Market View: Week of May 29, 2026
ECONOMIC REVIEW¹
U.S. Gross Domestic Product (GDP) got its final revision for the first quarter of 2026, which showed that it grew at an annualized rate of 1.6%. This was slightly below the previous estimate of 2.0%.
In the final reading, personal consumption was revised lower, raising concerns about the health of the consumer.
The first quarter included the onset of the Iran War, which raised gas prices and likely subdued consumer spending in other areas.
The Personal Consumption Expenditures Price Index (PCE), a key inflation measure, rose 0.4% in the last month and is up 3.8% versus last year.
Higher energy prices continue to elevate readings of inflation.
The core reading, which excludes the more volatile sectors like food and energy, came in at 0.2% on a month-over-month (MoM) basis, and 3.2% on a year-over-year (YoY) basis.
This measure is known to be the Federal Reserve’s (Fed) favorite inflation gauge because they believe it is the best forward-looking measure for identifying emerging trends in inflation.
With this critical measure still well above the Fed’s 2% target, interest rate cuts are unlikely in the near-term.
Personal Income, the average amount employees make in a month, was flat in April. This was the second consecutive month where inflation outpaced wage growth on a MoM basis.
How does the most recent economic data impact you?
Higher inflation coupled with lower wage growth is a bad combination for consumers, many of whom are now dealing with prices rising faster than their salaries.
Questions around the impact of AI on wages and overall employment remain, as well.
High inflation continues to challenge the Fed, and even with the new Fed Chairman, Kevin Warsh, he is unlikely to cut interest rates with inflation at current levels.
The downward revision to GDP caused some hesitation for investors who are now facing incrementally higher inflation and incrementally lower growth. However, both are still at moderate levels relative to history.
A LOOK FORWARD¹
This week, investors will be monitoring the labor report, including key details like the unemployment rate and the number of nonfarm payrolls added to the economy, as well as ISM Manufacturing and Services.
How does this week’s slate of economic data impact you?
A strong labor market is likely to keep the Fed from cutting interest rates as inflation remains elevated, but if the labor market weakens, that could make the interest rate decision more difficult for Fed officials.
Both ISM Manufacturing and Services will provide a snapshot of how managers are viewing business conditions in their respective sides of the economy.
MARKET UPDATE²
| Market Index Returns as of 5/29/26 | WTD | QTD | YTD | 1 YR | 3 YR | 5 YR |
|---|---|---|---|---|---|---|
| S&P 500 | 1.44% | 16.31% | 11.27% | 29.78% | 23.36% | 14.15% |
| NASDAQ | 2.39% | 25.04% | 16.33% | 41.98% | 28.37% | 15.27% |
| Dow Jones Industrial Average | 0.91% | 10.38% | 6.86% | 22.71% | 17.72% | 10.19% |
| Russell Mid-Cap | 1.34% | 10.40% | 11.82% | 22.37% | 18.09% | 8.15% |
| Russell 2000 (Small Cap) | 1.77% | 17.11% | 18.15% | 43.08% | 19.86% | 6.61% |
| MSCI EAFE (International) | 1.07% | 10.75% | 9.37% | 22.80% | 17.50% | 8.72% |
| MSCI Emerging Markets | 3.96% | 25.82% | 25.61% | 54.31% | 24.64% | 7.79% |
| Bloomberg US Agg Bond | 0.83% | 0.42% | 0.38% | 5.13% | 4.07% | 0.17% |
| Bloomberg High Yield Corp. | 0.55% | 2.19% | 1.68% | 7.57% | 9.33% | 4.39% |
| Bloomberg Global Agg | 1.00% | 1.59% | 0.50% | 3.26% | 3.71% | -1.54% |
OBSERVATIONS
Equity indices continued their positive performance, finishing the last week of May broadly positive as tensions with Iran eased somewhat.
The S&P 500 (+1.44%) posted its ninth weekly gain in a row, but the NASDAQ (+2.39%) led major market indices as enthusiasm for the AI trade continued.
Even the Dow Jones finished the week positive, up 0.91%.
Both small- and mid-cap stocks also performed well, rising 1.77% and 1.34%, respectively.
International developed markets rose 1.07%, slightly underperforming domestic equities.
Emerging market stocks led all major asset classes, rising nearly 4% on the week.
Yields fell across the fixed income landscape, with the assumption that lower tensions with Iran would lead to lower gas prices and ultimately lower inflation.
International bonds were up 1.00%, while domestic bonds followed closely at 0.83%, and high yield bonds rose 0.55%.
BY THE NUMBERS
Pope Leo XIV Released His First Encyclical:
Pope Leo XIV wrote a social encyclical which addressed artificial intelligence. Divided into five chapters, Magnifica Humanitas has an underlying premise that technology is not an antagonistic force to humanity, nor is it inherently evil. However, technology is never neutral, because it takes on the characteristics of those who devise, finance, regulate, and use it. Many believed that the encyclical took a stance against AI, which has been part of a larger movement as skepticism over AI’s impact on the labor market, or energy shortages from data centers has taken the forefront for many town hall forums, social media platforms, and upcoming midterm elections.³
OpenAI Just Solved an 80-Year Old Famous Math Problem:
The company OpenAI, maker of ChatGPT, announced that a major geometry conjecture has at last been solved—via a straightforward query to a chatbot, alongside comments from a number of experts, who declared the artificial intelligence’s method “clever” and “elegant.” The experts also hastened to add that, without humans intervening to “clean up” the AI’s work, the result wouldn’t be so convincing. “The human still plays a vital role in discussing, digesting, and improving this proof, and exploring its consequences,” wrote mathematician Thomas Bloom in the “reflections” document. Nevertheless, the mathematical proof combined multiple fields of mathematics to create an outside-the-box answer.⁴
Disclosures
The statements provided herein are based solely on the opinions of the Osaic Research Team and are being provided for general information purposes only. Neither the information nor any opinion expressed constitutes an offer or a solicitation to buy or sell any securities or other financial instruments. Any opinions provided herein should not be relied upon for investment decisions and may differ from those of other departments or divisions of Osaic Wealth, Inc. (“Osaic”) or its affiliates.
Certain information may be based on information received from sources the Osaic Research Team considers reliable; however, the accuracy and completeness of such information cannot be guaranteed. Certain statements contained herein may constitute “projections,” “forecasts” and other “forward-looking statements” which do not reflect actual results and are based primarily upon applying retroactively a hypothetical set of assumptions to certain historical financial information. Any opinions, projections, forecasts and forward-looking statements presented herein reflect the judgment of the Osaic Research Team only as of the date of this document and are subject to change without notice. Osaic has no obligation to provide updates or changes to these opinions, projections, forecasts and forward-looking statements. Osaic is not soliciting or recommending any action based on any information in this document.
Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. In general, the bond market is volatile; bond prices rise when interest rates fall and vice versa. This effect is usually pronounced for longer-term securities. Any fixed-income security sold or redeemed prior to maturity may be subject to a substantial gain or loss. Vehicles that invest in lower-rated debt securities (commonly referred to as junk bonds or high-yield bonds) involve additional risks because of the lower credit quality of the securities in the portfolio. International investing involves special risks not present with U.S. investments due to factors such as increased volatility, currency fluctuation, and differences in auditing and other financial standards. These risks can be accentuated in emerging markets.
Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index. Past performance cannot guarantee future results.
Securities and investment advisory services are offered through the firms: Osaic Wealth, Inc. and Osaic Institutions, Inc., broker-dealers, registered investment advisers, and members of FINRA and SIPC. Securities are offered through Osaic Services, Inc. and Ladenburg Thalmann & Co., broker-dealers and members of FINRA and SIPC. Advisory services are offered through Ladenburg Thalmann Asset Management, Inc., Osaic Advisory Services, LLC. and CW Advisors, LLC., registered investment advisers. Advisory programs offered by Osaic Wealth, Inc. are sponsored by VISION2020 Wealth Management Corp., an affiliated registered investment adviser.
_____
1 Data obtained from Bloomberg as of 5/29/26.
2 Data obtained from Morningstar as of 5/29/26.
3 Pope Leo’s ‘Magnifica humanitas’: AI must serve humanity not concentrate power - Vatican News
4 AI just solved an 80-year-old ‘Erdős problem,’ and mathematicians are amazed | Scientific American
8954061