I hope everyone had a great weekend. Believe it or not, the NFL preseason kicks off this Thursday with the Hall of Fame Game!
Stocks are coming off a positive, albeit volatile, week as easing geopolitical tensions have driven a sharp reversal in energy prices and helped push Treasury yields lower. Over the weekend, President Trump paused planned military strikes against Iran, and recent reports suggest negotiations regarding the reopening of the Strait of Hormuz are progressing. We will see how these developments unfold, but for now, lower oil prices and higher stock prices are providing a supportive backdrop for markets.
Turning to market fundamentals, earnings reports from Microsoft and Amazon provided some of the strongest evidence yet that demand for computing capacity remains robust and that several of the largest technology companies continue to view AI investment as a strategic priority. Investors remain focused on whether these unprecedented levels of AI spending will ultimately translate into equally unprecedented revenue growth, profitability, and shareholder returns.
Personally, I believe the most significant and beneficial effects of AI investment will be realized over the months and years ahead, with the race to build out the necessary infrastructure still in its early stages. This Friday's payroll report, another busy week of earnings, and continued developments in the Middle East will help determine whether last week's risk-on sentiment evolves into a more durable market recovery.
I remain constructive on the overall market and continue to view periods of short-term volatility as potential buying opportunities. As always, please feel free to reach out with any questions or comments.
Attached is this week's Market Strategy Radar Screen Report from John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management.
Have a great week!