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May 26, 2026
Good afternoon,
Markets
For the week ending 5/22/2026:
- The S&P 500 increased 0.1% to close at 7,473.47.
- The yield of the 10-year Treasury bond decreased from 4.59% to 4.56%.
- Oil decreased from $105.42 to $96.60.
- The CBOE Volatility Index (VIX) decreased from 18.43 to 16.70.
- U.S. dollar currency exchange rates were:
- EUR/USD: 1.16 (USD stronger from a week ago)
- GBP/USD: 1.34 (USD weaker from a week ago)
- USD/JPY: 159.02 (USD stronger from a week ago)
Market Headlines
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Stocks Continue Climb: The S&P 500 narrowly secured its eighth consecutive weekly gain, marking the longest streak since late 2023. Meanwhile, the Dow set a fresh record high on Friday after posting a 2.1% weekly gain. Markets were driven by strong corporate earnings and continued enthusiasm surrounding AI, along with reports of ongoing U.S.-Iran peace talks.
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Volatile Bonds: The bond market experienced elevated volatility throughout the week, with the 30-year U.S. Treasury yield briefly exceeding 5.19%, its highest level since 2007, before retreating later in the week. Persistent inflation concerns, elevated oil prices, and investor worries surrounding the U.S. fiscal deficit continued to pressure the bond market. Although yields declined later in the week, they remained elevated, with the 10-year U.S. Treasury yield ending the week at approximately 4.56%.
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Fed Transition: Kevin Warsh was officially sworn in as the 17th Chairman of the Federal Reserve, succeeding Jerome Powell following the expiration of Powell’s term as Chair on May 15. Powell will remain on the Federal Reserve Board of Governors through the remainder of his separate term, which runs until January 2028. Additionally, incoming Fed leadership and several policymakers have signaled a potentially more hawkish monetary stance. Fed Governor Christopher Waller stated that he supports removing the Fed’s prior easing bias from its policy outlook, leaving the door open for additional interest rate hikes if inflation remains elevated.
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Consumer Sentiment Remains Low: U.S. consumer sentiment plunged to a record low of 44.8 in the final May 2026 reading, falling sharply from April’s level of 49.8. Surging gasoline prices tied to the conflict with Iran, along with intensifying cost-of-living pressures, were the primary drivers behind the continued decline in consumer confidence. Inflation expectations also moved higher during the month, reflecting growing concerns that elevated prices could persist over the longer term.
Key Takeaway
Despite rising bond yields and declining consumer sentiment, equities continue to be supported by strong corporate profits. The S&P 500 posted its eighth consecutive weekly gain, even as Treasury yields moved back toward recent highs amid renewed inflation concerns and ongoing geopolitical uncertainty in the Middle East. As economic data continues to reflect both the immediate and longer-term effects of the U.S.-Iran conflict, investors appear to be distinguishing between the forces driving higher yields and those supporting equities. Rising yields are being driven by higher energy prices that are adding upward pressure to inflation, persistently elevated core inflation (which excludes food and energy), and resilient consumer spending. In contrast, equities continue to benefit from strong earnings growth and sustained investment in artificial intelligence. The key concern for investors moving forward is whether elevated yields will eventually begin to weigh on the ongoing rally in equities. If yields continue to rise, they could place pressure on valuations and make bonds increasingly attractive relative to stocks. However, if corporate profits continue to grow despite inflation concerns, there remains a path for the equity rally to continue.
The Week Ahead: May 26 – 29
- Tuesday: Consumer confidence
- Wednesday: No major reports scheduled
- Thursday: PCE index, GDP, Durable goods, New home sales, Initial jobless claims
- Friday: No major reports scheduled
Until next week,
Weller Financial Group
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