As investors bid farewell to a week marked by a Federal Reserve meeting, surprise labor market data and the latest corporate earnings, they are left trying to figure out what this means for a stock market still deciding where it wants to go. All three major market indexes ended the week higher after Friday’s rally, fueled by weaker-than-expected April jobs data that pushed the jobless rate up a bit and lowered Treasury yields – rekindling hopes that interest rates they will decrease this year after all. That helped the market recover from a three-week correction that sent the S&P 500 down 5.5% from its all-time high in late March to its mid-April low. The Nasdaq Composite climbed about 1.4% for the week, the Dow Jones Industrial Average rose 1.1% and the S & P 500 gained 0.6%. The Fed and economic policy were in focus this week given the central bank’s decision on Wednesday to once again keep interest rates unchanged, as it has done since last summer. Chairman Jerome Powell reassured traders by indicating that the central bank’s next move is unlikely to raise interest rates, although the three major stock averages ended the day mixed. Central bank officials have continued to say their policy moves depend on the path of inflation, while also making little recent progress in reducing price increases. However, the Fed won’t see new inflation numbers next week, leaving unanswered questions about whether rates are actually cooling enough to warrant a change in stance. “The market is a little confused,” said Larry Tentarelli, founder of Blue Chip Daily Trend Report. “Investors can be in a bit of a gray area because we don’t know what to expect.” Bond yields fell on Friday after the latest payrolls report. The yield on the 10-year note ended the day around 4.50% after crossing 4.6% earlier in the week, while the 2-year fell to around 4.81% after breaking above the 5% mark. “Markets are concerned that economic growth has been too strong and that progress in inflation has stalled,” said David Donabedian, chief investment officer at CIBC Private Wealth. “This report tilts in the opposite direction, making both the stock market and the bond market very happy.” With the old adage “sell in May and walk away” in mind, investors have wondered whether the recent weakness is part of a short-term recovery or the start of a larger downturn. However, many professionals note that this correction phase is normal in the context of a market that reached new all-time highs just five weeks ago. This week included the close of April’s trading month, which marked the first down month of the year for all three major market averages. It also marked the worst monthly performance for the Dow since September 2022. While the three major indexes remain down in the second quarter, all are up for the year. And this week’s 11th hour rally raises the question of whether the market has regained its momentum. “Investors are now questioning whether the pullback we experienced from March 28 to April 19 is over,” said Sam Stovall, chief investment strategist at CFRA Research. “There is still a chance that the market will experience a slightly deeper decline, but certainly not a deep correction or even the start of a new bear market.” Certainly, some recent earnings reports have raised doubts about the economy, with brands from McDonald’s and Starbucks showing signs of consumer pressure. Debating interest rates, Stovall said investors breathed a “sigh of relief” after Powell’s comment that the central bank’s next move was unlikely to push interest rates higher. But that didn’t answer Wall Street’s nagging question: When will borrowing costs really start to ease? Economists’ outlooks vary widely on how many cuts there might be this year: Citigroup sees four; Bank of America only one. However, Friday’s “cool jobs” report put the possibility of a rate cut as early as September back into play, according to CMEGroup’s FedWatch tool. Even in a longer-term environment, the fact that the economy is still expanding and contributing to earnings growth provides bullish reasons, according to Tom Hainlin, senior investment strategist at US Bank Wealth Management. “For us, that speaks to an environment where we think equities are outperforming bonds on the margin,” he said. While no new inflation data is scheduled next week, investors will look to reports on March wholesale inventories, March consumer credit and May consumer sentiment from the University of Michigan. “Next week, actually, is going to be very quiet on the financial calendar,” Tentarelli said. No major release “could be nice for a change.” AI Trading While interest rates took center stage this week, investors also continued to monitor companies linked to the AI boom amid recent stock volatility. Super Micro Computer fell nearly 9% for the week after missing revenue expectations in its fiscal third quarter. However, Nvidia, the dominant AI name, was able to move into the green with Friday’s rally, sending it 1.2% higher on the week. Despite this week’s mixed action, both are making huge gains this year. CFRA’s Tentarelli and Stovall both said investors should hold onto their positions in AI regardless of any price movements following the sector’s huge run. “I think, long term, the AI trade has plenty of gas in the tank,” Tentarelli said. While about four out of five S&P 500 companies have already reported earnings, key names like Disney, Uber and Lyft are coming next week. About 79% of companies that have posted results so far have beaten Wall Street expectations, according to FactSet. Week Ahead Calendar All times ET. Monday, May 6 No financials of note Earnings: Loews, Spirit Airlines, Tyson Foods, BioNTech, Hims & Hers, Vertex Pharmaceuticals, Lucid Group, Palantir Technologies, Simon Property Group, Aecom, Microchip Technology, Rocket Lab, Goodyear Tire, Flavors & Fragrances, Marriott Vacations, Noble Corp., Vornado Realty, Coty, BellRing Brands, Cabot Tuesday, May 7 3 p.m. Consumer Credit (March) Earnings: UBS, BP, Nintendo, Squarespace, Kenvue, Aramark, Gogo, Energizer, Tempur Sealy , Bloomin’ Brands, Crocs, Datadog, Duke Energy, Rockwell Automation, Spirit AeroSystems, TransDigm, Expeditors, Nikola, Walt Disney, Ferrari, GlobalFoundries, NRG Energy, Perrigo, Electronic Arts, Cirrus Logic, iRobot, Redfin, Lyft, TripAdvisor Adaptive Biotech, Arista Networks, Dutch Bros., Kyndryl, Marqeta, Oddity Tech , Olo, Sonos, Toast , Upstart Holdings, Virgin Galactic, Twilio, IAC/InterActive, Match Group, McKesson, Rivian Automotive, Brighthouse, Petroum, Assurant Angi, Kinross Gold, Astera Labs, Diamond Offshore, Reddit Wednesday, May 8 10 a.m. Wholesale Stocks (March) Earnings: Anheuser-Busch InBev, Edgewell Personal Care, Embraer, Elanco Animal Health, United Parks & Resorts, ODP, Emerson Electric, Brookfield, New York Times, Performance Food Group, Reynolds Consumer Products, Shopify, Teva Pharma , Uber Technologies, Brink’s, Tegna, Hain Celestial, Choice Hotels, Dine Brands, Liberty Broadband, Affirm Holdings, Fox Corp., Cushman & Wakefield, Line Media, Valvoline, Arm Holdings, Airbnb, Robinhood, Beyond Meat, Bumble, Kodiak Gas Services, NuSkin, SolarEdge Technologies, TKO Group, Vizio, AMC Entertainment, Cheesecake Factory, News Corp., Toyota Motors, Celanese, Instacart, Klaviyo Thursday, May 9 8:30 A.M. Continuing Jobless Claims 8:30 AM Original Claims Earnings: Nissan, Cedar Fair, Six Flags, Yeti, Hanesbrands, Planet Fitness, Sally Beauty, Tapestry, US Foods, Warby Parker, Krispy Kreme, Hyatt Hotels, Warner Bros. Discovery, Roblox, Viatris, Papa John’s, Hilton Grand Vacations, Warner Music Group, Solventum, Dropbox, Akamai, Figs, Sweetgreen, Unity Software, Yelp, Synaptics, H & R Block, Iamgold, Fidelis Insurance, Gen Digital, Savers Value Village Friday, May 10 10 a.m. Michigan Feeling (May) 2 p.m. State Budget (April) Earnings: Honda Motor, AMC Networks