Market Recap - Week of May 18 - 22, 2026

Gordon Achtermann
May 26
4 min read

The S&P 500 index rose 0.9% this week, its eighth consecutive week of gains, amid upbeat trading heading into the holiday weekend.

The Index ended Friday's session at 7,473.47, close to last week's record closing high of 7,501.24.

This marks the longest weekly winning streak since a nine-week run that ended in December 2023. The index is now up 3.7% for May and has climbed 9.2% in 2026.

Government data this week showed US housing starts decreased less than estimated in April amid a jump in multi-family projects, while the single-unit component declined. Separate data from the National Association of Home Builders and Wells Fargo also showed that US homebuilder confidence unexpectedly rose in May despite elevated mortgage rates, macro uncertainty, and continued affordability challenges.

US consumer sentiment, however, declined to a fresh record low in May amid fears that high gasoline prices could erode purchasing power, the University of Michigan said Friday. The main sentiment index tumbled 10% to 44.8 from last month. The consensus in a Bloomberg-compiled poll was for May's print to stay unchanged from a preliminary 48.2 estimate.

The health care and utilities sectors led the gainers this week, climbing 3.3% each.

The utilities sector's top gainers included Dominion Energy (D), which announced an all-stock merger agreement with NextEra Energy (NEE) to create the world's largest regulated electric utility. Dominion shareholders will receive a 25.5% stake in the combined entity, while NextEra's shareholders will own about 74.5% of the merged company. Dominion's stock climbed 9.6% while NextEra, the only weekly decliner in the sector, lost 5.2%.

This week will have just four trading days as the US stock market will be closed on Monday for Memorial Day.

Last Week’s Economic Reports

Pending home sales rose 1.4% m/m
Housing starts fell 2.8% m/m
Consumer sentiment dropped to a new record low: The University of Michigan's closely watched consumer sentiment index fell to 44.8 in May, down from April's already record-low of 49.8. Respondents cited higher gas prices, tensions in the Middle East, and the strain of day-to-day costs.

Up Next

Economic data will include the April personal consumption expenditures index, which is the Federal Reserve's preferred inflation measure, on Friday. Other reports will include May consumer confidence, April new home sales, and the second revision to Q1 gross domestic product.

S&P 500 Stylebox and Sector Returns

Once again, I'll note that so far this year, value has outperformed growth across the board, and it's not even close for large and midsize companies.

How to read the stylebox: The horizontal axis represents investment style, which can be value, blend, or growth for stocks and mutual funds. The vertical axis represents stock market capitalization, categorized by company size as large, medium, and small. The number in each box represents the percentage growth of the category at the intersection of the column and row. For example, large-cap value is in the top-left corner box of the 9 boxes, so the large-cap value category is up (or down) by the percentage shown in that box.

Thought of the Week

Bonds have had a rough start to 2026. 10-year Treasury yields are ~40 bps higher year-to-date, with moves through April driven by higher inflation expectations. The leg up in May, however, has been driven by rising real yields.

Rising yields are typically associated with expectations for a more hawkish Fed and stronger growth. Rate cuts were the base case for 2026 ahead of the conflict in the Middle East. Today, markets are pricing in a full rate hike by March 2027. But have economic prospects actually improved? In recent weeks, readings on industrial production, retail sales, nonfarm payrolls, and PMI have delivered upside surprises. In fact, the April S&P manufacturing PMI delivered its best print since 2022. However, the tone under the hood is less reassuring. Some of the “strength” looks like companies pulling demand forward to get ahead of potential supply chain disruptions, rather than a clean reacceleration in end demand. The Mayflash PMI release echoed that sentiment. The flash manufacturing PMI hit a 4-year high, supported by precautionary stock building, while supplier delivery times stretched to their longest since 2022.

Still, markets appear more concerned about inflation risks than growth risks from higher energy prices. But energy costs are up, elevated yields could tighten financial conditions, and the savings rate is low. As a result, a sustainable pickup in growth would be tough to come by absent additional fiscal support. As inflation slows alongside growth through mid-2027, the Federal Reserve could very well deliver a more dovish policy path than what is currently priced in. Investors should use the backup income to secure a higher income and ballast against any growth shocks that may lie ahead.

Source: JP Morgan (edited)

Thank you to all who attended this month's market Update webinar!

You can watch the replay here:

Spirit Airlines Bankrupt & Tim Cook Steps Down – Monthly Market Update Webinar – May 2026

The episode is also available wherever you listen to podcasts!