Tech Leads Again as Narrow Rally Pushes Markets to New Highs

U.S. equity markets extended their momentum this week, with major indexes pushing further into record territory as technology leadership and improving earnings trends continued to underpin investor confidence. The S&P 500 and Nasdaq both recorded their sixth consecutive weekly gain, capped by fresh all-time highs, marking one of the strongest multi-week rallies of the past several decades.

In fact, since the low this year on March 30, the S&P 500 has gained 17.1% while the Nasdaq has gained 26.9%, marking the third best six-week run in the past 15 years (the other two being the May 2020 Covid rebound and the May 2025 tariff announcement rebound). Beneath the surface, participation broadened only modestly, with enthusiasm around artificial intelligence and select growth themes remaining a dominant force driving returns.

Technology once again led last week’s upside, with mega-cap and semiconductor stocks delivering outsized gains. Strength across AI-related hardware, software, and infrastructure supported another sharp move higher for the sector – for example, semiconductors were up 11.1% for the week (also a six-week winning streak). Outside of these areas, performance was more mixed, with cyclical and defensive areas lagging amid falling energy prices and a calmer interest-rate backdrop.

At the same time, markets continue navigating a consistent flow of geopolitical headlines regarding developments in the Middle East as the conflict in Iran drags on. While risks for escalation remain, optimism around a potential longer-term agreement helped ease concerns, contributing to a notable pullback in oil, although oil is still about 65% higher than levels prior to the conflict.

While the rally has been impressive, under the hood it has been quite narrow, bringing back the conversation around dot-com bubble comparisons. Even though the S&P 500 is at all-time highs, the median stock is still about 13% below its respective high, one of the widest gaps going back 25 years, according to Goldman Sachs. In addition, four of the last five closing highs occurred when there were more declining stocks than increasing stocks, and in April, only 23% of S&P 500 companies beat the index, the fourth lowest monthly reading going back to 1986, according to BoA Global Research.



Our chart of the week below, provided by Raymond James, shows performance of the S&P 500 sectors and benchmark indexes over recent periods. As you can see, technology performed over 7% better than the next best sector last week and since the start of the Iran war, technology has performed almost 22% better than the next best sector, a number that illustrates just how one-sided the rally has been.

Investors have shown a strong ability to look past the conflict in Iran, and instead have been laser focused on first quarter earnings and the growth that lies ahead. With about 90% of S&P 500 companies now reported, results have materially exceeded expectations, delivering the strongest earnings growth rate since 2021. Corporate commentary has generally pointed to resilient demand in key areas tied to technology, travel, and services, though executives remain attentive to tightening consumer budgets and lingering inflation pressures.

Estimated earnings growth for the first quarter now sits at 28%, over double the 12% increase that was expected before Q1 earnings season began. However, FactSet notes 71% of the dollar-level increase in earnings over this period was due to positive earnings surprises by three companies – Alphabet, Amazon, and Meta (for example, Alphabet reported a positive earnings surprise by 90% - reporting earnings of $5.11 per share versus the expected $2.68 per share).

Even though three companies made a bulk of the upward revision, earnings growth for 2026 is expected to come in a 22% with all sectors contributing, and expected to increased another 14% in 2027 with all but one (energy) contributing. We see the markets broadening out, outside the mega caps and technology names, because of this wider earnings growth.

There are still several bearish narratives in play, including concerns that a lagged inflation impact from the Iran conflict could keep the Federal Reserve in a more hawkish stance for longer. Early signs of this are already emerging, with inflation reaching three-year highs driven by energy prices and Fed sentiment shifting accordingly.

As a result, markets are now pricing a higher probability of a rate hike this year than a rate cut. Recent Fed communication has reinforced this bias, with officials — including some who dissented at the April meeting such as Hammack, Kashkari, and Logan — emphasizing that they are uncomfortable with language implying the next policy move would be a cut.



We will hear from more Fed policymakers this week, and rate expectations could continue to move more hawkish. The latest inflation report comes out Tuesday morning and could accelerate this move.

There will be many more earnings reports as well, mostly focusing on smaller cap tech companies. Geopolitics will remain front and center after early Monday reporting says Iran’s latest proposal was rejected and called unacceptable as it ignored nuclear demands by the US. In addition, President Trump is scheduled to meet with China’s President Xi later this week. 

Recent Economic Data



• Employment Report: The Department of Labor reported from its establishment survey there were 115,000 new jobs added to the economy in April, almost double the expected increase. In April, job gains occurred in health care, transportation and warehousing, and retail trade with losses seen in federal government. Since peaking in late 2024, government employment is down 11.5% or 348,000. Average wage grew 0.2% in the month and is up 3.6% over the past year with real wages (adjusting for inflation) up just 0.3%. The unemployment rate remained unchanged at 4.3%. The household survey showed the number of people unemployed was 7.373 million, up 134k in the month while the number of people employed fell 226,000 to 162.622 million.

• Job Openings and Labor Turnover Survey: The number of job openings on the last day of March was 6.866 million, down 56k from the prior month and down about 100k from a year ago. Hires picked up significantly in the month, rising 655k to 5.554 million and up about 200k from last year. Meanwhile, the total number of separations increased in the month and is up about 100k from last year. The increase in separations was mostly due to a jump in layoffs/discharges, which increased 153k in the month. 

• ADP Payrolls: ADP reported a 109,000 increase in the number of payrolls via its monthly payroll data which represented the fastest pace of job growth since January 2025.

• Jobless Claims: The number of unemployment claims filed the week ended May 2 was 200,000, an increase of 10,000 from the prior week with the four-week average down to 203,250. The number of continuing claims fell 10k to 1.766 million, with the four-week average down slightly to 1.790 million.

• Productivity & Costs: US worker productivity improved at a 0.8% annual rate in the first quarter, less than half the productivity gain that was expected. The 0.8% productivity increase was due to a 1.5% increase in output but offset by a 0.7% increase in hours worked. Compared to the same quarter a year ago, productivity increased 2.9%. Unit labor costs increased 2.3% in the quarter (on an annual rate), reflecting a 3.1% increase in compensation and offset by the 0.8% increase in productivity.

• Trade Deficit: The latest trade data showed the US trade deficit widened slightly in March to $60.3 billion, a $2.5 billion larger deficit than February. The increased deficit was due to a $6.2 billion or 2.0%, increase in exports and somewhat offset by a $8.7 billion or 2.3%, increase in imports. The total volume of trade, which gives us an idea of the amount of trade happening, was up 2.2% in the month but down slightly year-over-year as we lap strong imports March last year due to tariff worries.

• Construction Spending: After booming the years following the pandemic, construction spending has slowed recently but bounced back in March. Construction spending in March was at an annual rate of $2,173.2 billion, a 0.6% increase in the month and up 1.6% from a year ago. Residential spending drove the gains, up 1.6% in the month, while nonresidential spending was down 0.2%.



• New Home Sales: In March there were 682,000 new homes sold (on an annualized basis), equaling a 7.4% increase in the month and 3.3% above the rate from a year earlier. Inventory of new homes has been relatively unchanged over the past several months, at 475,000 in March and down about 7% from a year ago. The median sales price of a new home has come down as well, falling 6.2% from last year to $387,400. 

Company & Other News



• Amazon: Amazon announced the launch of Amazon Supply Chain Services, a new offering that opens its logistics, warehousing, fulfillment, and delivery network to outside businesses — including companies that do not sell on Amazon. The move was viewed as a significant competitive threat to traditional logistics providers like UPS and FedEx, whose shares fell following the announcement. Investors also drew comparisons to the early days of AWS, as Amazon continues monetizing internally built infrastructure into new long-term growth businesses.

• GameStop: GameStop created a lot of buzz the beginning of last week after it offered to buy eBay for $56 billion, which is roughly four times the size of GameStop, and about a 20% premium to where eBay shares traded prior to the announcement. GameStop said it would fund the deal with 50% cash, including $9.4 billion on its balance sheet and $200 billion in financing from TD Bank, and 50% in newly issued stock.

• Intel: A Wall Street Journal report said Apple and Intel have reached a preliminary agreement for Intel to manufacture some of the chips used in future Apple devices, marking a notable shift after Apple recently moved away from Intel processors. Investors viewed the deal as a potential milestone for Intel’s turnaround and U.S. semiconductor manufacturing efforts, while also helping Apple diversify its supply chain beyond Taiwan.

• Apple: Bloomberg reported, citing people familiar with the matter, that it will let users choose from multiple third-party AI services to power features across its software, instead of building its own AI, building a strategy to turn its devices into a comprehensive AI platform. It added that Apple is working on a similar approach for Siri – allowing users to choose external alternatives like ChatGPT instead.

• Google: An exclusive report from Business Insider said Google is internally testing a new Gemini-powered AI agent called “Remy,” designed to move beyond traditional chatbots by proactively completing tasks and acting on users’ behalf across Google’s ecosystem. An “agentic AI” is an AI assistant that can autonomously manage workflows, communications, scheduling, and research rather than simply responding to prompts. 

• White House Weighs AI Oversight: A New York Times report last week indicated the White House is considering an Executive Order that would create a government-industry working group to evaluate oversight and security standards for advanced AI models. The discussions appear to mark a notable shift toward greater AI regulation, driven in part by growing concerns around cybersecurity and national security risks tied to increasingly powerful models. Investors viewed the development as another sign that AI is rapidly becoming both a major economic growth driver and a strategic policy priority for Washington. Microsoft, Google, and xAI have already agreed to give the government early access to new AI models for national security testing.

• Section 122 Tariffs Shot Down: The Court of International Trade ruled that Trump did not have the authority to impose new global tariffs of 10%, another blow to Trump’s trade policy. The administration was forced to refund billions in tariffs the Court previously struck down, and now said it will not be able to implement these 10% tariffs, which Trump was using under Section 122 of the Trade Act of 1974 because he did not apply them properly. The Act states certain conditions must apply to use the 10% tariff, but the administration supposedly did not identify those in its proclamation, making them illegal. While Section 122 tariffs were not meant to be a long-term replacement tariff, it was meant to provide time to conduct Section 301 tariffs, which is expected to be a longer-term tariffs replacement option.

WFG News

WFG Investment Classes:

Interested in learning more about investing and how the markets work? Wentz Financial Group holds various Investment Basics classes throughout the year. Contact us for details! 

Summer Hours

Please note that beginning Memorial Day (May 26), Wentz Financial Group will be implementing its summer hours. We will be open and available between 8:30am and 4:00pm Monday through Friday from Memorial Day through Labor Day. As always, if you need to speak or meet outside these hours, please contact us and we are happy to set up a time that works.

Any opinions are those of Wentz Financial Group and not necessarily those of Raymond James. Information contained herein was received from sources believed to be reliable, but accuracy is not guaranteed. Information provided is general in nature and is not a complete statement of all information necessary for making an investment decision and is not a recommendation or a solicitation to buy or sell any security. Investing always involves risk and you may incur a profit or loss. Keep in mind that individuals cannot invest directly in any index. Past performance does not guarantee future results. There is no assurance these trends will continue, or forecasts will occur.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.

Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated. The LBMA Gold Price and LBMA Silver Price are the global benchmark prices for unallocated gold and silver delivered in London. SS&P GSCI Crude Oil is an index tracking changes in the spot price for crude oil. Investing in oil involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors.



Prior to making an investment decision, please consult with your financial advisor about your individual situation. The prominent underlying risk of using bitcoin as a medium of exchange is that it is not authorized or regulated by any central bank. Bitcoin issuers are not registered with the SEC, and the bitcoin marketplace is currently unregulated. Bitcoin and other cryptocurrencies are a very speculative investment and involves a high degree of risk. Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an investment, and a potential total loss of their investment.