Michael Hewson's Preview: The Week Ahead: US CPI, Retail Sales, UK Q1 GDP & Cisco Earnings | 11–15 May 20264

The week ahead – 11th May 2026

As hopes of an Iran peace deal continue to keep a lid on oil prices at around $120 a barrel US markets have taken the opportunity to surge to new record highs with the Nasdaq 100 surging through 28k and the S&P500 heading towards 7,400.

The wild-eyed optimism amongst investors appears to be being driven by earnings that have by and large beaten expectations. The moves higher appear to have been helped by hedge funds having their best monthly performance since the beginning of the decade, and which has helped drive this tech rally to new heights.

Even the Nikkei 225 has got in on the act blasting through, and beyond the 60k level to new record highs.

All the while the US economy continues to look resilient with a labour market that continues to add jobs despite concerns over rising gasoline prices, which in turn have driven input price inflation sharply higher in the latest ISM manufacturing and non-manufacturing surveys.

This coming week we’ll be getting an insight into how US CPI inflation has impacted on the US consumer, along with the first print of UK Q1 GDP.

We’ll also get more tech earnings in the form of Cisco Systems which to all intents and purposes supplies the nuts and bolts of the internet architecture, as well as AI infrastructure buildout.

US CPI (Apr) - 12/05

US CPI (Apr) - 12/05
The big surge in gasoline prices by 21.2% during March saw US inflation surge from 2.4% in February to 3.3%, thus complicating the outlook for the Federal Reserve when it came to its recent interest rate decision to hold rates at 3.75%. While the surge in energy prices was the main talking point for the March print the main concern policymakers will have is whether this surge in prices will start to lead to second and third round effects further out.
There was little sign that core inflation was seeing any effects from recent events, however if that were to happen it would more than likely start to be seen in the next few months given that core prices tend to act with a lag.
Nonetheless April CPI is still likely to be higher than it was in February, with gasoline prices continuing to edge higher in spite of the recent ceasefire. This suggests with the big surge in the March numbers, we could well see further upside pressure in the April numbers, albeit on a much smaller scale.   

US Retail Sales (Apr) – 14/05

Never bet against the US consumer has generally been a consistent mantra when it comes to US retail sales. At the start of the year US retail sales saw a sharp slowdown which was impacted by the very cold weather which swept across the north and east of the country.
A weak January print is nothing new in the US with similar weak readings in 2024 and 2025 so the number wasn’t a surprise.
For February the 0.7% gain was the best in 7-months and was driven by department store sales, as well as clothing and sporting goods and book store sales.
There were pockets of weakness including food and beverage sales and furniture stores, while in March there was an even larger improvement with a 1.7% gain, although a lot of this was driven by a surge in gasoline receipts which rose 15.5%. The core measure rose 0.4% which was still pretty solid and above expectations.
Whether this momentum is maintained in April is up for debate, given low levels of US consumer confidence, however the resilient nature of the US labour market ought to offer some level of support.               

UK Q1 GDP – 14/05

What can Q1 tell us about how the UK economy is likely to perform over the rest of the year.
In reality, not much.
The most recent monthly GDP numbers would appear to suggest a rebound in economic activity during January and February, while more recent data in March might suggest that some economic activity has been pulled forward in anticipation of steep price increases on imported goods as the crisis in the Middle East drives import costs sharply higher over the rest of the year.
At the most recent monthly GDP numbers for February, we saw a sharp increase of 0.5%, the best monthly gain since January 2024. The improvement also came after a weak series of monthly gains since a 0.2% expansion in November. Nevertheless, it is still welcome with strong growth in services which saw output expand by 0.5%.
Construction also had a good month, rising 1%, even though on a rolling 3-month basis it remains firmly in negative territory at -2%. So how to explain this given the widespread concern about the strain on private sector business. There could be an element of a mechanical rebound after the subdued end to 2025, which saw business hunker down ahead of the November budget. We’ve also seen a rebound in car manufacturing, again a mechanical rebound given the JLR shutdowns in H2 of last year.
We could also be looking at a seasonal element given that in 2024 and 2025 the UK economy proved to be more resilient than H2, probably due to business getting ahead of adverse April tax changes. January was also revised up to 0.1%.
Despite the good news about the economy this data pre-dates the outbreak of hostilities in the Middle East which has driven energy prices higher and is likely to cascade down through supply chains in the coming months, and into the monthly March numbers, which could go either way.
We could see a further improvement as companies bring forward their business ahead of sharp price increases, or we could see some consumer hunkering down.

Cisco Systems Q3 26 – 13/05 

with the shares currently at record highs this US company is at the forefront of the AI infrastructure buildout given its role as the nuts and bolts of the Internet and AI delivery story. In Q2 the company reported a 10% increase in total revenue of $15.3bn, with product revenue up 14% at $11.6bn. Its Networking revenue was up by 21% with the company reporting significant momentum in AI saying that it expects AI orders to exceed $5bn this year alone. Full year revenue guidance was raised to between $61.2bn and $61.7bn. The rising prices in product components could be a factor in this latest set of numbers, as it looks to meet demand from the likes of smaller cloud companies.