The Record Highs Didn't Last the Week

Markets made history this week — then gave some of it back in a hurry.

Both the S&P 500 and Nasdaq Composite touched fresh all-time highs as money continued piling into tech and AI infrastructure trades. Then Friday happened.

According to Charles Schwab's Nathan Peterson and Jim Ferraioli, options expiration Friday turned into a risk-off session as Treasury yields spiked across the entire curve simultaneously. The 2-year broke above 4.0%. The 10-year crossed 4.50%. The 30-year breached 5.0%.

This Isn't Just a U.S. Problem

American bonds weren't the only ones getting hit. Japan's 10-year government bond yield hit its highest level since 1997. UK 10-year yields reached their highest since 2008. France's 10-year climbed to its highest since 2009.

A global repricing of risk was underway. Schwab's Peterson cited several drivers: WTI crude oil surging 10% in a single week to roughly $105 per barrel, hotter-than-expected inflation readings, stalled Iran peace talks, and the transition to a new Federal Reserve chairman in Kevin Warsh — who faces a brutal environment for cutting rates.

A Trump-Xi meeting happened over the last 48 hours, per Schwab's reporting. China offered no help on Iran, and tensions surfaced around Taiwan. Markets were hoping for a cleaner diplomatic outcome.

Q1 Earnings Are Actually Strong — The Bond Market Doesn't Care

Corporate earnings this season have been genuinely solid, even as Friday's noise dominated headlines.

Out of 454 S&P 500 companies that have reported, 73% beat on revenue and 81% beat on earnings, according to Schwab. Q1 revenue growth is tracking at 10.50%. EPS growth is running at 25.09%.

Those aren't recession numbers. But rising bond yields — especially when driven by inflation and geopolitical risk rather than growth — can still crush valuations even when underlying business performance is strong. Higher yields mean the future profits investors are paying for today are worth less in present-value terms.

The Week Ahead: Nvidia Carries Everything

Nvidia reports first-quarter earnings Wednesday night. According to CNBC's investing coverage, it remains the week's undisputed headliner — the world's most valuable company and the dominant AI chip supplier.

Also reporting: Home Depot on Tuesday morning and TJX Companies on Wednesday morning.

Morgan Stanley described the U.S. housing market as continuing to "bounce along the bottom," per CNBC. Analysts at Bernstein don't expect Home Depot to revise its full-year guidance of flat to 2% same-store sales growth. Expectations are low. The stock has been beaten down since February.

TJX is a different story. Deutsche Bank analyst Krisztina Katai reiterated a buy rating on TJX ahead of Wednesday's print, setting a price target of $182 — implying 23% upside from current levels. She also reiterated buy on Ross Stores with a $253 price target, representing roughly 19% upside. Both off-price retailers benefit from the exact economic environment inflation creates: consumers trading down.

AMD Just Doubled Its Market Estimate — Wall Street Noticed

Advanced Micro Devices dropped a first-quarter earnings report that turned heads, separate from the Nvidia narrative.

AMD now views its data center division as the "primary driver" of revenue and earnings growth. Server CPU business grew more than 50% year-over-year in Q1, and AMD is guiding for over 70% growth in Q2 2026.

TD Cowen analyst Joshua Buchalter — ranked No. 69 out of more than 12,200 analysts tracked by TipRanks — raised his price target on AMD from $290 to $500 and kept his buy rating. He also raised his 2026 data center GPU revenue estimate to $17 billion and his 2027 estimate to $38 billion.

AMD doubled its CPU total addressable market estimate in just six months, now pegging it at roughly $120 billion, with agentic AI cited as a new demand driver.

What the AI Layoff Story Still Isn't Telling You

Previous coverage noted that 56% of 23 S&P 500 companies that announced AI-linked layoffs have seen their stocks fall, with an average decline of 25% as of May 15, per CNBC's original research.

The pattern is striking: this is happening while AI infrastructure companies like Nvidia and AMD are printing record results. The market is rewarding the picks-and-shovels AI plays and punishing the companies claiming AI will fix their business models.

Daniel Keum, associate professor of management at Columbia Business School, told CNBC that investors genuinely don't know how to price AI's impact at the company level. "AI is sort of what we call a macro shock," Keum said. "There's a lot of uncertainty in what it will do."

Announcing AI layoffs has not proven to be a stock catalyst. Fiverr is down 54%. Salesforce is down 32%. Nike is down 35%. Cutting workers and calling it an AI transformation doesn't move the needle if the business fundamentals don't follow.

The Bottom Line

Records were broken this week. Then a bond market that's been quiet too long reminded everyone that inflation doesn't negotiate, geopolitics are messy, and 5% on the 30-year is a number with real consequences.

Nvidia earnings Wednesday. If Jensen Huang delivers, markets breathe. If he doesn't — or if the bond selloff continues — this week's record highs may look like a peak for a while.