Weekly Market Update – May 22, 2026

Quick Takes

• Investors capped another strong week across global markets, buoyed by optimism around geopolitics, resilient corporate earnings, and continued economic expansion—even as inflation concerns and rising interest rates remain front of mind.
• U.S. equities pushed higher last week, extending one of their longest winning streaks since 2023. The S&P 500 rose +0.9%, marking its eighth consecutive weekly gain, while the Nasdaq added +0.5% and the small-cap Russell 2000 jumped +2.7%.
• S&P Global reported that the preliminary May U.S. PMI composite reading of 51.7 showed growth, with manufacturing surging to a four-year high while services activity softened. Bond markets experienced significant volatility as investors recalibrated expectations for inflation and Federal Reserve policy.

Source: Bloomberg. Data as of May 22, 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 Rides Momentum as Global Markets Rally but Inflation Concerns Linger

Investors capped another strong week across global markets, buoyed by optimism around geopolitics, resilient corporate earnings, and continued economic expansion—even as inflation concerns and rising interest rates remain front of mind.

Here’s what retail investors need to know across stocks, bonds, and the broader economy.

U.S. Stocks: Rally Extends Despite Volatility

U.S. equities pushed higher last week, extending one of their longest winning streaks in recent years. The S&P 500 rose +0.9%, marking its eighth consecutive weekly gain—the longest stretch since 2023—while the Nasdaq added +0.5% and the small-cap Russell 2000 jumped +2.7%.

Markets were anything but calm. Stocks swung throughout the week as investors tracked shifting Treasury yields, Middle East tensions, and developments in U.S.-Iran negotiations. Early concerns that conflict could drive oil prices sharply higher—and fuel inflation—briefly pressured markets. But sentiment improved midweek as hopes for a ceasefire framework emerged, easing oil prices and lifting equities.

Corporate earnings continued to underpin the rally. Nvidia remained a focal point after delivering results and forecasts above expectations, though its stock dipped as investors debated whether the AI-driven surge has gone too far. Still, semiconductor companies have been leading earnings growth, helping drive overall S&P 500 profit expansion at its fastest pace in four years.

Importantly, expectations remain strong. Analysts have lifted S&P 500 earnings estimates by more than +10% over the past three months—one of the fastest upward revisions in decades—led largely by semiconductor firms and the energy sector.

Leadership within the market is also shifting. Smaller companies and value stocks outperformed their large-cap and growth counterparts, signaling broader participation in the rally.

Meanwhile, the arrival of Kevin Warsh as the new Federal Reserve chair added another variable, as investors assessed whether monetary policy might stay tighter for longer.

International Stocks: Global Markets Outpace U.S. despite China decline

Markets outside the U.S. outperformed domestic equities, with developed international stocks rising +2.1% for the week.

Europe led the gains. The U.K. climbed +3.4% and broader European markets rose +2.9%, with Germany up +3.7%. Japan also advanced +1.0%, supported by stronger-than-expected economic growth of +2.1% in the first quarter.

Emerging markets delivered a mixed picture but still gained +1.1% overall. Strength in South Korea (+4.5%) and Taiwan (+2.1%) offset weakness in China, where disappointing economic data—including retail sales, industrial output, and property investment—sparked renewed growth concerns.

Performance dispersion remained wide. South Korea’s stock market has surged an eye-catching +242% over the past year, while Indonesia fell sharply last week and is now down -40% over the same period following an unexpectedly aggressive interest rate hike.

The U.S. dollar was largely unchanged, edging slightly lower for the week but still up about 1% for the year.

Bonds: Yields Swing as Inflation Fears Persist

Bond markets experienced significant volatility as investors recalibrated expectations for inflation and Federal Reserve policy.

The 30-year Treasury yield briefly climbed above 5.18%—its highest level in nearly two decades—before settling at 5.06% by week’s end. Similarly, the benchmark 10-year yield rose to 4.69% before easing to 4.56%.

Short-term yields signaled ongoing caution. The 2-year Treasury yield rose to 4.12%, suggesting investors believe rates could remain elevated.

Despite the volatility, bonds posted modest gains. The Bloomberg U.S. Aggregate Bond Index rose +0.3%, while international bonds performed slightly better with a +0.4% gain.

Economy: Expansion Persists, But Inflation and Confidence Worsen

Recent economic data painted a mixed picture—steady growth accompanied by mounting inflation pressures and weakening consumer sentiment.

Business activity remained in expansion territory. S&P Global reported that the preliminary May U.S. PMI composite reading of 51.7 showed growth, with manufacturing surging to a four-year high while services activity softened. However, inflation signals raised red flags: input costs and selling prices climbed at their fastest pace since 2022.

The housing market continues to struggle under the weight of higher borrowing costs. Mortgage rates climbed to 6.51%—the highest since August, while housing starts fell and builder confidence remained subdued.

Consumers are feeling the pinch. The University of Michigan’s Index of Consumer Sentiment dropped to a record low of 44.8, reflecting growing concern over the cost of living. Inflation expectations also moved higher—both near term (4.8%) and long term (3.9%).

Federal Reserve: Policy Path Remains Uncertain

Minutes from the Federal Reserve’s April meeting highlighted increasing concern about persistent inflation. Policymakers signaled that interest rates may need to stay higher for longer—and could even rise further if inflation fails to cool.

At the same time, some officials suggested rate cuts could eventually be appropriate if inflation eases or the labor market weakens. For now, the Fed appears firmly in a wait-and-see mode.

The appointment of Kevin Warsh signals potential changes ahead, particularly in balance sheet policy and communication strategy.

The Bottom Line

Markets are being driven by a powerful mix of optimism and caution. Stocks continue to climb on strong earnings and geopolitical hopes, while international markets gain momentum. But rising yields, persistent inflation, and weakening consumer confidence suggest volatility isn’t going away anytime soon. For investors, the message is clear: the rally remains intact—but the road ahead may be uneven.

Chart of the Week

The preliminary “flash” S&P Global U.S. Purchasing Managers Index (PMI) showed mixed results for May. The overall S&P Global U.S. Composite PMI was unchanged at 51.7, indicating subdued overall growth. That was a tick under Wall Street expectations for a 51.8 reading but marks 40 consecutive months in expansion territory (results above 50 signal economic expansion). 

The Manufacturing PMI improved to 55.3 from 54.5 the prior month, beating expectations for a decline to 53.8, and marking the best level in four years. Meanwhile, the Services PMI slipped to 50.9 from 51.0 the prior month and missed expectations to improve to 51.2. Manufacturing Output hit 56.2, which is the fastest growth since 2022, supported in part by inventory rebuilding and stockpiling. New Orders slowed but remained near the best levels in four years, skewed to domestic–driven demand as exports were weak amid global disruptions. Input inventories saw the largest build in about 11 months (precautionary stock building) while Supplier Delivery Times lengthened to their worst since August 2022, signaling supply strain. Regarding Employment, hiring increased at the fastest rate since mid–2025. Amid manufacturers, inflation pressures are intense and broad–based. Input Prices surged at the fastest pace since the 2022 energy shock and Output prices were up sharply to the highest level since September 2022. 

In contrast, Service sector PMI activity was near stagnant. Services Output was 50.9, a two-month low, while New Orders was also barely expansionary as higher prices and geopolitical uncertainty hampered growth. Employment weakened too as payrolls declined amid cost pressures. On the inflation front for service companies, Input Prices surged sharply but by less than the manufacturing sector. Output Prices rose at the fastest rate since August 2022. 

The bottom line is that a “two–speed” economy has developed with strong manufacturing versus sluggish services, leaving overall growth modest. Of concern, the services sector, the bulk of the economy, is losing momentum, with demand-sensitive weakness. Export demand has slowed in both manufacturing and services as inflation pressures re-accelerate. Comparisons with official GDP data indicate that the recent readings of the PMI are broadly consistent with the economy growing at a mere 1%-1.2% annualized rate so far in the second quarter, representing a marked slowing from the robust growth of the first quarter.

Flash PMI signals subdued growth in May amid price surge

S&P Global U.S. Flash PMI and Gross Domestic Product (GDP) 

Note: Data were collected May 12-20, 2026.
Source: S&P Global PMI, Bureau of Economic Analysis via S&P Global Market Intelligence.

The Week Ahead

Markets were closed on Monday for Memorial Day. The holiday-shortened week begins Tuesday morning with the Chicago Fed’s National Activity Index, Home Price Indexes from S&P Cotality Case-Shiller and the Federal Housing Finance Agency (FHFA), Consumer Confidence from the Conference Board, and Manufacturing Activity from the Dallas Fed. Wednesday is a bit of a lull with just weekly MBA Mortgage Applications and Manufacturing Activity from the Richmond Fed. Things pick back up on Thursday with weekly Jobless Claims, an inflation update with the Bureau of Economic Analysis’ release of the Personal Consumption Expenditures (CPE) Price Index, Personal Income and Spending, the second release of Q1 GDP, Durable Goods Orders from the Census Bureau, and New Home Sales. Friday concludes with Trade Balance numbers, an update on Wholesale Inventories, and the MNI Chicago PMI.

There are a few notable companies reporting quarterly earnings during the week. HP Inc., Marvell Technology, and Salesforce release earnings on Wednesday, followed by Costco Wholesale and Dell Technologies on Thursday.

Did You Know?

CHATGPT VS. NETSCAPE – Since ChatGPT’s release in November 2022, the AI boom continues to mirror the dot-com boom that began with Netscape in December 1994. At 865 trading days out, the Nasdaq is up +140% today versus a gain of +150% at the same point in the 1990s. (Source: Bespoke)

SMALL RETAIL STRUGGLES – While mega-retailers like Walmart and Amazon have performed well, the average retail stock has struggled in the 2020s. Over the last five years, the S&P Retail Select Industry Index has returned -3.2% versus a gain of +95% for the S&P 500. (Source: Bloomberg)

FOOL ME NINE TIMES – The FTC reported that fraud losses totaled $15.9 billion in 2025, up +27% year over year. Imposter scams, which include a flood of fake toll-collection texts, ranked as the leading fraud category for the ninth consecutive year, with more than one million imposter reports filed. (Source: FTC)

This Week in History

SPIRIT OF ST. LOUIS – On May 21, 1927, Charles Lindbergh completed the first trans-Atlantic flight as he landed his airplane, the Spirit of St. Louis, in Paris, 33 and a half hours after taking off from Roosevelt Field on New York’s Long Island. (Source: The Wall Street Journal)

Economic Review

• April Housing Starts decreased -2.8% month-over-month to a seasonally adjusted annual rate of 1.465 million units, but that still exceeded expectations for a -5.3% decrease to 1.410 million units. That compares to a -3.0% decrease, or 1.538 million units from the prior month (unrevised). Single-unit starts were down -9.0%, and Multi-family jumped +10.3%. Housing starts peaked at 1.8 million in April 2022. Regionally, new construction single-unit starts were down -5.5% in the Midwest, -18.8% in the Northeast, -2.7% in the South, and -22.9% in the West. Moving to Building Permits, one of the leading indicators tracked by the Conference Board and indicator of future construction activity, they rose +5.8% to an annualized rate of 1.442 million units. That was above expectations for 1.384 million units and compared to the prior month’s unrevised -11.5% drop to 1.507 million units. Single-unit permits fell -2.6% while multi-family units surged +21.8%. Regionally, single-unit permits fell -3.2% in the Midwest, -1.9% in the South, -4.3% in the West, and -1.9% in the Northeast. 
• Homebuilder confidence rose in April as the National Association of Home Builders (NAHB) Housing Market Index (HMI) increased +3 points to 37, versus expectations to remain at 34 where it was the prior month (unrevised). A year ago, the index stood at 34. The index is based on a 0-to-100 scale, where any number over 50 indicates a good reading, and below 50 is considered negative sentiment. Sentiment has been in negative territory for 23 months in a row. The three subcomponents all increased for the month with the Current Sales component up +3 points to 40, Sales Expectations in the Next Six Months was up +3 points to 45, and Traffic of Prospective Buyers was up +3 points to 25. For the month, 32% of builders reported cutting home prices (down -4 percentage points), the average price reduction was up a percentage point to 6%, and use of sales incentives was up +1 percentage point to 61%. On a regional basis, the Northeast rose +5 points to 44, the West was up +1 point to 27, the Midwest rose +6 points to 45, and the South was up +2 points to 36. 
• The National Association of Realtors (NAR) reported that Pending Home Sales rose +1.4% in April after the prior month’s +1.7% rise (revised up from +1.5%). That was above Wall Street expectations for a +1.0% increase. On a non-seasonally adjusted basis, the year-over-year rate of change in sales increased +3.2%, up from the prior month’s -1.0% annual rate. The results were mixed across census regions: the Midwest rose +3.0%, the West was up +0.4%, and the Northeast was up +6.6%, but the South was down -0.7%. Sales increased year-over-year in the Midwest, South, and West, but decreased in the Northeast.  “Buyers are coming out with cautious optimism despite increasing economic uncertainty and a slight rise in mortgage rates,” said NAR Chief Economist Dr. Lawrence Yun.
• The Conference Board reported a +0.1% increase in its Leading Economic Index® (LEI) for April, following an unrevised -0.6% reading in March and beating Wall Street expectations for a -0.2% decline. Seven of the 10 indicators advanced in April. “The U.S. LEI increased slightly in April, driven mainly by a rebound in stock prices and an increase in building permits, only for two and more units,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. The Conference Board Coincident Economic Index (CEI) increased by +0.3% after being unchanged in March. The Conference Board Lagging Economic Index (LAG) rose by +0.4% following a +0.3% increase in March.  
• The final reading of the May University of Michigan Consumer Sentiment Index dropped to 44.8 from the preliminary reading of 48.2 and is down from 49.8 in April. That is well below expectations to come in at 48.0. In the same period a year ago, the index stood at 52.2. The Current Economic Conditions component fell to 45.8 from the preliminary reading of 47.8 and is down from the final reading of 52.5 the prior month. The Consumer Expectations component moved down to 44.1 from the preliminary reading of 48.5 and is down from 48.1 the prior month. One-year inflation expectations increased to 4.8% from the preliminary 4.5% and are up from 4.7% the prior month. The five-year inflation expectations increased to 3.9% from the preliminary 3.4% and are up from 3.5% the prior month. The bottom line is that May consumer sentiment is that consumers are clearly concerned about rising costs and their ability to out-earn inflation, which they are concerned will increase beyond fuel prices.
• The Philly Fed Manufacturing Business Outlook Survey slumped to -0.4 in May from an unrevised +26.7 in April, reversing four consecutive increases. That was sharply lower than Wall Street forecasts for a decrease to +17.8. Readings above zero indicate economic expansion and below zero signal economic contraction. The index for New Orders plunged -34.7 points to -1.7, its lowest reading since April 2025. The Shipments index sank -29.1 points to +4.9. Delivery Times fell -12.1 points to -10.4. The Number of Employees index rose +2.3 points to -2.8 while the Average Workweek index slid -6.5 points to +1.2. Prices Paid remains elevated, but fell -11.4 points to +47.9, while Prices Received decreased -7.2 points to +26.3. Future activity expectations improved, as the Future General Activity index rose +12 points to +53.2, its highest reading since June 2021, as nearly 67% of the firms expect an increase in activity over the next six months (up from 57% last month). 
• The Kansas City Fed Manufacturing Survey edged lower to +8 in May from an unrevised +10 reading the prior month. The composite index is an average of the Production, New Orders, Employment, Supplier Delivery Time, and Raw Materials Inventory indexes. The Production index ticked lower to +9 from +10, month-over-month, and New Orders ticked higher to +13 from +12. The Number of Employees index improved to -4 from -6, while the Average Employee Workweek index edged lower to +6 from +7. The Prices Paid index was steady at +63, its highest level in more than a year, while the Prices Received index increased to +29 from +25. The Kansas City Fed Service Sector Outlook Survey rose to +10 from +3.
• Weekly MBA Mortgage Applications fell -2.3% for the week ending May 15 following a +1.7% drop the prior week. The Purchase Index dropped -4.1% following a +3.9% rise the prior week. The Refinance Index slipped -0.1% after a -0.8% dip the prior week. The average 30-Year Mortgage Rate rose to 6.56% from 6.46% the prior week. 
• Weekly Initial Jobless Claims fell by -3,000 to 209,000 for the week ending May 15, which was better than expectations for 210,000. The prior week was revised up by +1,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) rose by +6,000 to 1,782,000 for the week ending May 8, which was better than expectations for 1,786,000. The prior week’s reading was revised lower by -6,000. 

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. U.S. Bonds (iShares Core U.S. 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 U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% U.S. 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.