MARKET RECAP

American stock indices continued their upward momentum over the past week, driven by solid company results and ongoing excitement around artificial intelligence, even as international conflicts and climbing interest rates created some headwinds. The S&P 500 advanced approximately 0.9%, securing its eighth weekly gain in a row—the longest such run since late 2023—and finishing close to all-time highs just above 7,470. The Dow Jones Industrial Average posted a stronger increase of about 2.1%, reaching multiple new peaks before closing near 50,580, while the Nasdaq Composite delivered a more modest rise fueled primarily by tech and growth-oriented shares.

Market participation stayed generally constructive with selective caution, as participants weighed robust underlying business performance against potential inflationary pressures stemming from high energy costs linked to developments in the Middle East. Smaller-company stocks in the Russell 2000 delivered uneven results, whereas areas like technology, defense, and certain consumer categories led the way. Quarterly earnings largely surpassed forecasts once again, bolstering faith in business resilience, although some late-week selling emerged in semiconductor names and other momentum plays amid position trimming.

Bond markets came under selling pressure with Treasury yields moving higher due to reduced hopes for near-term Federal Reserve easing and ongoing worries about inflation, leaving the 10-year note yield around 4.55%. Energy commodities held firm overall, with WTI crude trading near $96 per barrel on supply disruption fears before moderating slightly on diplomatic optimism, while gold prices moved tentatively in response to elevated yields and a steadier dollar. Digital assets faced additional downward pressure amid the broader risk-averse tone in speculative corners.

Markets now head into a shortened trading week due to the Memorial Day holiday, with key items on the agenda including fresh inflation readings such as core PCE, updated GDP figures, consumer sentiment surveys, and earnings updates from companies like Salesforce and Costco. Positive signals on U.S.-Iran negotiations could help moderate energy costs, yet lighter volumes and continued monitoring of monetary policy may lead to sharper price swings. The prevailing mood remains underpinned by corporate strength, although sustained higher rates and external risks call for continued prudence.

Hawkish Shift in Fed Sentiment: The Federal Reserve’s April meeting minutes signaled a growing willingness to increase interest rates if core inflation remains stubborn. Policymakers noted that returning to their 2% target could take significantly longer than expected, elevating real yields to one-year highs and further flattening the Treasury curve.

Economic Divergence: Economic data painted a mixed picture. While overall employment trends remained strong and private sector job growth accelerated, surging input prices and geopolitical headwinds caused localized layoffs and production bottlenecks across several manufacturing lines.

• High-Profile Tech Supply: Equity markets are shifting focus to an upcoming wave of mega-cap tech listings, highlighted by SpaceX filing its S-1 registration statement for a highly anticipated public offering.

• Valuation Disconnect: Internal segment details for SpaceX reveal a sharp contrast: its core rocket launch and satellite internet branches are seeing rapid user growth and stable financials, whereas its heavily capitalized artificial intelligence and social operations consumed billions in capital expenditures against stagnant revenues.

• Index Rebalancing Fears: Though investors expressed anxiety that massive new listings (such as SpaceX and OpenAI) might trigger heavy passive selling across older market components, strict float-adjusted weighting rules by key index providers will severely limit their initial footprint, capping broader index displacement.

• Surging Soft Commodities: Agricultural markets broke free from a multi-year downtrend. Wheat and soybeans staged double-digit rallies due to geopolitical adjustments, while constraints in raw materials pushed global fertilizer prices higher.

• Persistent Meat Inflation: Wholesale beef prices remained near historic, inflation-adjusted highs. Due to the aggregate U.S. cattle herd contracting to record lows, meat production constraints continue to pressure corporate downstream processors’ operating margins.

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MARKET RECAP

US equity markets ended the week ending May 15, 2026, with modest or flat performance after hitting records mid-week but pulling back sharply on Friday amid rising yields and hotter-than-expected inflation data. The S&P 500 closed at 7,408.50 on May 15 (up from 7,398.93 on May 8), for a weekly gain of about +0.13% (roughly +9.57 points, or around +0.1–0.21% depending on exact intra-week references). The Dow Jones Industrial Average closed at 49,526.17 (down from 49,609.16 the prior Friday), posting a small weekly loss of about -0.2%. The Nasdaq Composite closed at 26,225.14 (down from 26,247.08), ending essentially flat to slightly negative for the week.

International stocks, proxied by the Vanguard Total International Stock ETF (VXUS), faced downward pressure late in the week. VXUS closed at $83.11 on May 15 (down from around $85.43 on May 8), reflecting a weekly decline of roughly 2.7%. This mirrored broader global equity softness amid a stronger US dollar and rising Treasury yields, though international markets had shown relative strength earlier in 2026.

The bond market came under pressure as Treasury yields rose notably on persistent inflation concerns. The 10-year Treasury yield climbed from around 4.38% on May 8 to approximately 4.59% by May 15 (up roughly +21 basis points), driven by hotter CPI and PPI readings, resilient jobs data, and shifting Fed expectations. This led to lower bond prices and contributed to the late-week equity selloff.

Bitcoin and gold showed mixed-to-negative results. Bitcoin traded in the $78,000–$81,000 range and closed the week modestly higher (around +0.7% in some daily snapshots, ending near $80,000–$81,000). Gold faced selling pressure and declined on the week (down roughly 1–3.5% depending on exact spot/futures tracking), closing around the $4,500–$4,650 area as higher yields and a stronger dollar weighed on the safe-haven metal.

Overall, the week featured resilient US equities early on (supported by earnings and AI themes) but gave way to volatility from macro pressures. Focus remains on inflation trends, Fed policy, and global developments heading into the next week.

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MARKET RECAP

• Another up week, US stocks +2.13% and international stocks +2.96%.
• A big reason stocks are moving up, despite the lack of a peace settlement with Iran and the Strait of Hormuz being closed, is that earnings estimates have really been shooting higher. Look at the estimates for 2026 and 2027 below.
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MARKET RECAP

• US stocks -0.44%, international +0.53%, bonds +0.50%.
• On February 28, 2026, the United States and Israel launched a massive, coordinated military operation against Iran, codenamed Operation Epic Fury by the U.S. and Operation Roaring Lion by Israel. The assault, announced by President Trump via social media, targeted the country’s nuclear program, ballistic missile facilities, and senior leadership.

• Global Market Divergence: American equities are lagging significantly behind international markets so far this year. While the S&P 500 has remained nearly flat with a 0.60% total return, a broad index of non-U.S. stocks has climbed 11.09% over the same period.

• Japanese Market Milestone: Japan’s TOPIX reached a new historic peak this week. Since hitting a relative low in January of last year, the index has beaten the S&P 500 by more than 28 percentage points.
  

• Mortgage Rate Relief: The average 30-year fixed-rate mortgage has dipped under the 6% threshold, marking the lowest level for this borrowing cost since 2022.
  
• NVIDIA Earnings Paradox: NVIDIA reported exceptional growth, specifically noting that its data center compute revenue jumped by more than 50% compared to last year. Despite these strong figures, the stock’s price actually decreased between the market open and close following the announcement—the seventh consecutive time it has followed this post-earnings pattern.

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