Weekly Market Update – May 29, 2026

Quick Takes

• Encouraging signs on inflation, easing geopolitical tensions, and continued enthusiasm around artificial intelligence helped push U.S. stocks to fresh highs while supporting bonds and global markets.
• The S&P 500 climbed +1.4%—marking its ninth straight weekly gain—while the tech-heavy Nasdaq surged +2.4% and the small-cap Russell 2000 added +1.8%. Both the S&P 500 and Nasdaq closed at all-time highs, and the Russell 2000 hit an all-time high on Thursday.
• Bond markets also delivered positive returns, benefiting from falling yields. The Bloomberg U.S. Aggregate Bond Index rose +0.8% and the Bloomberg Global Aggregate Bond ex U.S. Index performed even better, returning +1.1%.

Source: Bloomberg. Data as of May 29, 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.

Stocks Rally to Records as Inflation Cools and AI Boom Powers Markets

Wall Street wrapped up a strong, holiday-shortened week with a clear theme: optimism. Encouraging signs on inflation, easing geopolitical tensions, and continued enthusiasm around artificial intelligence helped push U.S. stocks to fresh highs while supporting bonds and global markets.

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

U.S. Stocks: AI Momentum Pushes Markets Higher

U.S. equities extended their winning streak, with all three major indexes finishing firmly in positive territory. The S&P 500 climbed +1.4%—marking its ninth straight weekly gain—while the tech-heavy Nasdaq surged +2.4% and the small-cap Russell 2000 added +1.8%. Both the S&P 500 and Nasdaq closed at all-time highs, and the Russell 2000 hit an all-time high Thursday.

Technology stocks led the charge, with the sector up +4.6% for the week. Investor enthusiasm around Artificial Intelligence (AI) remained a major driver, highlighted by a standout performance from Dell. Shares of the company jumped more than +30% on Friday alone after it reported strong earnings and bullish guidance tied to robust demand for AI servers.

Not every sector shared in the gains. Energy stocks lagged significantly, falling -5.4% as oil prices dropped sharply. Crude oil declined nearly -10% on the week, settling at $87.36 per barrel, reflecting easing geopolitical concerns in the Middle East.

International Stocks: Emerging Markets Take the Lead

Global markets outside the U.S. posted gains, though they generally lagged American equities. Developed international stocks (the MSCI EAFE Index) rose +1.0% for the week.

Japan stood out among developed markets, climbing +1.9%, and broader European countries like France, Italy, Germany, and Australia were up +1.0% or better. Spain was also a standout with a +2.5% gain. 

Emerging markets were the real standout. The MSCI Emerging Markets Index rose +3.9%, building on the prior week’s +2.1% gain. Technology-heavy economies drove much of the performance. South Korea surged +10.9% and Taiwan gained +6.8%, fueled by strong demand for memory chips and semiconductors tied to the global AI boom.

However, not all emerging markets participated in the rally. China and Brazil struggled, declining -1.4% and -1.7%, respectively, highlighting uneven economic momentum across the developing world.

Bonds: Yields Fall as Investors Seek Stability

Bond markets also delivered positive returns, benefiting from falling yields. As bond prices rise when yields decline, investors saw solid gains across most fixed-income sectors.

The 10-year Treasury yield dropped -12 basis points to 4.44%, while the 2-year yield fell to 4.00%. The 30-year yield declined -9 basis points to 4.97%. The move lower in yields was driven in part by declining oil prices and improving sentiment around geopolitical risks.

The Bloomberg U.S. Aggregate Bond Index rose +0.8%, building on the previous week’s +0.3% return. International bonds (the Bloomberg Global Aggregate Bond ex U.S. Index) performed even better, returning +1.1% on top of the +0.6% return the prior week.

High-yield bonds posted gains of +0.6%, though they lagged safer Treasury and investment-grade bonds, suggesting investors still favor quality amid lingering economic uncertainty.

Economy: Mixed Signals on Growth and Inflation

Economic data released during the week painted a mixed picture of the U.S. economy.

On the inflation front, there was some good news. The Core Personal Consumption Expenditures (PCE) Index—a key measure for the Federal Reserve—rose less than expected in April on a monthly basis. This marked the third straight month of slowing inflation momentum. However, on an annual basis, inflation remains elevated and actually reached its highest level since November 2023.

Consumer behavior showed resilience. Personal spending increased +0.5% in April, even as Personal Incomes were roughly flat.

Economic growth appears to be moderating. First-quarter GDP was revised down to a 1.6% annualized pace, from an earlier estimate of 2.0%. The downward revision reflected weaker investment and consumer spending, though overall growth still improved from the prior quarter’s slow pace.

Business investment trends were less encouraging. While Durable Goods Orders surged +7.9%—helped by aircraft demand—Core Capital Goods Orders, a key proxy for business investment, fell -1.1%.

Consumer Confidence dipped slightly in May, with the Conference Board index edging down to 93.1, though this was largely due to an upward revision in April’s reading.

Regarding monetary policy, Federal Reserve policymakers struck a cautious tone during the week, signaling that inflation remains a concern. Some policymakers indicated they are prepared to raise interest rates if inflation worsens. Others emphasized that risks remain tilted to the upside, citing factors like energy prices, supply chain uncertainty, and the unknown long-term impact of AI-driven productivity gains.

Geopolitics: Middle East Developments Calm Markets

A key factor supporting markets was easing tension in the Middle East. Reports suggested progress toward a 60-day ceasefire between the U.S. and Iran, along with agreements to keep shipping routes open through the Strait of Hormuz.

The potential deal includes provisions for unrestricted shipping, removal of mines in key waterways, and discussions around sanctions relief and nuclear oversight. While some conflicting reports emerged, overall investor sentiment improved as the possibility of a broader agreement took shape.

The reaction was immediate: oil prices dropped sharply, bond yields fell, and equities rallied—highlighting how closely global markets are tied to geopolitical developments.

The Bottom Line

The week underscored several key themes shaping markets right now:

• AI continues to drive stock market leadership, particularly in technology and semiconductor-related sectors.
• Cooling inflation—though still elevated—is giving investors hope that the Fed may avoid aggressive tightening.
• Geopolitical risks are easing, helping to stabilize energy prices and boost confidence.
• Economic data remains mixed, with resilient consumers but slowing business investment.

For everyday investors, the takeaway is that markets are balancing optimism about innovation and easing risks with lingering uncertainty about inflation and growth.

Chart of the Week

The cost of goods and services rose +0.4% in April, a tick below expectations to be +0.5% and down sharply from +0.7% the previous month (unrevised). For the year, the Personal Consumption Expenditure (PCE) Deflator (aka PCE Price Index) was up +3.8%, matching expectations and up from +3.5% the prior month (unrevised). The Core PCE Price Index, which excludes food and energy and is the Fed’s preferred inflation gauge, was up +0.2% for the month, under expectations for +0.3% and down a tick from that level the prior month (unrevised). Year-over-year, the Core-PCE Price Index was up +3.3%, in line with expectations and up from +3.2% (unrevised) the prior month. The PCE Index for Goods was up +0.7% after increasing +1.4% the prior month, and year-over-year it was up +1.2% versus +1.0% the previous month. The PCE Price Index for Services was unchanged at +0.3% in April and up +2.5% year-over-year following the prior month’s +2.8%. The key takeaway from the report is that the Core PCE Price Index, the Fed’s preferred inflation gauge, continues an acceleration in the year-over-year level, which will extend concerns about stagflationary conditions.

Fed’s Preferred Inflation Gauge Moderates for a Third Straight Month

But on a Year-over-Year basis Core PCE still looks Stagflationary

Source: Bureau of Economic Analysis via Bloomberg.

The Week Ahead

We are back to a full week after last week’s holiday-shortened schedule, but it is a relatively light schedule. The main economic event arrives on Friday when the Bureau of Labor Statistics releases the May Nonfarm Payrolls report. Economists expect the U.S. economy added 93,000 jobs during the month, while the unemployment rate is forecast to hold steady at 4.3%. The week gets underway with U.S. Manufacturing PMIs from ISM and S&P Global on Monday. Construction Spending is also reported on Monday. Tuesday’s sole release is the JOLTS Job Openings Report. Wednesday is the busiest day of the week with weekly MBA Mortgage Applications, Services PMIs from ISM and S&P Global, Factory and Durable Goods Orders for April, and the Federal Reserve’s Beige Book.

With less than 20 S&P 500 companies left to report first-quarter results, nearly 90% have beaten earnings-per-share estimates. As the end of the stellar first quarter earnings season winds down, some notable reports this week include Hewlett Packard Enterprise on Monday, Palo Alto Networks on Tuesday, Broadcom and CrowdStrike on Wednesday, and Docusign on Thursday. 

In Initial Public Offering (IPO) news, if anticipated mega-IPOs from SpaceX, OpenAI, and Anthropic weren’t taking up all the attention, Honeywell-backed quantum computing company Quantinuum (QNT) would garner more attention. It is expected to debut at a valuation of roughly $12.7B, making it one of the largest technology offerings of the year. In addition, FedEx will complete the spinoff of FedEx Freight to create a new standalone S&P 500 company, marking one of the year’s most significant corporate restructurings.

Did You Know?

A HELP, NOT A THREAT – The Federal Reserve’s 2025 Survey of Household Economics and Decision Making found that 1 in 4 workers had used generative Artificial Intelligence (AI) on the job in the prior month, and 81% of them said it saved them time. AI users were also more likely to expect the technology to improve their career rather than worry about it replacing their job. (Source: Federal Reserve)

NO GUARANTEES – Nonconforming non-jumbo mortgage originations — loans without a government guarantee — have risen steadily post-COVID. From just 0.9% of total mortgage volume in 2020, their share has grown every year since, reaching 5.6% in 2025. (Source: Wall Street Journal)

MEGA MOMENTUM – While the average S&P 500 stock is up +8.6% since the index’s low on March 30, the 10 stocks with market caps of $1+ trillion are up +22.9%. The 19 stocks with market caps above $500 billion are up an average of +38.2%, and 3 have doubled or more. (Source: Bespoke)

This Week in History

WORLD WAR EUPHORIA – On May 29, 1946, with the stock market still euphoric over peace, the Dow Jones Industrial Average hit its immediate post-World War II high of 212.50, a level it wouldn’t pass again until April 12, 1950. (Source: The Wall Street Journal)

Economic Review

• On Thursday, the Bureau of Economic Analysis (BEA) reported the second estimate of real Gross Domestic Product (GDP) for the first quarter 2026 showed the U.S. economy grew at just a +1.6% annual pace. That was a reduction from the +2.0% annual pace seen in the initial estimate, where Wall Street expected it to stay. Personal Consumption Expenditures (PCE), the main engine of the economy, increased +1.4% in Q1, down from +1.6% in the advance estimate and versus +1.9% in Q4. The PCE component contributed +0.95 percentage points to real GDP growth in the first quarter, down from 1.08 in the advance estimate. Exports rose +13.0%, a tick higher than the initial estimate of +12.9%. Imports were up +21.1%, revised lower from the +21.4% preliminary reading. As a result, Net Exports subtracted -1.25% percentage points from Q1 growth versus the +1.30 detraction from the initial estimate. Government spending increased +4.4%, unchanged from the advance estimate, and added +0.73 percentage points to Q1 GDP. In contrast to GDP, Gross Private Domestic Investment increased +7.0% (revised down from +8.7% in the first estimate), resulting in a +1.19 percentage point contribution to Q1 GDP growth, down from +1.48 in the advance estimate. The GDP Price Index (GDP Price Deflator) was revised lower to +3.5% from +3.6% in the initial estimate. Real Final Sales to Private Domestic Purchasers—a measure of underlying Private–Sector Demand—increased +2.4%, down a tick from the +2.5% initial estimate. The bottom line is that GDP Growth and Consumer Spending in Q1 were weaker than previously estimated while Government Spending and the trade components were essentially unchanged from the advance estimate.
• Personal Income was flat (0.0%) in April, missing expectations to rise +0.4% and was down from the negatively revised +0.5% reading the prior month (originally +0.6%). Real Disposable Income was down -0.5% month-over-month, after dropping -0.2% the prior month. Personal Spending rose +0.5% in April, matching expectations but down from +1.0% the prior month (after it was revised up from +0.9%). After adjusting for inflation, Real Personal Spending was +0.1% for the month, matching expectations and down from +0.3% the prior month after being revised higher from +0.2%. The Personal Savings Rate, as a percentage of disposable personal income, declined to +2.6% from +3.6% the previous month. The key takeaway was the lack of income growth while spending remained solid in the face of stubbornly high inflation.
• The Conference Board Consumer Confidence Index decreased to 93.1 in May, but only because April was upwardly revised to 93.8 from the originally reported 92.8. That was better than Wall Street expectations to come in at 92.0. In the same period a year ago, the index stood at 98.4. The Present Situation gauge fell to 121.2 from 124.4 the prior month (revised higher from 123.8). The Expectations gauge — which reflects consumers’ six-month outlook — rose to 74.4 from an upwardly revised 73.4 (originally 72.2). Sustained levels below 80 on the expectations index can signal a recession within the next year, while in good times the index can top 120 or more. The bottom line from the report is that inflation levels weighed current conditions, but those same inflation pressures did not diminish expectations for better conditions six months from now. 
• The Census Bureau reported preliminary Durable Goods Orders for long-lasting items (such as televisions, appliances, and transportation equipment) increased +7.9% in April, following an upwardly revised +1.3% rise (from +0.8%) the prior month. That was above Wall Street expectations to rise +4.0. Durable Goods Orders Excluding Transportation were up +1.1%, above expectations for a +0.5% reading and matching the prior month’s after it was revised higher from +0.9%. The important Core Capital Goods Orders (capital goods excluding volatile sectors like transportation and defense), a proxy for business spending, fell -1.1%, short of expectations for a +0.4% gain and down sharply from the upwardly revised +3.9% reading the month before (originally +3.4%). Core Capital Goods Shipments, which are factored into GDP, increased +0.4%, above expectations for a +0.6% gain but down from the upwardly revised +1.3% reading the month before (originally +1.2%). 
• The Federal Reserve Bank of Chicago reported that US economic activity rebounded in April, with its Chicago Fed National Activity Index (CFNAI) rising to +0.14 from -0.15 the prior month (revised up from -0.20). That was much better than Wall Street expectations for a rebound to -0.03 and was the highest reading since March 2025 (readings below zero indicate below-trend growth in the national economic activity). Two of the four broad categories of indicators used to construct the index rose from the previous month, and two categories made positive contributions. The Production and Income category jumped to +0.18, up from -0.20 the prior month. The Sales, Orders, and Inventories category contribution was +0.02, up from -0.03 the prior month. The Employment, Unemployment, and Hours category contributed -0.02, a decrease from 0.0 the prior month. The Personal Consumption and Housing category detracted -0.04, down from 0.0 the prior month.  Overall breadth of the index improved slightly with 47 of the 85 individual indicators making positive contributions, versus 36 the prior month, while 38 made negative contributions. Improvements in the individual indicators were modest, with 44 indicators improving, while 40 indicators deteriorated, and one was unchanged. The CFNAI three-month moving average increased to +0.03 from +0.02 the prior month. During the last 20 years, there has been a 91% correlation between the three-month index level and the quarterly change in real GDP. 
• The Chicago Purchasing Managers Index (PMI), a barometer for the region’s business and manufacturing conditions (also known as the Chicago Business Barometer), surged to 67.7 in May from an unrevised 49.2 in April. That was far above Wall Street expectations for a 50.3 reading and shot it back into expansion territory (readings above the 50 level indicate economic expansion). That is its highest level since January 2022. The rise was driven by increases in New Orders, Production, Order Backlogs, and Supplier Deliveries. A decline in Employment provided some marginal downside to the results. New Orders jumped +18.2 points, to the highest level since January 2022. Production advanced +11.9 points, marking five months in expansionary territory and the highest level since July 2021. Meanwhile, the Prices Paid index increased +3.5 points to the highest since May 2022. Respondents continue to highlight oil prices and transport fuel surcharges pushing up costs, the survey said.
• The Texas Manufacturing Outlook Survey improved in May, with the General Business Activity rising to +0.4 from an unrevised -2.3 the prior month. That was better than expectation for a reading of 0.0. However, the Production sub-index, a key measure of the state’s manufacturing activity, fell -10 points to +9.4. Other measures of manufacturing activity also showed signs of slowing. The Capacity Utilization index fell to +5.2 from +19.8, the New Orders index decreased to +6.4 from +9.9, and the Shipments index declined to +7.4 from +15.0. On the other hand, Employment improved to +0.2 from -0.9 and Capital Expenditures rose to +6.0 from +3.1. Prices Paid rose to +42.7 from +37.0 but Prices Received fell to +18.9 from +27.6. Indicators of Future Conditions Six Months from Now ticked up to +14.3 from +14.1. The Texas Service Sector General Business Activity improved to -7.7 from -9.9 the prior month (unrevised), below expectations to come in at -6.0.
• The Richmond Fed Manufacturing Survey improved to +3 in April from an unrevised 0.0 the prior month, beating expectations to come in at +1. All three component indexes rose in the month: New Orders to +17 from +8, the Shipments index jumped to +16 from −2, and Employment improved to +3 from 0. The growth rate of Prices Paid decreased slightly, from 6.40 to 5.96, while growth in Prices Received decreased slightly from 4.73 to 4.21. The Richmond Fed Service Sector Survey improved as well, to neutral (0.0) from -6 the prior month, better than expectations to improve to just -5.
• According to the S&P Cotality Case-Shiller 20-City Home Price Index, US housing prices fell -0.16% in March, down from an unrevised -0.05% the prior month. That was below expectations for a -0.10% decline. Of the twenty cities tracked by the index, sixteen declined month-over-month with Seattle down the most (-0.95%), followed by Tampa (-0.75%), while Chicago (+1.20%) and Boston (+0.57) saw the biggest increases. On a year-over-year (YoY) basis, the 20-city index was up +0.83%, below expectations for a +1.12% rise and down from a +0.92% annual increase the month before (revised higher from +1.18%). Chicago reported the highest annual gain (+6.09%), followed by New York (+4.02%), while Seattle had the lowest annual return (-2.50%), and Tampa the next worst (-1.93%). 
• The competing Federal Housing Finance Agency (FHFA) House Price Index (HPI) showed US home prices rose +0.1% in March, up from the -0.1% decrease the prior month (revised lower from 0.0%). The results were in line with Wall Street expectations. The government data showed home prices up +1.7% year-over-year, unchanged from the prior month’s annual rate. House prices were up in 5 of the 9 regions on a monthly basis, and 7 of 9 were up on an annual basis. The 12-month changes ranged from +4.4% in the East North Central region and down -0.7% in the West South Central region. House prices rose in 65 of the 100 largest metropolitan areas over the last year. The metropolitan area that experienced the most significant price decline was Elgin, IL at +10.8% and the biggest decline was Austin-Round Rock-San Marcos, TX at -6.9%.
• The Commerce Department reported New Home Sales for April fell -6.2% month-over-month to a seasonally adjusted annual rate of 622,000 units versus a +3.4% increase of 663,000 units the prior month (revised lower from +7.4% and 682,000 units). The data series tends to be volatile month-over-month and are often revised. Wall Street was expecting a -3.2% decline to 660,000 units. New Home Sales remain far below the recent peak of over 1 million units in August 2020 but are running above the pre-pandemic average of 600,000. Year-over-year, sales of new homes were down -11.3% following a +1.1% annual rate the prior month. The months of supply at the current rate of sales was 9.4, up from 8.7 the prior month and 8.6 months a year ago. By region, for the month sales fell -9.8% in the South, -12.9% in the Northeast, -25.0% in the Midwest, but rose +18.7% in the West. The Median New Home Price increased +2.2% to $422,500 from the prior year.
• Weekly MBA Mortgage Applications sank -8.5% for the week ending May 22 following a -2.3% drop the prior week. The Purchase Index slipped -0.4% following a -4.1% drop the prior week. The Refinance Index plunged -18.1% after a -0.1% dip the prior week. The average 30-Year Mortgage Rate rose to 6.65% from 6.56% the prior week., its highest since August 2025.
• Weekly Initial Jobless Claims rose by +5,000 to 215,000 for the week ending May 22, which was worse than expectations for 210,500. The prior week was revised up by +1,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) rose by +15,000 to 1,786,000 for the week ending May 15, which was worse than expectations for 1,784,000. The prior week’s reading was revised lower by -11,000.

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.