This week’s rally wasn’t straightforward. U.S. stocks ended higher, volatility dropped, and the dollar lost ground, but crypto didn’t keep up. From Monday to Thursday, Bitcoin fell about 3.0% and Ethereum dropped 4.8%, while the S&P 500 gained 0.8% and the Nasdaq 100 rose 0.6%. In short, stocks are pushing higher despite concerns, while crypto is waiting for more institutional interest.
Macro backdrop: growth improved, inflation stayed sticky
The Fed continued to limit risk-taking. On April 29, the FOMC kept the federal funds rate at 3.5% to 3.75% and noted that inflation was still high, partly due to global energy prices. The vote showed some disagreement: Stephen Miran wanted a 25 basis point cut, while Beth Hammack and others preferred to hold rates steady but did not want to keep an easing bias in the statement.
Thursday’s data made things tougher for the Fed. Real GDP grew at a 2.0% annualized rate in Q1, up from 0.5% in Q4, but inflation stayed high. The PCE price index rose at a 4.5% annualized rate, and core PCE was up 4.3%. March’s PCE report showed a similar trend, with headline PCE up 0.7% for the month and 3.5% for the year, while core PCE increased 0.3% for the month and 3.2% for the year.
Labor costs remained steady. The Employment Cost Index rose 0.9% in Q1, with wages and salaries up 0.8% and benefits up 1.2%. Over the past year, total compensation for civilian workers increased 3.4%. This means growth is solid, but inflation is still a problem. It helps earnings, but it also slows down how quickly markets can expect easier monetary policy.
U.S. equities: resilient, but selective
Stocks outperformed crypto because investors were encouraged by earnings, AI exposure, and lower volatility. The VIX dropped from 19.21 on Monday to 16.89 by Thursday, down about 12.1%, which helped stocks handle the Fed and inflation updates. However, the 10-year Treasury yield still rose from about 4.31% to 4.39%, so this wasn’t a broad increase in liquidity.
Tesla: AI platform thesis gets support
Tesla stood out by offering investors a clearer long-term vision. TSLA rose about 2.6% from Monday to Thursday, as the market started to see Tesla as an AI and software platform, not just a car company. In Q1, Tesla’s revenue grew 16% year over year to $22.387 billion, GAAP gross margin was 21.1%, operating income jumped 136% to $941 million, and free cash flow reached $1.444 billion.
The main takeaway is the shift in profit sources. Automotive revenue grew 16% year over year to $16.234 billion, but Services and Other revenue jumped 42% to $3.745 billion, making it the fastest-growing part of the business. Automotive gross margin, excluding regulatory credits, was 19.2%. Active FSD subscriptions rose 51% to 1.28 million. This supports the idea that Tesla is moving from hardware sales to more software, insurance, services, and autonomy revenue.
There are still risks. Tesla made 408,386 vehicles but delivered only 358,023 in Q1, so inventory rose to 27 days of supply. Energy revenue dropped 12% year over year to $2.408 billion, and storage deployments were 8.8 GWh, making energy the weak spot this quarter. Still, investors seem willing to overlook short-term issues if Robotaxi, FSD, Optimus, AI chips, and energy capacity can start generating revenue soon.
Mega-cap earnings: AI growth is real, but capex discipline is now the debate
This week’s company results reinforced the main message from U.S. equities: AI demand is real, but the cost of building for it is becoming harder to ignore. Meta, Microsoft, Amazon, and Apple each show this in their own way. Revenue growth is still strong, AI is making products better, and demand for cloud services keeps growing. The big question is whether the next dollar spent on AI will bring enough return to justify the investment.
Meta showed the strongest advertising growth, with revenue up 33%, its fastest rate since 2021. AI-driven ad targeting continues to improve advertiser ROI, and products like Llama, business AI tools, and AI glasses offer several long-term growth paths. The challenge is spending. Meta’s 2026 capex guidance jumped to $115 billion to $135 billion, almost double last year, while Reality Labs is still a big drag. Investors still believe in the growth story, but they want to know when AI spending will start to show clear free cash flow.
Microsoft is still the best example of making money from AI in software. Azure grew 40%, Microsoft Cloud revenue hit $54.5 billion, and annualized AI revenue passed $37 billion, up 123% from last year. Copilot paid users also rose above 20 million, showing that enterprise AI is moving from trials to real budgets. Still, expectations are high. Azure only just beat estimates, cloud infrastructure costs are rising, and investors are debating if 40% Azure growth can last or if it’s just a short-term peak.
Amazon delivered the cloud growth the market wanted. AWS revenue grew 28%, its fastest in 15 quarters, while total revenue reached $181.5 billion and advertising kept growing as a third big profit source. The concern is about earnings quality and high spending. A big investment gain from Anthropic boosted net profit, and 2026 capex is expected to hit $125 billion, the highest among the big tech companies. For Amazon, the positive view is that AWS growth is back. The worry is that Amazon might be sacrificing margins for growth just when investors want more focus on cash flow.
Apple stands out because the market is still waiting for new proof. The main questions are whether iPhone sales, especially in China, can keep up after a strong last quarter, and if Services can keep growing from its roughly $30 billion per quarter. Services is Apple’s main profit driver thanks to high margins, but legal issues with the App Store and a slower AI story add risk. Apple’s strength is how efficiently it makes money. Its challenge is showing that a quieter AI approach can still compete with the big investments at Meta, Microsoft, and Amazon.
The main point is that big tech is still driving U.S. equity sentiment, but expectations are getting higher. AI revenue, cloud demand, and services growth are strong enough to support current valuations, but the market is becoming more selective. Companies that can clearly show AI profits, protect margins, and spend wisely will likely keep leading. Those who rely too much on future AI promises may face more doubt, even if their revenue growth looks good.
Crypto: ETF flows cooled after a strong April
Bitcoin started the week with strong institutional inflows. According to Amberdata’s April 27 snapshot, BTC was near $78,629 and ETH was around $2,369. There was a five-day streak of BTC spot ETF inflows totaling $556.1 million, and BTC ETF assets under management reached $112.3 billion. Bitcoin stayed the top institutional pick, with BTC ETF holdings at 7.1% of supply, compared to ETH ETF holdings at 1.5% of ETH supply.
The problem is that momentum slowed at the end of the month. U.S. spot Bitcoin ETFs still brought in about $2.1 billion to $2.44 billion in April, their best month since October 2025, but demand cooled in the final days, with a net outflow of about $148.4 million on April 29. BlackRock’s IBIT stayed the leading product, with holdings reported between 809,000 and 812,000 BTC, but the market needed more support to keep Bitcoin near $80,000.
Looking deeper, the crypto market was mixed. Liquidity was strong, with BTC 50 bp depth at $899 million and ETH at $1.25 billion, but trading activity was low. BTC’s 7-day spot volume was at the 9th percentile and ETH’s at the 4th percentile. BTC funding was also negative at an annualized -4.5%, suggesting the earlier April rally was driven more by spot buying and short covering than by too much leverage.
Ethereum is still a warning sign. ETH lagged behind BTC this week, and Amberdata’s April 27 snapshot showed a 7-day ETH ETF net outflow of $242.9 million. If the crypto market is really turning more positive, Ethereum should start to show it. This week, that didn’t happen.
Playbook: what to watch next
The most likely scenario is consolidation. Bitcoin can stay positive if it holds above the mid-$70,000s, but a clear move above $80,000 probably needs ETF inflows to pick up and Treasury yields to stop rising. The bullish case is stronger ETF demand, steady yields, and ETH doing better than BTC. The bearish case is that stubborn inflation keeps the Fed cautious, real yields go up, and crypto keeps lagging behind stocks.
Tesla serves as a broader market signal. Investors are still willing to back long-term platform stories when there’s real progress from idea to revenue. For Bitcoin, this means ETF adoption and being included in institutional portfolios. For Ethereum, it’s about stronger usage, higher fees, better scaling, and more institutional demand. In today’s market, stories matter, but only if they’re backed by capital flows and revenue.
To wrap up
This week’s mood is positive but careful. U.S. stocks handled a tough macro calendar, Tesla boosted the AI-platform theme, and volatility dropped. Crypto, though, didn’t fully join in, showing that ETF demand and liquidity are still more important than just a strong stock market.
For Bitcoin, the big question is whether institutional inflows will come back soon enough to balance out higher yields and late-month profit-taking. For Ethereum, it’s about whether it can stop lagging and show that crypto risk appetite is growing. Until then, stocks are leading, crypto is consolidating, and the next big move will depend on where the money flows.
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