News of the week summary - 10/05/2026

The US jobs market holds up, confounding expectations

Friday's employment report delivered a clear surprise. The US economy added 115,000 jobs in April, according to the Bureau of Labor Statistics, more than double the 55,000 that economists had been forecasting and the second consecutive month of solid gains after March's upwardly revised 185,000. The unemployment rate held steady at 4.3 percent. Healthcare led the gains with 37,000 new jobs, followed by transportation and warehousing with 30,000 and retail trade with 22,000.

The result matters because it had not been obvious that the labour market would hold together this well. February had seen a steep decline of 133,000 jobs as government employment contractions rippled through the data, and the consensus forecast had been built around continuing weakness. Instead, two consecutive months of gains of 115,000 or more marked the strongest back-to-back performance since 2024. The unemployment rate, at 4.3 percent, has been broadly stable for over a year, suggesting that while hiring has slowed from the frantic pace of 2023 and 2024, outright job losses remain limited.

The complication for the Federal Reserve is that a resilient labour market, combined with headline inflation running well above target on the back of energy costs, removes any urgency to cut rates. But it also means the energy shock has not yet produced the demand destruction that would typically bring inflation down on its own. Markets read the report as confirmation that rates would remain on hold at the June meeting, with the probability of a rate cut this year declining further.

American consumers have rarely been more pessimistic

The same Friday brought a starkly different signal from the University of Michigan's preliminary consumer sentiment survey. The index fell to 48.2 in early May, below the 49.7 that economists had expected and continuing a decline that began when fuel prices surged in March. For context, the reading is close to the all-time low of 50.0 recorded in June 2022 at the peak of post-pandemic inflation. Year-ahead inflation expectations rose to 4.7 percent, up from 4.6 percent in April, and long-run inflation expectations climbed to 3.7 percent from 3.5 percent, levels not seen since the early 1980s.

The divergence between these two datasets and the strength of the jobs report reflects something important about the structure of the current shock. The US labour market is healthy by most measures: people are employed, wages are growing, and layoffs remain low. But gasoline is up more than 40 percent from a year ago, and the price of filling a tank is one of the most salient economic signals in American life: visible, daily, impossible to avoid. Around a third of respondents spontaneously mentioned high petrol prices as a source of concern, and the survey director noted that lower-income households, for whom fuel represents a larger share of the budget, showed the steepest falls in sentiment. An economy can be statistically strong and feel financially punishing at the same time, and that combination is what households were reporting this week.

Big Tech earnings validate AI spending, but scrutiny is rising

The first-quarter earnings season for US technology companies was largely wrapping up during the week, and markets were still absorbing a striking divergence in how investors treated different kinds of AI news. Alphabet had gained around 34 percent in April, its strongest monthly performance since 2004, after reporting robust results across cloud computing, advertising and its Waymo autonomous vehicle unit. The message from that result was that AI investment was translating into revenue growth at an accelerating pace. Meta Platforms, by contrast, fell sharply after raising its 2026 capital expenditure guidance to a range of $125 billion to $145 billion even while beating on earnings. Microsoft declined after its own results. The pattern was telling: investors were beginning to price AI capital spending against evidence of return, not simply rewarding companies for the scale of their commitment.

The broader earnings picture remained strong. With nearly all S&P 500 companies having reported, the blended year-on-year earnings growth rate for the first quarter stood at around 29 percent, with record net profit margins of 13.4 percent. That fundamental strength is one of the reasons equities remained at all-time highs despite the Iran conflict, the inflation uncertainty and the gloomy consumer sentiment data. The equity market and the household survey were reading the same economy very differently, and the earnings data sided with the market.

Cerebras launches its roadshow as AI IPO season begins

On Wednesday, Cerebras Systems opened its investor roadshow ahead of a planned listing on the Nasdaq, becoming the most prominent pure-play AI hardware company to prepare for a public debut in 2026. The company builds the Wafer-Scale Engine, a processor designed to run AI inference workloads substantially faster than conventional graphics processing units; it claims its system can outperform leading GPU-based solutions by a factor of fifteen on standard benchmarks.

Cerebras reported $510 million in revenue for 2025, up 76 percent from the prior year, alongside a net income margin of around 47 percent, unusual profitability for a company at this stage of growth. The roadshow was being marketed at $115 to $125 per share, implying a valuation of roughly $26 billion to $27 billion, and had already been oversubscribed more than twenty times before the week was out. The offering drew immediate comparisons with SpaceX's planned listing, which had been widely discussed in markets for months and was expected to follow later in the summer. For investors, Cerebras represented the first opportunity to buy directly into AI chip infrastructure outside the dominant Nvidia ecosystem, a bet that the AI boom would create room for architectural alternatives at scale.

Oil stays elevated as the ceasefire holds but the standoff continues

Through the week, Brent crude traded above $110 a barrel, its level for most of the period since the April ceasefire was announced. The technical pause in hostilities had not resolved the underlying economic disruption: the Strait of Hormuz remained effectively closed to normal commercial traffic, the US naval blockade of Iranian ports continued, and the 500-plus vessels waiting in the Gulf to transit the waterway remained unable to do so. Iran had, at various points since the ceasefire, declared the strait open; tankers attempting to transit had faced continuing uncertainty over mines and security.

The practical consequence was that global oil and gas supply remained curtailed, energy inflation continued to feed through to consumer prices across every major economy, and central banks remained unable to offer any relief through their usual channels. The situation had stabilised relative to the most acute weeks in March, when Brent surged past $120, but stability at $110 still represented a shock of historic proportions, comparable in scale to the 1973 oil crisis, measured by supply disruption as a share of global consumption. How long it persisted would determine whether the inflation numbers being published through May and June represented a temporary spike or the beginning of a more persistent repricing of energy-intensive goods and services across the global economy.