In 30 seconds: The S&P 500 extended its winning streak to eight consecutive weeks, driven by record-high net profit margins and an unprecedented 23% earnings growth forecast for 2026, led by massive gains in big tech and Nvidia. The ongoing Iran war continues to disrupt global energy supplies, driving oil inventory to multi-year lows, stoking inflation fears in G7 debt markets, and accelerating renewable energy adoption in Africa and Southeast Asia. University of Michigan consumer sentiment fell to an all-time record low in May while inflation expectations surged, with the bond market shifting from pricing in Fed rate cuts to pricing in a hike for 2026. Kevin Warsh was sworn in as Federal Reserve Chair, immediately signaling a hawkish stance on inflation driven by the Iran war energy shock, warning that rate hikes remain on the table if inflation expectations become unanchored.
The S&P 500 closed at 7473.4702 on 2026-05-22, up 0.37% on the day, extending what is now eight weeks in a row of consecutive gains. Over the course of that streak the index has added roughly 12%, which puts it in rare historical company. Pattern recognition is not a trading strategy, but the base rate is hard to argue with. The fuel is earnings. S&P 500 earnings: 23%. First-quarter net profit margins hit 14.8%, a record. The numbers at the top of the market cap table are staggering: Nvidia Q1 Net Income surged 211% year over year, AMD Q1 Net Income rose 94%, Netflix Q1 Net Income climbed 83%, Google Q1 Net Income gained 81%, Amazon Q1 Net Income added 77%, and Meta Q1 Net Income grew 61%. Even the relative laggards posted solid numbers: Microsoft Q1 Net Income up 23%, Apple Q1 Net Income up 19%, Tesla Q1 Net Income up 17%. NVIDIA net profit margin reached 71% in the first quarter, a record. The concentration question lingers. Technology weighting in S&P 500 Index: 44%. S&P 500 Dividend Yield: 1.07%. Investors are paying for growth, not income, and so far the growth keeps showing up.
The Iran conflict keeps finding new ways to ripple through everything. The Dec27/Dec28 oil spread backwardation is not far off crisis highs, which tells you the market expects physical barrels to remain scarce well into the back end of the curve. A barrel of WTI now costs roughly $100 — about what you pay for breakfast in London's Mayfair, where one recent bill came to £75.9. You can decide which is the worse deal. China's petroleum demand indicators have collapsed, from a more than 40% reduction in crude imports to the steepest contraction in domestic demand. That is not a rounding error. Meanwhile, natural gas at the Waha hub in West Texas has now traded at negative prices for 75 consecutive business days, a record streak. G7 safe-haven debt market: $50 Trillion. Per the Fed Model, when stocks and bonds are correlated and offer similar yields, when bonds reprice, so will equities. The recommended posture remains a 60/20/20 allocation — long equities, not short, in the midst of what looks like a cyclical and secular bull. Gold settled at $4,508.60 on 2026-05-22, off 0.69% on the session, lackluster lately after a very strong run. Gold and Bitcoin can still be valuable hedges if central banks ignore the inflation thread or are powerless over it. If commodities keep rallying, TIPS breakevens should follow, as they did in 2022. Germany offered a rare bright spot: business morale has improved for the first time since the Iran war. The Ifo Expectations Index ticked up to 83.8 from 83.5, and the Ifo Current Assessment Index rose to 86.1 from 85.4. On the other side of the energy transition, solar panel exports from China to Africa jumped 83% year on year in April.
Every sub-index deteriorated: current conditions slipped from 47.8 to 45.8, and expectations cratered from 48.5 to 44.1. The survey has been running since 1952, so "lowest ever" covers a lot of recessions. There is a methodological asterisk. When you adjust UMich sentiment for the transition to online collection, it's moderately higher than the vanilla release in level terms, but it's still around the lowest point it reached in 2022. So the record is partly a mode-shift artifact. The mood, however, is real. The partisan breakdown is instructive. Democrat consumer sentiment registered 32.8, its lowest since Covid. Independent consumer sentiment hit 40.8, its lowest since the election. Even Republican consumer sentiment fell to 84.6, its lowest since the election. Inflation expectations are where this gets operationally interesting. One-year expectations revised up to 4.8% from 4.5%. Long-run expectations jumped to 3.9% from 3.4%, well above the 2.8% to 3.2% range that prevailed through 2024. Meanwhile, the bond market has gone from pricing in two Fed rate cuts to pricing in one Fed rate hike — a complete reversal since January 1. Regional Fed manufacturing surveys confirm the pressure: the 6-month forecast for prices paid component within Philadelphia Fed and Kansas City Fed Manufacturing Indexes showed a sharp increase.
Kevin Warsh is sworn in as Fed chair by Supreme Court Justice Clarence Thomas. The ceremony carried a personal footnote: As a Stanford undergrad, Warsh worked as an intern on Thomas's 1991 confirmation to the court. The symbolism was tidy. The monetary policy backdrop was not. "Don't look at anybody." Two minutes later, he gave some suggestions by laying out what he was looking for: a booming economy needn't be constrained. The president elaborated: Kevin [Warsh] understands that when the economy is booming, that's a good thing. We don't have to go crazy. Just let it boom. We want it to boom. He added: "We're going to grow our way out of it [the national debt] so fast." He also said: "We want to stop inflation, but we don't want to stop [the boom]." The irony was hard to miss given the goods inflation already in the system. A Federal Reserve Governor spelled it out: I am prepared to be patient in holding policy at its current restrictive setting as we watch how the conflict evolves and what impact there is on inflation and inflation expectations. If I believe inflation expectations start to become unanchored, I would not hesitate to support [rate hikes]. He warned that "a risk that is getting more real every day is that the longer the energy price shock continues, the greater the chance that these increases bleed into prices for other goods and services." The speech was widely read as hawkish. The intellectual backdrop here matters. One economist argued that the pre-pandemic Fed Listens tour convinced the Fed it needed to favor the employment side of the mandate to promote inclusive employment. They haven't been able to adjust to the post-pandemic world of higher inflation pressures. That is not the "just let it boom" framework the president outlined two minutes after telling his appointee to be totally independent. Historically, stocks can have some trouble after a new Fed chair takes over: the Dow's average peak-to-trough drawdown in the first six months of new leadership runs 15.2%, with a median of 10.5%. Kevin Warsh is already doing better than his previous two predecessors. Stocks fell a lot on Day 1 for Yellen and Powell.
Here is what moved this week.
S&P 500: 7,473.47, up 0.37% on the day
Gold: $4,508.60, down 0.69% on the day
US Dollar (DXY): 99.29, up 0.10% on the day
WTI crude: $96.38, up 0.03% on the day
Gas (per gallon): $4.49, down 0.22% on the week
30-year fixed mortgage: 6.51%, up 15 bp on the week
Initial jobless claims: 209,000, down 1.42% on the week
Continuing claims: 1,782,000, up 0.34% on the week
Average hourly earnings: $37.41, up 0.16% on the month