Market Commentary

For the week ending 5/29/2026

 

The U.S. stock market capped another strong, though holiday-shortened week, by setting consecutive record all-time highs. A powerful technology sector rebound and renewed optimism surrounding U.S. peace negotiations with Iran drove the rally, despite structural economic crosscurrents and sticky inflation data. The S&P 500, Nasdaq, and Dow Jones Industrial Average all closed at fresh record highs last Friday for both weekly and monthly gains.

A massive resurgence in technology, semiconductor and software stocks spearheaded that record-breaking momentum. The semiconductor giant Micron Technology jumped 19% on Tuesday to surpass a $1 trillion market capitalization, following raised analyst price targets, and triggering a broader chip-making rally. Semiconductors have rallied throughout the past five months, marking a record start to the year, with the majority of those gains in just the past two months. Marvell Technology also continued its huge YTD rally following a better-than-expected quarterly report and raised outlook for the next two years. Salesforce, Snowflake and Dell also reported strong quarterly earnings and guidance, helping ease persistent market fears that artificial intelligence would cannibalize traditional software models. Software stocks had their best month since 2001 as talk of the “SaaS-pocalypse” has subsided.

On the geopolitical front, the U.S. and Iran engaged in military strikes this week, raising tensions in the Middle East, however the U.S. said these strikes were in self-defense and intended to maintain the ceasefire. Markets then received a substantial macroeconomic lift on Thursday morning, as U.S. and Iranian negotiators reportedly reached a draft agreement to extend their military ceasefire by 60 days and to launch negotiations on Iran’s nuclear program. However, President Trump has not made a final determination on the latest draft of a deal. The news mitigated fears of ongoing supply disruptions for the Strait of Hormuz. Consequently, West Texas Intermediate (WTI) crude oil futures pulled back significantly from a Wednesday night high above $92.50 to end Friday near $87.42 per barrel.

Meanwhile, a cluster of newly released government data presented a complicated growth picture for the domestic economy. The first-quarter Gross Domestic Product (GDP) growth estimate was lowered to 1.6%, dropping from the initial 2.0% estimate. This data suggests that the prolonged military conflict with Iran and previously elevated energy prices have acted as a drag on broader economic expansion.

The broader public economic sentiment continued to show a distinct “K-shaped” divergence from Wall Street’s performance. Due to high grocery costs and elevated gasoline prices, the Conference Board’s Consumer Confidence Index dipped to 93.1 in May. The report noted that consumers are increasingly concerned about energy prices, while geopolitical concerns remain elevated. Simultaneously, domestic housing affordability contracted further as daily average 30-year fixed mortgage rates touched a 10-month high of 6.75%. Higher interest rates triggered a weekly decline in pending home sales and sent mortgage applications to their lowest levels since early April.

The Federal Reserve’s preferred inflation metric, the Personal Consumption Expenditures (PCE) price index for April, provided mixed relief. Monthly core PCE data (excluding food and energy) rose a modest 0.24%, coming in slightly softer than consensus estimates. Annual core PCE was in-line with estimates at 3.3%. However, due to higher energy prices from the past few months, the headline PCE climbed at a 3.8% annual rate. This marks the fastest annual pace in three years, reinforcing expectations that the Fed will hold interest rates steady well into the future.

Overall, last week reflected continued enthusiasm across technology and AI-related stocks, while easing pressure from oil prices provided additional support for broader market participation. Investors have continued to show a willingness to buy dips and invest into growth and technology sectors as equity indices continued to push further into record territory.

For the week, the Dow rose 0.9% to 51,032, the S&P 500 climbed 1.4% to 7,580 and the Nasdaq jumped 2.4% to 26,973.

Oil fell -9.6% to $87.36/bbl. Gold rose 1.5% to $4,593/oz. and the yield on the Ten-Year Treasury dipped to 4.45%.

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