A Curious Calm

By JSF Financial on Jun 16 in Market Update

Quick Take. Stocks followed up April’s gains with another strong performance in May, closing repeatedly at fresh all-time highs as oil prices retreated.[1] Bond yields stayed elevated (prices lower), however, as inflation concerns remain.[2]

Source: https://www.wsj.com/finance/stocks/oil-declines-lift-stocks-to-fresh-records-243d065e

May opened with confidence that the United States and Iran were moving toward a deal to end the war, sending oil prices tumbling. Brent crude oil prices fell 19% over the month, its biggest monthly fall since the start of the pandemic.[3] Stocks notched back-to-back monthly gains, finishing May at record highs, boosted by strong corporate earnings and continued optimism over artificial intelligence.[4]

Source: https://www.wsj.com/finance/stocks/oil-declines-lift-stocks-to-fresh-records-243d065e?mod=Searchresults&pos=2&page=1

Defying the stock-market adage to “sell in May then go away,” the S&P 500 rose for nine consecutive weeks, racking up its biggest two-month percentage gain in six years.[5] The S&P 500 added 5.2% while reaching 11 closing highs during the month, leaving the index up roughly 11% higher year-to-date. [6],[7] Not to be left behind, the tech-heavy Nasdaq surged 25% over April and May for its biggest two-month gain since November 2002.[8]

Beneath the headline gains, the rally has narrowed again. Just five companies were responsible for roughly half of the S&P 500’s growth since April.[9]

Earnings Season: Record-Setting First Quarter

The natural question during a rally is whether the underlying earnings support the move upwards, and first quarter earnings offered a resounding answer. With 94% of S&P 500 companies reporting by late May, blended first-quarter earnings growth came in at 28.4% year-over-year, more than double the 13.0% rate estimated at the end of the quarter and the highest growth rate the index has produced since the fourth quarter of 2021.[10] 84% of companies beat earnings estimates, the highest beat rate since the second quarter of 2021.[11] The blended net profit margin reached 14.8%, the highest level FactSet has recorded since it began tracking the metric in 2009.[12]

Technology continues to do the heavy lifting. The “Magnificent 7” mega-cap technology names grew earnings 63.2% in aggregate. Notably, the remaining 493 companies in the

index grew earnings 17.4%, meaning that even outside the most concentrated names, this was a strong reporting season by historical standards.[13]

Inflation Concerns Cloud Bond and Housing Market

While equity investors celebrated the earnings picture, fixed-income markets have been watching a different set of figures for inflation.

An April Consumer Price Index reading came in hotter than expected, with consumer prices rising 3.8% year-over-year, the highest annual rate since May 2023.[14] Core CPI rose 2.8% and both readings sit well above the Fed’s 2% target.[15]

The inflation report was followed by stronger producer price data, which sent 10-year Treasury yields to their highest level since July of last year.[16] Yields had already been supported by Federal Reserve policy meeting minutes revealing that future interest rate hikes could be back on the table, with the prospect of cuts this year fading.[17]

Overall, Treasury yields drifted higher (prices lower) for the month, although prospects for a near-term reopening of the Strait of Hormuz pulled them back sharply in the final week of May.[18]

With inflation concerns pushing bond yields higher, U.S. mortgage rates have moved to their highest level in nine months, tempering the spring housing market.[19] The 30-year fixed mortgage rate now sits firmly above 6%, and with energy price effects still working through the economy, near-term relief looks unlikely.[20]

Consumer Sentiment Finds New Floor

Source: https://www.bloomberg.com/news/articles/2026-05-22/us-consumer-sentiment-slumps-to-record-low-on-inflation-worries?srnd=phx-economics-indicators

Bond markets are not alone in their inflation worries. The University of Michigan’s Consumer Sentiment Index for May signaled a downbeat consumer. The index came in at a record low of 44.8, down five points from April and below all forecasts.[21] Long-term inflation expectations climbed to a seven-month high, with prices expected to rise 3.9% over the next five to ten years, up from 3.5% in April.[22]

Source: https://www.ft.com/content/60c7a1ea-9b8a-4f11-b3cb-109fade74e48?syn-25a6b1a6=1

Hard data on consumer behavior, however, has held up. Analysis of debit and credit card spending shows that households kept spending across goods categories even as gas became more costly, with card spending on gas up 40% compared with the same period last year.[23]

Even though May crude oil prices dropped, reduction of gas prices at the pump tend to lag. The national average price for a gallon of regular gasoline climbed through most of May, peaking at $4.56 on the Friday of Memorial Day weekend (the highest level in four years) before easing as ceasefire reports pulled oil prices lower.[24] Major retailers have noted that the tax refunds from recent legislation have largely been erased by higher fuel costs, which could weigh on spending in the months ahead.[25]

For now, consumer spending, which accounts for roughly two-thirds of U.S. economic activity, has continued to grow this year despite higher interest rates, rising inflation, and the economic shocks of recent months.[26]

Looking Ahead: IPO Season

As stock markets trade around record highs, several notable initial public offerings are on the horizon. SpaceX filed for a public listing that, at a reported $75 billion in proceeds, would surpass Alibaba’s $22 billion 2014 float as the largest U.S. IPO on record.[27] The SpaceX listing is also expected to benefit from accelerated index-inclusion rules, which would result in passive index-tracking funds purchasing the stock automatically.[28] The company’s expected valuation would place it among the largest names in the index by market capitalization, though it would rank around 200th by revenue.[29]

Two of the largest artificial intelligence companies, OpenAI and Anthropic, are also considering public listings this year. These blockbuster IPOs will be highly anticipated and watched for demand.[30]

Meanwhile, the administration continues to rebuild its tariff wall, and the G7 summit in June may return international trade topics to the limelight.[31],[32]

May had no shortage of headlines to cover, and there is probably little reason to expect a simpler June. Months like these are the reason portfolios are built around discipline and long-term objectives rather than reacting to noise. As we’re close to halfway through the year, this may be a natural moment to reflect on your 2026 goals. We are available if you would like to discuss your portfolio, review your strategy, or discuss any changes to your financial objectives.

Congratulations to our graduates this season and to the loved ones who have supported them every step of the way. We applaud you and hope this milestone marks the start of an exciting new chapter. We also wish all the dads and father figures in our lives a fun and enjoyable Father’s Day!

Wishing everyone a restful and enjoyable summer!

Your Friends at JSF

The information expressed herein are those of JSF Financial, LLC, it does not necessarily reflect the views of NewEdge Securities, LLC. Neither JSF Financial, LLC nor NewEdge Securities, LLC gives tax or legal advice. All opinions are subject to change without notice. Neither the information provided, nor any opinion expressed constitutes a solicitation or recommendation for the purchase, sale or holding of any security. Investing involves risk, including possible loss of principal. Indexes are unmanaged and cannot be invested in directly.

Historical data shown represents past performance and does not guarantee comparable future results. The information and statistical data contained herein were obtained from sources believed to be reliable but in no way are guaranteed by JSF Financial, LLC or NewEdge Securities, LLC as to accuracy or completeness. The information provided is not intended to be a complete analysis of every material fact respecting any strategy. The examples presented do not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a given strategy. Diversification does not ensure a profit or guarantee against loss. Carefully consider the investment objectives, risks, charges and expenses of the trades referenced in this material before investing.

Asset Allocation and Diversification do not guarantee a profit or protect against a loss.

The Bloomberg Barclays U.S. Aggregate Bond Index measures the investment-grade U.S. dollar-denominated, fixed-rate taxable bond market and includes Treasury securities, government-related and corporate securities, mortgage-backed securities, asset-backed securities and commercial mortgage-backed securities.

The S&P 500 Index is an unmanaged, market value-weighted index of 500 stocks generally representative of the broad stock market.

TLT-iShares 20 Plus Year Treasury Bond ETF seeks to track the investment results of an index composed of US Treasury bonds with remaining maturities greater than twenty years.

The CBOE Volatility Index (VIX) is a real-time index that represents the market’s expectations for the relative strength of near-term price changes of the S&P 500 Index (SPX). Because it is derived from the prices of SPX index options with near-term expiration dates, it generates a 30-day forward projection of volatility. Volatility, or how fast prices change, is often seen as a way to gauge market sentiment, and in particular the degree of fear among market participants.

The Nasdaq Composite is a market-capitalization-weighted index consisting of all Nasdaq Stock Exchange listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds or debenture securities.

Treasury Bond- is a U.S. government debt security with a fixed interest rate and maturity between two and 10 years.

Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period. GDP is the most commonly used measure of economic activity.

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[1] https://www.cnbc.com/2026/05/28/stock-market-today-live-updates.html

[2] https://www.wsj.com/finance/stocks/investors-just-cant-get-enough-of-stocks-these-days-d85caba0

[3] https://www.cnbc.com/2026/05/29/oil-price-iran-deal-war-ceasefire-trump.html

[4] https://www.cnbc.com/2026/05/28/stock-market-today-live-updates.html

[5] https://www.cnbc.com/2026/05/31/stock-market-today-live-updates.html

[6] https://www.cnbc.com/2026/05/28/stock-market-today-live-updates.html

[7] https://www.ft.com/content/90dbca8c-fb63-4fa5-a5d6-e6d6d9f6d10e

[8] https://www.barrons.com/livecoverage/stock-market-news-today-052926/card/nasdaq-has-surged-25-in-just-two-months-xuPCiTYrlvY2ZvLL8S0H?eafs_enabled=false

[9] https://www.ft.com/content/7599af3b-2184-4538-8ef9-370e01c1aaa8

[10] https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_052126.pdf

[11] https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_052126.pdf

[12] https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_052126.pdf