As investors say goodbye to a surprise week of Federal Reserve meetings, labor market data and the latest corporate earnings, they’re trying to figure out what this means for a stock market that’s still deciding Where does he want to go? All three major market indexes ended the week higher after Friday’s rally, which was driven by weaker-than-expected jobs data in April, which pushed the unemployment rate slightly higher and Treasury yields lower – less than expected. Rekindled the belief that interest rates will decline this year. All. This contributed to the market’s recovery from a three-week-long correction that brought the S&P 500 down 5.5% from its late-March low in mid-April. The Nasdaq Composite rose about 1.4% this week, the Dow Jones Industrial Average rose 1.1% and the S&P 500 rose 0.6%. The Fed and economic policy were top of mind this week, given the central bank’s decision Wednesday to once again leave interest rates unchanged, as it has been doing since last summer. Chairman Jerome Powell satisfied traders by signaling that the central bank’s next move is unlikely to send rates higher, although the three major stock averages were mixed at the end of the day. Central bank officials have continued to say that their policy actions depend on the direction of inflation, while also noting recent progress in reducing price rises. But the Fed will see no new inflation data next week, leaving unanswered the question of whether prices are really falling so low that a change in stance is needed. “The market is a little confused,” said Larry Tantarelli, founder of the blue chip Daily Trend Report. “Investors are probably in a somewhat gray area, because we don’t know what to expect.” Bond yields fell on Friday after the latest payroll report. The 10-year Treasury yield ended around 4.50% after surpassing 4.6% earlier in the week, while the 2-year Treasury yield settled at around 4.81% after topping the 5% mark. “The market is concerned that economic growth was too strong and progress on inflation has stalled,” said David Donabedian, chief investment officer at CIBC Private Wealth. “This report leans the other way, which both the equity markets and the bond markets are very happy about.” In keeping with the age-old “sell in May and go away” adage, investors are wondering if the recent weakness is part of a short-term consolidation or the beginning of a larger recession. But many professionals say this correction phase is normal in the context of a market that hit new all-time highs as recently as five weeks ago. This week included the conclusion of the trading month of April, which was the first declining month of the year for all three major market averages. It is also the worst monthly performance for the Dow since September 2022. While the three major indexes were down in the second quarter, all are up for the year. And this week’s 11th-hour rally raises questions about whether the market has regained its momentum. “Investors are now questioning whether the decline we experienced from March 28 to April 19 is over,” said Sam Stovall, chief investment strategist at CFRA Research. “There’s still the potential for a slightly deeper market decline, but certainly not a deep correction or even the beginning of a new bear market.” Certainly, some recent earnings reports have cast doubt about the economy, with McDonald’s and Starbucks’ brands showing signs of strain among consumers. Rate debate Stovall said traders took a “breath of relief” after Powell’s comments that the central bank’s next move was unlikely to raise rates. But that didn’t answer the question that’s been troubling Wall Street: When will borrowing costs really start to come down? Economists have a wide range of views on how many cuts could happen this year: Citigroup sees four; Bank of America only one. However, Friday’s good jobs report again raised the possibility of an interest rate cut in early September, according to CMEGroup’s FedWatch tool. Even in a prolonged bullish environment, the fact that the economy is still expanding and contributing to income growth remains bullish, according to Tom Hanlin, senior investment strategist at US Bank Wealth Management. “For us, it speaks to an environment where we think stocks outperform bonds at the margin,” he said. Although no new inflation numbers are scheduled to be released next week, investors will watch reports from the University of Michigan on March wholesale inventories, March consumer credit and May consumer sentiment. “Next week will, in fact, be very quiet on the economic calendar,” Tantarelli said. Any major release can’t be “good for a change.” AI Business While interest rates took center stage this week, investors also continued to monitor companies linked to the artificial intelligence boom amid the recent decline in stocks. Super Micro Computer fell nearly 9% on the week after fiscal third-quarter revenue missed expectations. But Nvidia, the leading AI name, was able to move into the green with Friday’s rally, taking it 1.2% higher on the week. Despite this week’s mixed action, both are posting huge gains this year. Both Tantarelli and CFRA’s Stovall said investors should maintain their AI positions regardless of any price fluctuations following the industry’s massive run. “I think, in the long term, the AI business has a lot of gas in the tank,” Tantarelli said. While nearly four out of five S&P 500 companies have already reported their earnings, major names including Disney, Uber and Lyft are due next week. According to FactSet, about 79% of corporations have posted results so far that have surpassed Wall Street expectations. Week Ahead Calendar All times ET. Monday, May 6 Notes No earnings economic data: Loews, Spirit Airlines, Tyson Foods, BioNTech, Hims & Hers, Vertex Pharmaceuticals, Lucid Group, Palantir Technologies, Simon Property Group, AECOM, Microchip Technology, Rocket Lab, Goodyear Tire, Flavors & Fragrances, Marriott Vacations, Noble Corp., Vornado Realty, Coty, Bellring Brands, Cabot Tuesday, May 7 at 3 p.m. Consumer Credit (March) Earnings: UBS, BP, Nintendo, Squarespace, Kenview, Aramark, Gogo, Energizer, Tempur Sealy, Bloomin’ Brands, Crocs, Datadog, Duke Energy, Rockwell Automation, Spirit AeroSystems, TransDigm, Expeditors, Nikola, Walt Disney, Ferrari, GlobalFoundries, NRG Energy, Perrigo, Electronic Arts, Cirrus Logic, iRobot, Redfin, Lyft, TripAdvisor, Adaptive Biotech, Arista Networks, Dutch Brothers, Kindril, Marqeta, Oddity Tech, Olo, Sonos, Toast, Upstart Holdings, Virgin Galactic, Twilio, IAC/Interactive, Match Group, McKesson, Rivian Automotive, Brighthouse, Occidental Petroleum, Assurant, ENGIE , Kinross Gold, Astera Labs, Diamond Offshore, Reddit Wednesday, May 8 at 10 am Bulk Inventory (March) Earnings: Anheuser-Busch InBev, Edgewell Personal Care, Embraer, Elanco Animal Health, United Parks & Resorts, ODP, Emerson Electric, Brookfield, The New York Times, Performance Food Group, Reynolds Consumer Products, Shopify, Teva Pharma, Uber Technologies, Brinks, Tegna, Hain Celestial, Choice Hotels, Dine Brands, Liberty Broadband, Affirm Holdings, Fox Corp., Cushman & Wakefield, Liberty Media, Valvoline, Arm Holdings, Airbnb, Robinhood, Beyond Meat, Bumble, Kodiak Gas Services, Nuskin, SolarEdge Technologies, TKO Group, Vizio, AMC Entertainment, Cheesecake Factory, News Corp, Toyota Motors, Celanese, Instacart, Clavio Thursday, May 9, 8 :30 AM Continuing Jobless Claims 8:30 AM Initial Claims Earnings: Nissan, Cedar Fair, Six Flags, Yeti, HanesBrands, Planet Fitness, Sally Beauty, Tapestry, US Foods, Warby Parker, Krispy Kreme, Hyatt Hotels, Warner Bros. Discovery, Roblox, Viatris, Papa John’s, Hilton Grand Vacations, Warner Music Group, Solventum, Dropbox, Akamai, Figs, Sweetgreen, Unity Software, Yelp, Synaptics, H&R Block, ImageGold, Fidelis Insurance, Zen Digital, Savers Value Village Friday, May 10 10am Michigan Sentiment (May) 2pm Treasury Budget (April) Earnings: Honda Motor, AMC Networks