Market Flash: Crude Oil Woes Can’t Stop GDP Growth

Coverage: April 28th, 2026 — May 5th, 2026

Growth Rebounded, With a Few Scuff Marks

First-quarter GDP rose at a 2.0% annual rate, a rebound from the prior quarter’s 0.5% pace. The gains came from investment, exports, consumer spending, and government spending, while imports weighed on the headline number.

The report was solid enough to quiet recession chatter for the moment, but far from a victory lap. Consumer spending slowed, residential investment remained weak, and the growth mix leaned heavily on business investment and government support. In other words: the economy is moving forward, though it still looks over its shoulder every few blocks.

The Fed Holds, but the Vote Got Loud

The Federal Reserve kept the federal funds rate at 3.50% to 3.75%, with policymakers still facing the awkward pairing of solid activity and sticky inflation. The official statement said economic activity has been expanding at a solid pace, job gains have remained low on average, and inflation is elevated in part because of higher global energy prices.

The vote mattered almost as much as the decision. One policymaker preferred a quarter-point cut, while three others objected to language that still leaned toward future easing. That leaves the Fed in familiar terrain: patient, data-dependent, and trying to keep oil-driven inflation from writing the next chapter.

Oil Is Still Driving the Bond Market

Energy stayed at the center of the macro tape. Gulf tensions around the Strait of Hormuz kept crude prices above $100, briefly pushing inflation anxiety back into the bond market before oil eased and stocks stabilized.

That matters because this oil move hits several places at once: headline inflation, consumer confidence, shipping costs, and central-bank patience. Markets have handled the stress better than the headlines might suggest.

Earnings Are Doing the Heavy Lifting

Corporate earnings gave investors a reason to keep buying dips. S&P 500 profit growth is tracking near the strongest quarterly pace since late 2021, with Big Tech carrying much of the load.

The market’s enthusiasm still has a familiar concentration issue. AI infrastructure, cloud spending, semiconductors, and power demand are driving the cleanest part of the story, while investors are becoming more selective about which companies can turn AI spending into actual revenue.

Factories Are Expanding, Prices Are Barking

U.S. manufacturing stayed in expansion, with the ISM Manufacturing PMI holding at 52.7 in April. New orders improved, but employment contracted and price pressures climbed sharply, a reminder that supply-chain stress and energy costs are starting to show up in the industrial survey data.

That mix fits the broader week. Demand remains alive, inflation remains inconvenient, and businesses are still trying to decide whether the next few months call for more production or more caution.

Another Upset at the Kentucky Derby

The week’s cleanest underdog story came at Churchill Downs, where Golden Tempo won the 152nd Kentucky Derby and trainer Cherie DeVaux became the first woman to train a Derby winner. Golden Tempo came in at long odds and closed hard, turning the sport’s biggest two minutes into a rare mix of history, chaos, and a useful reminder that crowded consensus can lose by a nose.