Markets started May on a more positive note, but gains were uneven. U.S. stocks climbed through midweek before easing on Thursday. Bitcoin briefly topped $82,000 before retreating, while Ethereum fell behind despite stronger ETF demand. Overall, investors are more willing to take risks than they were in April, but they still want to see evidence that growth can hold up with-aloe-vera-calendula-cream-bringing-33-years-of-trusted-indian-herbal-skincare-to-the-desert-climate/”>with higher rates and big AI investments.
This week highlighted how closely crypto, tech stocks, and the broader economy now move together. ETF inflows continue to support Bitcoin, large tech companies are still driving U.S. stocks, and the Federal Reserve is the main factor limiting further gains in valuations.
Market Snapshot: Stocks led, Crypto was mixed
From the May 4 open through the May 7 close, the S&P 500 rose 1
50%, the Nasdaq 100 rose 3.00%, the Dow rose 0.36%, and the Russell 2000 rose 1.06%. Bitcoin gained 2.03% over the same period, while Ethereum fell 1.84%, indicating the crypto market remained more selective than the equity market.
The tone was risk-on, but not close to euphoric. The VIX fell from 17.38 at Monday’s open to 17.08 by Thursday’s close, while the 10-year Treasury yield moved from 4.40% to 4.39%, leaving rates elevated even as volatility cooled. That is important because higher long-end yields can limit how much multiple expansion investors are willing to pay for growth stocks and crypto alike.
Macro Backdrop: The Fed is still the ceiling
The Federal Reserve’s April 29 statement remained the week’s key macro anchor. The Fed held the target range at 3.50% to 3.75%, said inflation remains elevated, and pointed to developments in the Middle East as a source of significant uncertainty. The vote split also mattered: one policymaker favored a 25 bp cut, while three others supported holding rates but did not support an easing bias, showing that the committee is divided on how much policy support markets should expect.
That leaves investors waiting for the next labor-market signal
The April Employment Situation report is scheduled for Friday, May 8, at 8:30 a.m. ET, and the March report showed payrolls rising by 178,000 with unemployment at 4.3%. A strong jobs number could keep the Fed cautious and maintain pressure on rates, while a softer report could revive the rate-cut narrative that risk assets need for a stronger breakout.
U.S. Equities: AI is still leading, but selectivity is rising
Large tech companies once again drove most of the market’s gains. From May 4 to May 7, Tesla rose 5.52%, Apple gained 2.79%, Microsoft was up 2.24%, Meta increased 1.46%, and Amazon rose 0.88%. The strong performance of Tesla and the Nasdaq 100 shows that investors still want to invest in AI, autonomous technology, and platform businesses when the overall market is steady.
The big question is whether AI investments can generate enough revenue to balance out the high spending. Alphabet, Amazon, Meta, and Microsoft spent over $130 billion on capital expenses last quarter and could reach $725 billion for the year, according to ICE’s market recap. Statista reports that Microsoft’s AI business is earning $37 billion a year, Amazon saw its best AWS growth since 2022, and Alphabet’s cloud revenue grew by more than 60%, showing that AI is bringing in real revenue.
Investors are not turning away from AI, but they want clearer evidence that AI investments are paying off. This is important because even strong earnings may not boost stock prices if investors think spending is rising faster than future profits.
Crypto: ETF demand supports Bitcoin, but Ethereum still needs a catalyst
Bitcoin’s setup looked stronger than Ethereum’s because the institutional bid remained visible. U.S. spot Bitcoin ETFs recorded $539.6 million of net inflows on May 4, $478.8 million on May 5, and $26.2 million on May 6, with IBIT as the largest positive contributor across all three sessions. Another report using SoSoValue data showed $532 million of net Bitcoin ETF inflows on May 4, led by $335.5 million into IBIT and $184.6 million into Fidelity’s fund.
That flow support explains why Bitcoin held up better than Ethereum through most of the week. Some reports showed that Bitcoin ETFs had reached a nine-day inflow streak totaling about $2.7 billion through early May, with April finishing at $1.97 billion of net inflows and May 1 alone bringing in $629 million. Ethereum did get a better flow signal, with U.S. spot Ether ETFs recording $61.29 million of net inflows on May 4, but ETH still finished the May 4 to May 7 window lower, suggesting that investors remain more confident in Bitcoin’s ETF-driven narrative than Ethereum’s near-term catalyst path.
The outlook for crypto is positive, but not straightforward
Strong demand for Bitcoin ETFs is helping to support prices, but the market still needs lower interest rates or more risk-taking to turn these inflows into a lasting rally. For Ethereum to catch up, it needs more support from other altcoins, stronger stories around staking and DeFi, or steadier ETF inflows.
What to watch next
- April jobs report: A soft report could reopen the rate-cut conversation, while a strong report could keep the Fed cautious and cap risk assets.
- 10-year yield: A move below 4.30% would likely help growth stocks and crypto; a push back toward 4.50% would make valuation support harder to find.
- Bitcoin ETF streak: Continued inflows, especially into IBIT and FBTC, would keep the institutional adoption story intact.
- AI capex commentary: Investors are no longer satisfied with revenue beats alone. They want evidence that AI spending is driving cash flow.
- Ethereum relative strength: ETH needs to stop underperforming BTC before the broader crypto market can look convincingly risk-on.
To conclude
From May 4 to May 7, stocks showed better breadth, Nasdaq led again, and Bitcoin drew ETF demand. Ethereum still lagged, yields stayed elevated, and questions remain about AI spending.
The market is cautiously bullish
Future moves depend on labor data-lowering rates, continued Bitcoin ETF inflows, and proof that AI spending grows cash flow.
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