The Markets (as of market close May 29, 2026)
Wall Street closed out May on a strong note, with all major indexes posting gains and several reaching new record highs. The S&P 500 extended its winning streak to nine consecutive weeks, while the Dow and NASDAQ continued to push further into record territory. Stock traders appeared increasingly optimistic that geopolitical tensions in the Middle East may continue to ease, reducing concerns about energy supply disruptions and inflationary pressures.
Market leadership broadened beyond the technology sector, with gains spreading across large-cap, small-cap, and international equities. The Russell 2000 rose nearly 2% for the week, reflecting growing confidence in the broader economy. Treasury yields moved lower as investors welcomed signs of moderating economic growth and easing oil prices. Crude oil posted its largest weekly decline in several months as reports of progress in U.S.-Iran ceasefire discussions helped calm energy markets.
Last Week’s Economic News
- Economic growth improved in the first quarter. The second estimate of first-quarter GDP showed the economy expanding at an annualized rate of 1.6%, up from 0.5% in the fourth quarter of 2025. Consumer spending remained positive, though growth moderated from the prior quarter.
- Inflation remains elevated. The Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation measure, rose in April and 3.8% over the past 12 months. Core inflation, which excludes food and energy, increased year-over-year.
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Manufacturing activity strengthened. New orders for durable goods jumped in April, marking the second consecutive monthly increase. Transportation equipment led the gain, while orders excluding transportation also posted solid growth.
- Trade conditions improved modestly. The U.S. goods trade deficit narrowed in April as exports grew faster than imports. Export activity increased during the month.
- Housing remained under pressure. Sales of new single-family homes fell in April and were more than 11% below year-ago levels. Inventory remained elevated at a 9.4-month supply, suggesting continued softness in the housing market.
- Labor market conditions stayed relatively stable. Initial unemployment claims rose slightly, while continuing claims remained below 1.8 million. The labor market continues to show resilience despite slower hiring growth earlier in the year.
- Gasoline prices remained elevated but edged lower. The national average price for regular gasoline declined modestly, though prices remain higher than they were a year ago.
Eye on the Week Ahead
Stock market watchers will focus on the May employment report, which should provide additional insight into the health of the labor market. Recent data suggests hiring has improved modestly after a slower start to the year, making this report particularly important for assessing economic momentum. Market participants will also continue monitoring inflation trends, Federal Reserve commentary, and developments in the Middle East, all of which could influence expectations for interest rates and market performance during the summer months.
Have a nice week!
Sincerely,
Robert G. Carpenter