Market recap: Week ended May 1, 2026

Markets wavered over a busy week

Trading volumes were muted on Monday, as investors looked ahead to a packed schedule that included high profile corporate earnings, interest rate decisions, a Canadian economic update and ongoing developments in the Middle East. Wall Street ended the day with mixed results. The Dow slipped 0.13%, while the S&P 500 and the Nasdaq gained 0.12% and 0.20%, respectively. In Canada, the TSX declined 0.3%, falling for a third consecutive session.

On Tuesday, renewed concerns about the AI industry weighed on markets. The Dow fell 0.05%, the S&P 500 lost 0.49% and the Nasdaq dropped 0.90%. Canada’s TSX ended down 0.7%, extending its losing streak to four sessions, its longest stretch of daily declines since December. The tech sector led losses in both countries, while energy posted the strongest gains.

On Wednesday, the major North American indexes closed mostly lower after the Bank of Canada and the U.S. Federal Reserve (the Fed) held interest rates steady. The S&P 500 edged down less than 0.1%, the Dow fell 0.6% and the Nasdaq rose less than 0.1%. In Canada, the TSX declined 0.79%, closing at a three week low, with materials and industrial stocks among the biggest decliners.

After the close, four members of the “Magnificent Seven” reported results. Microsoft posted revenue of US$82.89 billion, beating estimates by roughly US$1.5 billion, while Amazon reported revenue of US$181.5 billion, up 17% year over year. Alphabet generated nearly US$110 billion in revenue, exceeding estimates by US$2.7 billion, and Meta reported roughly US$56.3 billion, beating expectations by US$860 million.

Markets rebounded sharply on Thursday, with both U.S. and Canadian stocks advancing, as strong earnings helped offset concerns tied to elevated oil prices and geopolitical risks. The Dow jumped 1.62%, the S&P 500 gained 1.02% and the Nasdaq rose 0.89%. In Canada, the TSX surged 1.9%, marking its biggest daily percentage gain since late March. For the month, the TSX rose 3.65%, recapturing much of March’s decline. Economic data also offered support, showing U.S. GDP grew at a 2.0% annualized pace in Q1, while Canada’s economy expanded 0.2% in February, with preliminary estimates pointing to 1.7% annualized growth in the first quarter.

The S&P 500 advanced 0.29% to a new record high on Friday, while the Nasdaq gained 0.89%, closing above 25,000 for the first time. The Dow slipped 0.31%. Shares of Apple, which reported results after Thursday’s closing bell, helped drive sentiment and capped a strong quarter for the “Magnificent Seven” group. The iPhone maker reported revenue of US$111.18 billion, exceeding expectations of US$109.66 billion.

In Canada, the TSX fell 0.22% on Friday, closing out a volatile week as gains earlier in the period were pared by weakness in materials and industrial stocks.

The Liberal government released a spring economic update

On Tuesday, one year after winning a minority government, Prime Minister Mark Carney and Finance Minister François Philippe Champagne delivered a spring economic update titled Canada Strong for All. While the snapshot outlined more than $54 billion in new spending over the next six years, it still showed a modest improvement in Ottawa’s near term fiscal outlook.

Stronger than expected economic growth in the second half of 2025, alongside higher oil prices, helped lift corporate and personal income tax revenues. As a result, the government increased its income tax projections by an average of $8.6 billion per year over the next five years. That improvement helped lower the projected 2025–26 deficit to $66.9 billion, down from $78.3 billion in the November budget, an $11.5 billion improvement.

Stronger than expected economic growth in the second half of 2025, alongside higher oil prices, helped lift corporate and personal income tax revenues. As a result, the government increased its income tax projections by an average of $8.6 billion per year over the next five years. That improvement helped lower the projected 2025–26 deficit to $66.9 billion, down from $78.3 billion in the November budget, an $11.5 billion improvement.

The update also included relief for workers and employers through a planned reduction in Canada Pension Plan premiums. Beginning January 1, 2027, the base contribution rate is set to decline to 9.5% from 9.9%.

Prime Minister Carney announced Canada’s first sovereign wealth fund

On Monday, Prime Minister Mark Carney unveiled plans for Canada’s first national sovereign wealth fund, designed as a long term investment vehicle to support major national projects. The Canada Strong Fund will launch with an initial $25 billion, seeded over three years, with plans to grow its size over time through investment returns. Carney described the initiative as a “national savings and investment account” aimed at building wealth for future generations.

The government said the fund will work in partnership with private sector investors to help finance large scale infrastructure and strategic projects. While the fund will be capitalized through public debt, the investment is being treated as an asset on the federal balance sheet and therefore does not add directly to the deficit. Key details around governance and investment strategy remain limited, though the update indicated Ottawa may also look to existing government assets, including potential privatization efforts, as additional funding sources.

The Bank of Canada and the Fed held rates steady

The central banks north and south of the border announced interest-rate decisions on Wednesday, as scheduled. The Bank of Canada, led by Governor Tiff Macklem, held its key rate at 2.25%, where it has remained since October 2025. Macklem’s opening statement highlighted the Middle East conflict, rising energy prices, inflation, and Canadian economic resilience as key factors at the crossroad of its decision. The April decision also included a Monetary Policy Report and the outlook for economic growth in Canada was little changed. The Bank’s April forecast projects Gross Domestic Product growth of 1.2% in 2026, rising to 1.6% in 2027 and 1.7% in 2028. Policy-makers expect inflation to rise toward 3% in April, but, based on the assumption that oil prices will ease, inflation will fall back to its 2% target by early next year.

The Fed also held interest rates steady south of the border, maintaining the federal funds rate in a range of 3.5% to 3.75%. The decision proved unusually divided, with the committee voting 8–4, its most uneven outcome since 1992. The meeting is widely expected to be Jerome Powell’s final as Fed Chair, with his term set to end May 15. U.S. President Trump has nominated Kevin Warsh as the next Fed Chair. Powell will remain on the Fed Board of Governors for an indefinite period.