Investors step into what one analyst calls a “delicate position” this week. Hopes are high for real diplomatic progress in the Middle East, and optimism on Wall Street driven by a strong earnings season and AI exuberance is still holding strong.

But the tech trade has cooled over the past week, and negotiating an end to the war that has roiled the global economy will be no easy thing for leaders in Washington. All of that leaves investors with a lot to puzzle over.

The Dow Jones Industrial Average (^DJI) closed Friday up 0.7% for a weekly gain of 1.5%. The S&P 500 (^GSPC) and tech-heavy Nasdaq Composite (^IXIC) each picked up 0.2% on Friday to end the five-day stretch up 1.8% and 2.6%, respectively.

Things to circle on the calendar

Friday’s jobs report leads the week’s calendar and is set to give investors another critical read on the state of the labor market and where AI disruptions may or may not be showing up.

Previewing those headline figures will be Tuesday’s JOLTS job report, along with Thursday’s jobless claims data from the BLS and layoff figures from the outplacement firm Challenger, Gray, and Christmas — a big week for labor market data.

In the corporate world, we’ll get second quarter results from semiconductor designer Broadcom (AVGO), another key bellwether for the state of the AI and chips trade, and see just how strongly demand is holding up.

Numbers from the data network provider Ciena (CIEN) on Thursday will contribute to the AI view as well.

Elsewhere on the corporate calendar, cybersecurity leaders Palo Alto Networks (PANW) and CrowdStrike (CRWD) will report earnings on Tuesday and Wednesday, respectively, while retail giants Dollar General (DG), Five Below (FIVE), and Macy’s (M) report throughout the week.

AI and the labor market

The monthly jobs report has always been a critical check on the economy. But since the AI boom took off — and especially since it has spurred several rounds of high-profile layoffs at major companies — it’s become even more crucial for answering one question: Is AI displacing the American worker?

According to Apollo chief economist Torsten Sløk, the answer is still no. (Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)

Citing weekly payroll data from the provider ADP, Sløk argued that “There is zero evidence of job losses because of AI,” with firms instead hiring implementation experts and raising salaries.

As a result, Sløk argued, this Friday’s report, expected to show 93,000 jobs added in May, could print far above consensus: “It is Jevons paradox playing out in real time: cheaper technology is creating more demand and more jobs,” Sløk wrote.

BNP Paribas US economist Andrew Husby made a similar argument on Friday, writing in a client note that while the spread of AI tools “looks set to displace employees in some industries,” AI optimism is likely to push the other way, heightening demand for labor.

“We don’t dismiss the risks – for example, cyclical sensitivity also entails worse outcomes if the economy disappoints, and there is high uncertainty about AI’s effects,” Husby wrote. ”But in our base case, growth’s resilience plus demographic tightness in the US labor market pushes the unemployment rate lower over time.”

Both growth and inflation are going in the wrong directions

For market watchers looking for a bit of reprieve from months of sticky inflation, a ream of data on Thursday painted a complex picture.

The monthly PCE index, the Fed’s preferred gauge of inflation, may have looked OK. Prices rose 0.4% month on month in April and 0.2% on a “core” basis, excluding food and energy, better than expected.

But the 12-month change figures — 3.8% on a headline basis and 3.3% on a core basis — both marked their biggest gains in more than two years. At the same time, first quarter GDP growth was revised down to 1.6%, against initial readings of 2% growth.

“We are far from stagflation, but rising inflation coupled with slowing growth is the opposite of what we want in both dimensions,” Chris Zaccarelli, chief investment officer for Northlight Asset Management, wrote in a note to clients.

This is, of course, going to complicate things for newly confirmed chair of the Federal Reserve Kevin Warsh, especially as President Trump looks for rate cuts from his appointee.

“We need to get inflation back under control and ideally do that in a way that preserves or improves growth,” Zaccarelli said. “For those that are counting on a rate cut in the second half of this year, they can forget it, because this kind of data makes it increasingly unlikely that we will get one in 2026 or even for all of next year.”

Watching for more Musk mergers

As SpaceX prepares to go public in what is set to be the far and away the largest IPO on record, CEO Elon Musk seems to be looking at another merger for his suite of companies.

The tech visionary has already completed a roll-up of SpaceX, which focuses on rocketry and connectivity technology, with his startup xAI, which manages the Grok AI platform. Now, Musk is musing about combining SpaceX — expected to go public in June — and the long-public Tesla (TSLA).

That might not be great for shareholders, our own Pras Subramanian reported. By bringing Tesla under the SpaceX umbrella, where Musk controls a roughly 85% stake, the tech leader could consolidate his control over the merged corporation and leave investors less room to push back on plans with which they disagree.

That said, given concerns over Musk splitting his time too thinly, some investors may welcome such an idea, Ann Lipton, University of Colorado law professor and expert in corporate governance, told Yahoo Finance.

“Shareholders … would not have to worry about him allocating resources between the two. They would lose their control, but investors in Musk companies do not seem to value that much.”

Economic and earnings calendar

Monday

Economic data: S&P Global manufacturing PMI, May final reading (55.3 expected, 55.3 previously); ISM manufacturing, May (53.2 expected, 52.7 previously); ISM prices paid, May (85 expected, 84.6 previously); ISM new orders, May (54.5 expected, 54.1 previously); ISM employment, May (48.5 expected, 46.4 previously)

Earnings calendar: Hewlett Packard Enterprise Company (HPE), Credo Technology Group (CRDO), Trip.com Group (TCOM)

Tuesday

Economic data: JOLTS job openings, April (6.89 million expected, 6.87 million previously); JOLTS quits rate, April (+2% previously); JOLTS layoffs rate, April (+1.2% previously); Wards total vehicle sales, May (16 million expected, 15.92 million previously)

Earnings calendar: Palo Alto Networks (PANW), Dollar General (DG), Ulta Beauty (ULTA), Victoria’s Secret (VSCO)

Wednesday

Economic data: ADP employment change, May (120,000 expected, 109,000 previously); MBA mortgage applications, week ended May 29 (-8.5% previously); S&P Global US services PMI, May final reading (50.9 previously); S&P Global US composite PMI, May final reading (51.7 previously); Factory orders, April (+4.3% expected, +1.5% previously); ISM services index, May (53.7 expected, 53.6 previously); ISM services, prices paid, May (71 expected, 70.7 previously); ISM services, new orders, May (53 expected, 53.5 previously); ISM services, employment, May (48.5 expected, 48 previously); Durable goods orders, April final reading (+7.9% previously)

Earnings calendar: Broadcom (AVGO), CrowdStrike Holdings (CRWD), Medtronic (MDT), Veeva Systems (VEEV), Five Below (FIVE), Uranium Energy Corp. (UEC), Macy’s Inc. (M)

Thursday

Economic data: Challenger job cuts, year-on-year, May (-20.9% previously); Nonfarm productivity, first quarter final reading (+0.7% expected, +0.8% previously); Initial jobless claims, week ended May 30 (215,000 previously); Continuing claims, week ended May 23 (1.786 million previously)

Earnings calendar: Ciena Corporation (CIEN), Samsara (IOT), Planet Labs (PL), lululemon athletica (LULU), Rubrik (RBRK), Wise Group (WSE), Brown-Forman Corporation (BF-A, BF-B), DocuSign (DOCU), X-Energy (XE)

Friday

Economic data: Change in nonfarm payrolls, May (+93,000 expected, +115,000 previously); Change in private payrolls, May (+100,000 expected, +123,000 previously); Change in manufacturing payrolls, May (+4,000 expected, -2,000 previously); Average hourly earnings, month-on-month, May (+0.3% expected, +0.2% previously); Average hourly earnings, year-on-year, May (+3.4% expected, +3.6% previously); Unemployment rate, May (4.3% expected, 4.3% previously); Consumer credit, April ($18 billion expected, $24.85 billion previously)

Earnings calendar: ABM Industries (ABM)

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