Weekly Market Update – May 15, 2026

Quick Takes

• U.S. markets wrapped up a volatile week on a mixed note, as investors balanced strong recent equity performance against fresh concerns about inflation, rising interest rates, and geopolitical uncertainty.
• U.S. equities ended the week little changed overall, but beneath the surface, momentum slowed. The S&P 500 edged up just +0.1%, while the Nasdaq slipped -0.1% and the small-cap Russell 2000 fell -2.4%. Markets had pushed to record highs earlier in the week.
• A big story last week was the bond market, where yields surged sharply—sending ripple effects across global financial markets. The 10-year U.S. Treasury yield climbed to 4.59%, its highest level since early 2025, and the 30-year yield rose to 5.12%, its highest since 2007.

Source: Bloomberg. Data as of May 15, 2026.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

Wall Street Pauses as Inflation, Yields and Global Tensions Take Center Stage

U.S. markets wrapped up a volatile week on a mixed note, as investors balanced strong recent equity performance against fresh concerns about inflation, rising interest rates, and geopolitical uncertainty. While major indexes hovered near record levels earlier in the week, a late sell-off underscored how quickly sentiment can shift when economic and global risks come into focus. Here’s a look at the key market and economic developments last week.

U.S. Stocks: Rally Stalls as Inflation Worries Build

U.S. equities ended the week little changed overall, but beneath the surface, momentum slowed. The S&P 500 edged up just +0.1%, while the Nasdaq slipped -0.1% and the small-cap Russell 2000 fell -2.4%. Markets had pushed to record highs earlier in the week, driven largely by enthusiasm around artificial intelligence and big technology companies.

That AI-led rally, however, began to fade as investors took profits and reassessed risks. Strong corporate earnings have supported stocks in recent months, but with earnings season winding down, fewer immediate catalysts are on the horizon.

Instead, attention shifted to mounting pressures:

• Inflation data came in hotter than investors hoped
• Oil prices surged, with crude jumping to over $104 per barrel
• Treasury yields climbed sharply
• Geopolitical tensions in the Middle East persisted

The energy sector emerged as the top performer, benefiting from rising oil prices, while consumer staples and tech also held up relatively well. On the downside, consumer discretionary, real estate, and materials stocks lagged.

Investor anxiety was also reflected in rising volatility, with the VIX climbing to 21.4, and a stronger U.S. dollar, which gained +1.4% over the week.

Markets appeared disappointed with the outcome of President Donald Trump’s visit to China. While talks were described as constructive, they produced no major breakthroughs — particularly regarding the ongoing Middle East conflict and energy supply disruptions. The continued closure of the Strait of Hormuz and lack of progress with Iran remain significant overhangs.

International Stocks: Emerging markets steal the spotlight

Overseas markets struggled more than their U.S. counterparts, weighed down by the same macroeconomic pressures plus a stronger dollar.

Developed international stocks fell -1.7% for the week, with:

• Europe down -1.9%
• The U.K. losing -2.3%
• Japan faring slightly better, down -0.9%

Emerging markets were hit even harder, dropping -2.5% after a strong prior week. Latin America led decliners, falling -5.8%, with Brazil plunging -7.2%. South Korea showed relative resilience, slipping just -1.3% overall despite a sharp -7.1% drop on Friday.

A rising U.S. dollar added further pressure, making international assets less attractive to global investors and tightening financial conditions abroad. 

Bonds: Global Yields Surge and Shake Markets

A big story last week was the bond market, where yields surged sharply—sending ripple effects across global financial markets.

The 10-year U.S. Treasury yield climbed to 4.59%, its highest level since early 2025 and one of the largest single-day jumps in over a year. Meanwhile, the 30-year yield rose to 5.12%, reaching levels not seen since 2007.

This spike reflects growing investor concerns that inflation may remain elevated longer than expected—and that the Federal Reserve could delay rate cuts or even consider further tightening.

Several factors drove the bond sell-off:

• Stronger-than-expected inflation data (both consumer and producer prices)
• Rising energy costs linked to geopolitical tensions
• Global bond market weakness, particularly in Japan and the U.K.
• Increasing government borrowing expectations overseas

Higher yields tend to weigh on stocks by increasing borrowing costs and offering investors more attractive returns in fixed income. But Friday’s sharp stock market drop—where the S&P 500 fell -1.2% and the Dow lost over 500 points—coincided with the largest spike in yields during the week. (Bond prices and yields move in opposite directions.)

Economy: Inflation Pressures Persist Despite Solid Growth

Fresh economic data painted a mixed picture of the U.S. economy — solid growth but stubborn inflation.

Inflation Remains the Key Concern

• Consumer prices rose +0.6% in April and +3.8% over the past year—the fastest pace since May 2023
• Core inflation (excluding food and energy) also came in above expectations
• Producer prices, i.e. wholesale inflation, surged +1.4% in April, with a +6.0% annual increase

Energy costs were a primary driver, reflecting the impact of geopolitical tensions and supply concerns.

Consumer and Business Activity Hold Up

Despite inflation pressures, economic activity remained relatively strong:

• Retail sales increased +0.5% in April, with steady underlying demand
• Industrial production rose +0.7%, beating expectations
• Existing home sales ticked up slightly, with median prices continuing to rise

Overall, the data suggests the economy is still growing, but inflation remains sticky—complicating the outlook for interest rates and financial markets.

The Bottom Line

Markets are entering a more uncertain phase. While the AI-driven rally propelled stocks to record highs, rising inflation, higher bond yields, and geopolitical risks are now testing that momentum. Investors are increasingly focused on whether inflation will ease—and whether central banks will be able to cut rates later this year. Until there’s more clarity, markets may remain volatile, with both stocks and bonds reacting quickly to new economic data and global developments.

Chart of the Week

The rate of inflation for consumer goods and services was in line with Wall Street expectations in April, with the headline Consumer Price Index (CPI) up +0.6% for the month, down from an unrevised +0.9% rise in March. Year-over-year (YoY), CPI was +3.8%, a tick above expectations to rise +3.7%, but up from the unrevised +3.3% annual rate in March. Core CPI, which excludes the more volatile food and energy prices, increased a modest +0.4% for the month, above expectations for a +0.3% increase and up from +0.2% the prior month. YoY Core CPI was +2.8%, above expectations to rise +2.7% and up from +2.6% from the prior month’s annual rate. The Energy index was up +3.8% for the month and +17.9% for the year, reflecting the spike in oil prices from the Iran conflict. The Food index was up +0.5% for the month and up +3.2% for the year. The Shelter component, which is about one-third of the CPI weighting, was up +0.6% for the month and at +3.3% for the year. The Used Cars and Trucks index was flat for the month (0.0%) and down -2.7% year-over-year. The bottom line is that both Headline CPI and Core CPI have accelerated and are well above the Fed’s +2.0% annual target rate.

Consumer inflation rose +3.8% annually in April, the highest since May 2023

U.S. Consumer Price Index (CPI), Year-over-year % change

Note: All months seasonally adjusted except April 2026
Source: U.S. Bureau of Labor Statistics, CNBC.

The Week Ahead

 This week’s economic calendar is light with housing-related reports the most common theme. 

The National Association of Home Builders (NAHB) kicks things off with home builder confidence as Monday’s sole report. Tuesday’s only report is Pending Home Sales from the National Association of Realtors. Wednesday brings the usual weekly mortgage applications from the Mortgage Bankers Association (MBA), and later that afternoon the Federal Reserve will release minutes from its April monetary policy meeting. Thursday is the busiest day, with the Census Bureau releasing Building Permits and Housing Starts. S&P Global releases its May preliminary U.S. Purchasing Managers’ Indexes (PMIs), regional Federal Reserve banks release the Philadelphia and Kansas City manufacturing surveys, and of course, the latest weekly jobless claims are reported. Friday is back to a single report to wrap up the week with the final reading of May Consumer Sentiment from the University of Michigan.

Only 17 S&P 500 index companies report results this week as earnings season winds down. But included among those is the world’s most valuable company, Nvidia, which announces earnings on Wednesday. Options markets imply a roughly 6% move in the stock following the report, with semiconductor and AI-linked names likely to react in sympathy. Other companies releasing earnings on the week include Home Depot on Tuesday, Lowe’s and Target on Wednesday, plus Deere and Walmart on Thursday.

Did You Know?

CONSUMERS HANGING IN – In the April Survey of Consumer Expectations, the mean probability of missing a debt payment in the next three months fell to 11.4%, the lowest since August 2023. The biggest improvement came among consumers with a high school education or less, where the probability dropped from 14.3% to 11.5%, the lowest since February 2022. (Source: New York Fed)

STAGGERING GROWTH – With most companies reporting, S&P 500 earnings are projected to grow +28.2% in Q1 compared to a year ago, marking the strongest growth since Q4 2021. Companies that are AI beneficiaries have seen Q1 earnings increase by +50%, according to Deutsche Bank. (Source: Reuters)

DEFYING THE PLAYBOOK – Despite WTI crude oil rallying +36% since the start of the Iran War at the end of February, as of midday on May 7, the S&P 500 Energy sector was actually down -0.5% over this period. Meanwhile, Consumer Discretionary, a sector typically hurt by higher energy prices, has rallied +8.2%, outperforming the S&P 500’s gain of +7.1%. (Source: Bespoke).

This Week in History

PANIC OF 1884 – On May 14, 1884, panic hit markets. Two leading commercial banks and an investment bank, Grant & Ward (in which former President Ulysses S. Grant was a partner) would go bust after lending massively to stock speculators buying on margin. Interest rates went as high as 4% a day, in what became known as the Panic of 1884. (Source: The Wall Street Journal)

Economic Review

• April wholesale inflation surged with the headline Producer Price Index (PPI) rising +1.4% for the month, nearly three times the expected +0.5% rise and above the upwardly revised +0.7% the prior month (originally reported at +0.5%). That was the largest monthly advance since March 2022. Year-over-year (YoY) PPI increased at a +6.0% rate, up from the unrevised +4.3% annual rate the prior month. While that is the highest annual rate in three years, it was well below Wall Street expectations for a +4.6% annual rate. Core PPI, which strips out volatile food and energy costs, was up +1.0% for the month, compared to expectations for a +0.3% rise, and up from a +0.2% reading the prior month (revised up from +0.1%). Core PPI was up +5.2% YoY, above expectations for +4.3% and up from the prior month’s +4.0% annual rate after being revised higher from +3.8%. The index for Final Demand Goods increased +2.0% following a +1.9% rise the prior month. The index for Final Demand Services was up +1.9%, its largest advance since March 2022. The bottom line is that the PPI surged in April, and not just from energy-related categories.
• Imports Prices were up +1.9% in April, far above expectations for a +1.0% increase, and up from a +0.9% increase the prior month (revised higher from +0.8%). Import Prices ex Petroleum were up +0.7%, above expectations to come in at +0.5%, and up from a flat reading the prior month (after being revised lower from +0.1%). Year-over-year, the cost of imports rose +4.2%, far below expectations for a +3.1% annual rate, and up from the prior month’s +2.3% annual rate after it was revised higher from +2.1%. Meanwhile, Export Prices were up +3.3%, above expectations for +1.2% and down from the prior month’s +1.5% increase after being revised down from +1.6%. Export prices accelerated to +8.8% over the past year, more than the expected +7.0% rise, and up from last month’s +5.4% annual rate (revised down from +5.6%).
• The Commerce Department reported that the advance reading of US Retail Sales for April increased +0.5%, matching Wall Street expectations and down from +1.6% the prior month (which was revised lower from the originally reported +1.7%). Retail sales represent about one-third of all consumer spending and offer clues on the strength of the economy. Retail Sales Ex-Autos were up +0.7%, matching expectations and follows an unrevised +1.9% reading the prior month. Sales Ex-Autos and Gas were up +0.5%, better than expectations for a +0.3% rise but down from the +0.7% the prior month after it was revised up from +0.6%. The Control Group, a figure used to calculate Gross Domestic Product (GDP), rose +0.5%, above expectations for a +0.4% rise and down from +0.8% gain the prior month (revised higher from +0.7%). The key takeaway from the report is that solid spending activity was seen across most retail categories in April, which is when consumers were digesting the gas price shock from the Iran war. Excluding auto and gasoline station sales, retail sales were up 0.5% month-over-month.
• The National Federation of Independent Business (NFIB) reported that their Small Business Optimism Index rose to 95.9 in April, up a tick from an unrevised 95.8 the prior month. That was below Wall Street expectations for 96.1. Of the 10 component indexes, seven increased, while three declined, with none unchanged. The increases were led by Earnings Trends, which rose +6 points to -19%, Plans to Increase Inventories, which rose +3 points to -2%, and Current Inventory Too Low, which also improved +3 points to -2%. The decliners were Expect Economy to Improve which fell -7 points to +4% and Expect Real Sales Higher and Good Time to Expand which both fell -4 points to +3% and +7% respectively. The separate Uncertainty Index rose -4 points to 88, reversing the prior month’s increase that resulted in the highest level since September 2025. “Inflationary pressures continue to be a challenge for Main Street,” said NFIB Chief Economist Bill Dunkelberg. “While small business optimism is currently fragile, the benefits of the Working Families Tax Cut Act should start to feed into the private sector over the next few months.”
• The US Treasury Department recorded a Federal Budget Surplus of +$215.0 billion in April, a little less than expectations of +$220.0 billion, and narrower than the +$258.4 billion deficit recorded in April 2025. Receipts fell -1.5% (to $837.3 billion) on a year-ago basis, while Outlays rose 5.2% (to $622.3 billion). Individual Income Taxes ($515 billion) were the largest source of receipts in April, followed by Social Insurance & Retirement Receipts ($196 billion). Customs duties brought in $22 billion, bringing the fiscal year-to-date total to $189 billion. The largest outlays by function were Social Security ($139 billion), Net Interest ($97 billion), Medicare ($88 billion), and National Defense ($77 billion). The fiscal year-to-date deficit is $953 trillion versus $1.049 trillion in the same period a year ago. The budget deficit over the last 12 months is -$1.680 trillion. The key points from the report is that a boost in tax receipts helped fuel a narrowing in the fiscal year-to-date deficit versus the prior year period and the deficit for the 12 months ending in April is down -16% from the same period a year ago.
• US Industrial Production rose +0.7% in April, above expectations for +0.3% and sharply higher from -0.3% the prior month (revised higher from -0.5%). Manufacturing Production, which represents about three-quarters of total Industrial Production, increased +0.6%, beating expectations for a +0.2% increase and up from +0.1% the prior month (revised higher from -0.1%). Year-over-Year, Industrial Production was up +3.3%, following the prior month’s +0.7% annual pace. Capacity Utilization rose to 76.1%, up from 75.7% the prior month (unrevised). Capacity Utilization reflects how much a manufacturing plant is being used to produce things. The key takeaway from the report is that the industrial production increase was underpinned by solid manufacturing output that was led by the production of durable goods. Excluding motor vehicles and parts, manufacturing output was up 0.3% month-over-month.
• The New York Fed’s Empire State Manufacturing Index, a gauge of manufacturing activity in the state, surged to +19.6 in April – its highest level in more than four years. Wall Street expected it to be +7.2. New Orders rose +3 points to +22.7, their highest level in more than four years. Shipments were little changed at +18.9. The Employment index fell to +8.3 from +9.8, while the Average Workweek index came in at +11.5. Both inflation gauges were up, with the Prices Paid index jumping +12 points to +62.6, a sharp acceleration for a second consecutive month. The Prices Received index rose +10 points to +31.8. Fortunately, the outlook improved, with the Six Months Ahead General Business Conditions index jumping +14 points to +33.5.
• The National Association of Realtors (NAR) reported that Existing Home Sales increased +0.2% in April to a seasonally adjusted annual rate of 4.02 million units, below expectations for 4.05 million units but up a tick from the 4.01 million units reported the prior month (revised up from 3.98 million units). Year-over-year existing sales were unchanged (0.0%) versus the -0.1% annual decline the prior month. The Median Existing Home Price increased +0.9% from the prior year to $417,700, marking the 34th consecutive month of year-over-year increases. The Inventory of Homes for Sale was up +3.0% from the prior month to 1.36 million units and is up +4.9% from a year ago. Unsold Inventory sits at a 4.4-month supply, up from 3.8 months the previous month. This remains below the 6.0-month supply typically associated with a more balanced market. The Median Time on Market for properties was 32 days, down from 41 the previous month and 29 a year ago. First-Time Buyers accounted for 33% of sales, up from 32% the previous month. Cash Sales accounted for 25% of transactions versus 27% the prior month. For the month, sales fell only in the West region, down -2.6%, were flat in the Northeast, and were up +2.2% in the Midwest and +0.5% in the South.
• Weekly MBA Mortgage Applications rose +1.7% for the week ending May 8, following a -4.4% drop the prior week. The Purchase Index rose +3.9% following a -3.7% fall the prior week. The Refinance Index slipped -0.8% after a drop of -5.0% the prior week. The average 30-Year Mortgage Rate ticked up to 6.46% from 6.45% the prior week.
• Weekly Initial Jobless Claims rose by +12,000 to 211,000 for the week ending May 8, which was worse than expectations for 205,000. The prior week was revised down by -1,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) rose by +24,000 to 1,782,000 for the week ending May 1, which was worse than expectations for 1,780,000. The prior week’s reading was revised lower by -8,000.

Asset Class Performance

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. US Bonds (iShares Core US Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (Vanguard Total International Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares US Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% US Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.