Wall Street finished the week on top with all three major averages advancing as investors weighed signs of easing geopolitical tensions in the Middle East, a softer than expected inflation reading, and strong corporate earnings that reinforced optimism around AI driven growth.
President Donald Trump said a framework to end the conflict with Iran and restore shipping through the Strait of Hormuz has been “largely negotiated” following discussions with Israel and key Middle Eastern partners. But, no agreement is in place yet. The market has priced a Hormuz reopening inside a month. That window just got shorter.
On the inflation front, the core Personal Consumption Expenditures (PCE) price index showed underlying price pressures increased less than economists expected in April on a monthly basis. PCE rose 0.2% for the month and 3.3% annually offering slight hope that underlying price increases are easing.
For the week, the S&P moved up 1.4%, while the Nasdaq climbed 2.4%, and the Dow added 0.9%.
Future Wealth’s View
Every spring, the same question comes back – Should I sell in May and go away?
The first five months of 2026 has delivered a Middle East war, soaring oil prices, a new Fed Chair and blockbuster Q1 earnings putting the Dow, S&P and Nasdaq at record highs. But, the economy is unraveling piece by piece – the consumer is hurting from high inflation, companies are struggling to keep their margins from higher fuel prices and consumer confidence is heading lower. The Conference Board’s Expectations Index is still below the recession threshold – consumers cited energy prices, inflation and the war. But, the market didn’t care.
Records and reality are having a disagreement and only one of them is right. Records built on a single sector don’t lend itself to broadening. If the market gains stay concentrated in technology, the correction could be severe. But, most investors are distracted and are instead focussed on the upcoming Space X IPO.