Market Wrap-up and What’s to come in June

May was a strong month for markets. U.S. equities reached new record highs, buoyed by solid corporate results, lower energy prices, and cautious optimism surrounding the conflict with Iran.

More updates on the markets, economic data, and global news below.

Market Update: MAY

  • The S&P 500 advanced 5.3% in May and extended its winning streak to nine consecutive weeks (only the fifth time in 40 years).
  • The NASDAQ gained almost 9%, as the technology sector outperformed broader markets. Enthusiasm continued around semiconductors, AI, and digital infrastructure.
  • The Dow reached new highs, surpassing the 51,000 mark for the first time as strong corporate earnings and resilient economic data bolstered investor confidence.
  • While market leadership remained concentrated in technology-related sectors, improving sentiment around the Middle East conflict and energy prices helped sustain the broader market rally.
Corporate Earnings and Sector Highlights:
  • Q1 earnings season concluded with exceptionally strong results. With 97% of S&P 500 companies reporting, 85% exceeded earnings estimates and 81% beat revenue expectations, both well above historical averages.
  • Blended earnings growth accelerated to 28.6% year-over-year, the fastest pace since Q4 2021 and more than double expectations at the end of March.

Sector Highlights:

  • Earnings strength was broad-based, with ten of eleven sectors seeing upward revisions after surprisingly positive EPS performances.
  • Communication Services and Information Technology led earnings growth, increasing 53% and 52%, respectively.
  • Materials and Consumer Discretionary sectors also delivered robust double-digit earnings growth, highlighting broad participation across the market.

Economic Data: Rates, Inflation, Labor Market

  • The Fed’s benchmark rate remains at 3.50%-3.75% with a meeting approaching mid-June.
  • The labor market remained resilient in May, with payrolls increasing by roughly 115,000 jobs and the unemployment rate holding steady near 4.3%.
  • Inflation picked up in May, with CPI rising 3.8% year-over-year (up from 3.3% in March), driven largely by increases in energy and shelter costs.

Geopolitical & Notable Global Developments:
  • The U.S.-Israeli conflict with Iran remained a key focus for investors in May. Diplomatic progress and signs of de-escalation helped improve market sentiment during much of the month, though recent developments suggest the path toward a lasting resolution remains uncertain.
  • The Strait of Hormuz remains a critical topic of negotiation. Oil prices moderated from the elevated levels seen earlier in the spring as concerns about major supply disruptions eased slightly. Lower energy prices provided some relief to consumers and helped reduce pressure on inflation expectations.
  • The Federal Reserve leadership transition became official in May as Kevin Warsh succeeded Jerome Powell as Chair of the Federal Reserve following the conclusion of Powell’s term on May 15. Investors will continue to monitor the new Chair’s policy outlook and approach to inflation and interest rates.

Here’s What to Look for in may:

Key events and data releases to watch in include:

  • June 5: May Jobs Report
  • June 10: May CPI (Inflation) Release
  • June 16-17: Next Federal Reserve Meeting
  • June 19: Juneteenth – Markets Closed

May was a reminder that markets can continue to perform even as geopolitical uncertainty and inflation pressures persist in the background. As we head into summer, maintaining discipline and a well-diversified approach remains important amid continued uncertainty.

Feel free to reach out to your Shepherd team to discuss whether your investment strategy remains aligned with your long-term objectives, or with any questions on recent market developments.

Have a wonderful June and a happy start to summer!

Sources:

https://www.federalreserve.gov/newsevents.htm

https://www.nasdaq.com/articles/may-2026-review-and-outlook

https://www.bls.gov/news.release/empsit.nr0.htm

https://www.bls.gov/news.release/cpi.nr0.htm

https://www.morningstar.com/news

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All performance referenced is historical and is no guarantee of future results.  

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