By Thierry Hasse, Chief Investment Officer
Elevage Partners | April 28, 2026
The S&P 500 continued to push higher last week, closing Friday at 7,165, while consumer sentiment fell in April to 49.8, the lowest reading in the survey’s 74-year history (Source: University of Michigan Surveys of Consumers). We have watched that gap widen all year. It is not a short-term anomaly. It is a defining feature of this market cycle, and it sets the stage for everything that follows.
Two Very Different Stories
Inflation expectations are again moving higher. The same Michigan survey showed year-ahead expectations jumping to 4.7% in April, the largest single-month increase in a year. Gasoline prices have risen sharply, now averaging $4.03 per gallon nationally, up from $2.98 two months ago (Source: AAA). For lower-income households, these are not abstract data points. They are immediate pressures.
But the strain is no longer confined to one segment of Main Street’s population.
White-collar workers, long considered insulated from economic disruption, are confronting a different kind of uncertainty. Artificial intelligence is beginning to reshape the demand for knowledge-based roles. Last week, Meta announced 8,000 position cuts and Microsoft offered buyouts to roughly 12,000 U.S. employees, even as both companies continue to invest heavily in AI infrastructure.
More than 92,000 technology workers have been laid off this year (Source: Layoffs.fyi). These are not cyclical reductions tied to a slowing economy. They are structural changes inside some of the very companies driving market gains.
Why Markets Are Still Rising
Why, then, do markets continue to move higher? Two forces are operating on a different plane than the day-to-day experience of most households. First, the acceleration of artificial intelligence. Second, the ability of large U.S. corporations to translate that shift into earnings growth.
Both were reinforced again last week.
Earnings from major financial institutions earlier this month set the tone, highlighting the durability of their core business models. That momentum carried forward as Intel reported a stronger-than-expected quarter, lifting the broader semiconductor sector, while Nvidia again surpassed a $5 trillion market capitalization on continued AI infrastructure demand.
Markets are forward-looking. They price what earnings can become, not what conditions feel like today. As long as the earnings engine remains intact, geopolitical tension and economic discomfort rarely disrupt the trend.
This is also where the divergence becomes more visible.
The companies benefiting most are clear: large banks, technology platforms, and premium-focused businesses. They are capturing the gains from capital concentration and enterprise spending, and they are generating the earnings strength sustaining the market’s advance.
Holding that view has required discipline, particularly when it fell out of favor. Last week’s results were a clear reminder of why our Investment Committee has remained anchored to it.
The Fed Path Becomes Clearer
The policy backdrop also shifted last week. The Department of Justice ended its criminal investigation of Federal Reserve Chairman Jerome Powell tied to his congressional testimony on the Fed’s building renovations. The probe had stalled Fed governor nominee Kevin Warsh’s confirmation as Powell’s successor. With it closed, his path through the Senate Banking Committee opens.
Warsh has signaled an interest in shifting the Fed’s operating philosophy while reaffirming central bank independence. Both will matter.
Even if Warsh is confirmed, the Federal Open Market Committee’s 12 voting members are not moved by executive preference. Winning them over is different from clearing a Senate vote. Regime change at the Fed, if it comes, arrives slowly and by persuasion. Through all the political pressure, the Fed has held focus on its dual mandate of full employment and price stability. Inflation’s path from here remains uncertain, with the Iran conflict carrying energy-price risk no model fully captures. Our base case for 2026 remains a Fed on hold, recalibrating as the data warrants.
What We Are Watching This Week
While the Fed waits, the market does not. The most consequential earnings of the quarter arrive Wednesday and Thursday. Microsoft and Alphabet report after the close on April 29, with Amazon the same evening, and Apple closing the week on April 30.
Their forward guidance will matter more than the revenue figures. These four companies are spending hundreds of billions on AI infrastructure, and that spending has driven much of the market’s gain this year. The question is whether revenue and margin progression are tracking the investment. If guidance signals continued capex at the current pace without a clear acceleration in earnings, the market will start to price that disconnect. If guidance shows AI spending converting into durable revenue growth, the cycle has further to run.
In our view, the cloud and enterprise platforms reporting this week are the right way to invest in AI for the long term. They generate real cash flow from their services. Their balance sheets can absorb the capex without depending on the most aggressive assumptions about what AI will produce. That is why our AI exposure is built around these companies, and why we will read their guidance closely.
What This Means for Long-Term Investors
Next week’s guidance will sharpen our view, but not change where we stand. The market continues to reward investors who own durable businesses with pricing power and strong balance sheets, and who hold them through stretches when the strategy looks out of step. It also rewards the work of connecting each portfolio decision to the specifics of a client’s financial life. That is what takes a thesis off paper and into a plan a family can live by.
If these themes prompt questions, we welcome the conversation at info@elevagepartners.com.