U.S. stocks face a crucial week at high levels: Trump’s China visit is imminent, Powell may step aside amid inflation “at record highs,” and the historic bull market faces a stress test.

The Tongtong Finance APP notes that the stock market is at an all-time high, and the recent strong market performance continues to completely dispel investors’ worries from the beginning of the year.

The S&P 500 index closed up 0.8 last Friday, with a weekly gain of 2.4%; meanwhile, the tech-heavy Nasdaq index closed up 1.7% last Friday, achieving a 4.5% return over five trading days. The Dow Jones Industrial Average ended flat on Friday, with a slight weekly increase of 0.4%.

A better-than-expected April employment report shows that despite the persistent drumbeat of layoffs in tech companies due to artificial intelligence (AI), the previous concerns about an impending slowdown in the U.S. labor market were unnecessary. Semiconductor stocks and those supporting the U.S. AI buildout continue to lead the market this week, with their stock prices surging.

Schedule shifts focus from earnings reports to economic data

The calendar is shifting from a busy earnings season back to key inflation data releases. After a week of data showing the labor market remains sufficiently stable, inflation data quickly overshadowed concerns about the workforce.

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NDX+2.35% US500+0.84% DJI+0.02% BA+2.74% C-2.74% MSFT-1.34% CSCO+4.79% AMAT+6.04% AAPL+2.05% NVDA+1.75% CL+3.68% META-1.16% XYZ+6.72% UPWK-16.87% NET-23.62% BILL+11.07% COIN+4.25% OKLO+0.95%

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April Consumer Price Index (CPI) was the headline on Tuesday. Due to oil shocks, economists expect the year-over-year price increase to jump from 3.3% to 3.8%. The core CPI, excluding energy and food, is expected to rise from 2.6% in March to 2.7%.

Wholesale inflation data (PPI) will follow on Wednesday, along with retail sales data, which will test consumers’ ability to continue spending under pressure.

This is an important week. Markets will see ongoing earnings reports from potential mid-sized companies across various sectors, including small modular reactor company Oklo (OKLO.US), Cisco (CSCO.US), U.S. Rare Earth (USAR.US), and Applied Materials (AMAT.US).

Inflation data and Powell’s “farewell”

With the labor market remaining stable, all eyes will be on this week’s inflation data. The market expects the data to look less optimistic, with both overall and “core” inflation rates expected to accelerate compared to March.

According to analyst forecasts, U.S. overall inflation for April will reach 3.8%, with core prices excluding food and gasoline expected to rise by 2.8%.

Wells Fargo economists wrote in a briefing last Friday: “The April CPI report will be more interesting than usual.” They pointed out that rising energy prices—and the resulting increase in corporate transportation costs—will start to show up in food prices. This will likely cause more dissatisfaction among ordinary American households.

For inflation watchers, the more interesting aspect will be housing costs. Due to data distortions caused by government shutdowns in October and November, housing costs are expected to surge in April.

Wells Fargo added: “However, we expect housing inflation to quickly slow down again in May, as real-time rental indicators point to further softness. After excluding housing, the performance of the service sector should be very hot, driven by rising jet fuel costs causing a jump in airline ticket prices.”

These data releases come just days before the last day of Fed Chair Powell’s leadership at the Federal Reserve (scheduled for Friday, May 15). It is expected that the Senate will submit Kevin Waugh’s nomination to replace Powell for a full Senate vote midweek.

Trump’s Iran response and China visit

Geopolitics will also be a focus for investors in the coming week. President Trump is scheduled to depart for Beijing next week, accompanied by about a dozen U.S. corporate executives, including Nvidia (NVDA.US) CEO Jensen Huang, Apple (AAPL.US) CEO Tim Cook, Boeing (BA.US) CEO Kelly Ortberg, and Citigroup (C.US) CEO Jane Fraser.

Trump’s planned visit follows another legal setback for the government regarding tariffs. The International Court of Justice ruled on the evening of May 7 that the 10% comprehensive tariffs imposed by Trump are invalid.

Kavak Macro economists say this ruling may “not have any immediate impact on the effective tariff rate in the U.S.,” but it still raises the possibility of the government owing another round of refunds.

During his tenure, a key part of Trump’s economic agenda focused on tariffs—implementing, increasing, and using them as leverage in trade negotiations. For investors, volatility around Trump’s specific agenda and its outcomes has become acceptable; the court ruling on Thursday night did not have a significant impact on the stock market.

However, this development, combined with Trump’s trip to China, reminds investors that although Iran war and AI hype dominate daily discussions, these structural pillars of the president’s economic agenda have not disappeared.

The first labor story of AI has been set

The impact of AI on the economy seems to evolve weekly, and how AI will affect various industries long-term remains uncertain. But analysts believe recent events have closed a chapter on the transformation of the U.S. labor market triggered by AI.

Block’s decision to lay off 40% in March marked the beginning of this trend. Meta and Microsoft’s actions at the end of April show that AI-related layoffs are affecting some of the world’s largest companies.

This week, even if not reaching a boiling point, this trend will surely heat up further, with ample evidence that, looking back to spring 2026, it will be seen as a period when AI provided “cover” for various tech-related companies to carry out organizational transformations through layoffs, telling stories about new ways of working to adapt to the current environment.

Coinbase (COIN.US), Bill.com (BILL.US), Cloudflare (NET.US), and Upwork (UPWK.US) all announced layoffs plans this week. The latter three companies announced after Thursday’s market close.

Each company’s explanation varies: from “continuing to focus on increasing organizational agility and efficiency while seeking to drive higher profitability,” to decisions aimed at “further accelerating the evolution toward an ‘agent-based AI-first’ operating model,” to “rethinking the company from the ground up rather than incremental changes to the status quo.”

Coinbase CEO Brian Armstrong wrote in an employee memo explaining the layoffs that the rapid development of AI “puts us at a turning point—not just for Coinbase, but for every company. The biggest risk now is not to act.”

These announcements have a “Coca-Cola or Pepsi?” quality: they are undoubtedly colas, but the taste varies from person to person. Just as your preference for a certain soft drink is personal, the organizational changes driven by AI in the tech environment this year remain a matter of taste.

As management, CEOs can readjust organizational structures, cut a series of positions they’ve long wanted to eliminate, select a few core AI initiatives that truly work, and then aggressively promote them outward.

But obtaining industry approval to boldly lay off workers, especially in the first phase of AI-driven labor transformation, is precisely the core challenge.