Public Markets 3 Days

Last updated: May 7, 2026, 5:30 PM ET

Public Markets: Earnings, Geopolitics, and Fed Uncertainty

The S&P 500 pulled back slightly from recent highs, though a better-than-expected software earnings season provided a floor for the broader market, as investors juggled corporate results against persistent geopolitical risks. While software firms shone brightly with strong quarterly reports, other sectors showed strain; Gilead Sciences projected an adjusted loss for 2026, shifting guidance dramatically from prior earnings estimates due to R&D expenses from acquisitions, and cloud provider CoreWeave reported a $740 million first-quarter loss as operating expenses of $2.22 billion outpaced revenue growth. Meanwhile, the technology sector also saw financial turbulence, with Coinbase swinging to a loss and posting another revenue drop despite recent cost-cutting measures, illustrating the volatility inherent in crypto-linked businesses.

Corporate Performance & Consumer Health

Consumer-facing companies delivered mixed signals, suggesting that while demand remains present, cost pressures are increasingly squeezing margins and forcing value-seeking behavior. Quick-service restaurants, including McDonald’s, and Taco Bell, all reported increased sales despite a 35% rise in gas prices, which the burger giant later qualified by warning of price pressures from rising beef and energy costs constricting franchisee cash flows. This consumer strain was echoed by Papa John’s, whose CEO noted that budget-conscious customers are trading down to smaller pizzas and skipping add-ons, while appliance maker Whirlpool slashed its earnings guidance in half amid historically low consumer confidence affecting demand for higher-end goods. In contrast, travel and logistics firms showed growth: Lyft’s quarterly revenue climbed 14% to $1.65 billion, aided by partnerships, and Expedia saw revenue rise to $3.43 billion, driven by a 25% surge in its business-to-business unit.

Energy Markets & Geopolitical Risk

Energy markets remained highly reactive to developments in the Middle East, with oil futures recovering initial losses as optimism over a potential U.S.-Iran deal faded into caution, leading prices to fluctuate wildly in what Citigroup described as a "hope-and-fear dance." The ongoing conflict has amplified price moves due to evaporated market liquidity since the war began, and the U.S. depleted its stockpiles, resulting in the government selling more than $17 billion worth of missiles to Gulf Nations due to slow production. Geopolitical uncertainty is also impacting specific energy sectors; Cheniere Energy plunged nearly 10% after reporting a surprise $3.5 billion derivatives loss linked to hedges upended by the war, while the International Energy Agency urged Canada to accelerate energy export development to mitigate future supply shocks.

Fixed Income & Monetary Policy Outlook

Treasury yields snapped two days of declines as investors awaited clarity on Middle East negotiations, though yields had previously fallen on expectations that peace talks might restart to end the conflict. The Federal Reserve remains divided on the path forward, with Boston Fed President Susan Collins discussing recent FOMC dissent and the outlook for rates possibly landing around 2026 levels, while Minneapolis Fed President Neel Kashkari explicitly stated that the Iran war has added uncertainty to the rate outlook. This uncertainty is causing some traders to increase wagers that the Fed’s next policy move might be a hike rather than a cut, a scenario that would align with the concerns raised by former Governor Kevin Warsh’s nomination driving bond trader bets.

Corporate Finance & Dealmaking Activity

The corporate world saw significant capital raising alongside punitive losses in specific areas, particularly as private credit and AI infrastructure draw massive investment. Private credit exposure remains a subject of regulatory scrutiny, with Treasury Secretary Scott Bessent meeting with insurance regulators to discuss sector ties, while Blackstone continued raking in capital, announcing $96 billion for investment despite reporting a first-quarter loss due to slumping distributable earnings. In tech infrastructure, SpaceX is preparing for massive spending, including a $55 billion investment into manufacturing AI chips via its new Terafab complex, while the wider market sees old IT making a bid for AI relevance through servers and general chips as the pendulum swings back. Meanwhile, Carlyle continues to attract capital, while Madison Air filed for a Nasdaq IPO targeting a $500M valuation, buoyed by strong revenue growth.

Financial Services & Regulatory Shifts

Major financial institutions are navigating turnarounds and regulatory shifts, with Citigroup holding its first investor day in four years to convince the market that its engine has been rebuilt, though initial modest profitability targets initially disappointed some investors. In the payments space, corporate card startup Ramp is reportedly raising funds at a $40 billion valuation, a 30% increase from six months prior, while the crypto sector saw Kraken’s parent company agreeing to buy Reap Technologies for $600 million to bolster tokenization efforts. Regulatory focus remains sharp: the U.S. audit watchdog is weighing whether to rescind its independence rules concerning auditor conflicts, potentially scrapping the PCAOB standard, and a former Willkie Farr & Gallagher counsel pleaded guilty in an insider-trading case while cooperating with prosecutors.

Global Markets & Sovereign Finance

International markets are grappling with geopolitical tensions and domestic economic pressures, influencing sovereign debt and currency stability. The dollar slipped below its pre-Iran war level as market sentiment shifted, while oil prices edged higher amid caution over Middle East peace efforts. In bond markets, Colombia is actively buying dollars in the spot market ahead of a controversial Swiss franc swap payment deadline before its election, and Ghana plans to raise $1 billion through domestic cocoa bonds as part of an overhaul to manage commodity sales. The International Monetary Fund warned that demand for Angola’s bonds will likely wane if the Iran war drags on, worsening inflation and currency pressure due to higher import costs.

Sectoral Stress and Corporate Strategy

Rising input costs and inflation are forcing strategic adjustments across various industries, impacting everything from fast food to luxury goods. European luxury firms and automakers disappointed investors, making consumer discretionary the worst-performing sector amid sustained inflation, while UK pub operator J D Wetherspoon issued its third profit warning this year as elevated costs erode earnings. Conversely, DraftKings beat revenue estimates, posting a 17% rise to $1.65 billion as sportsbook sales grew, even as the broader market debated the sustainability of yields above 5% challenging Wall Street consensus. Furthermore, Canadian miner Sherritt is pulling out of Cuba after 32 years due to fears surrounding U.S. sanctions imposed by the Trump administration, a move that deals a blow to the island’s economy.