On Friday, the S&P 500 Index ($SPX) (SPY) closed +0.37% higher, the Dow Jones Industrial Average ($DOWI) (DIA) closed +0.58% higher, and the Nasdaq 100 Index ($IUXX) (QQQ) closed +0.42% higher. June E-mini S&P futures (ESM26) rose +0.35%, and June E-mini Nasdaq futures (NQM26) rose +0.42%.
Stock indexes closed higher on Friday, with the S&P 500 and Nasdaq 100 hitting 1-week highs, and the Dow Jones Industrials setting a new all-time high. Shares were supported by hopes that the US and Iran are moving closer to a peace deal. Moreover, chipmakers and AI-infrastructure stocks rose amid unwavering enthusiasm for artificial intelligence. Additionally, Workday rose more than +5% to lead software stocks after reporting better-than-expected Q1 results and offering a positive outlook.
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Stocks fell back from their best levels on Friday after the University of Michigan’s US May consumer sentiment index was revised down to a record low and inflation expectations for May were revised upwards. Additionally, sharp comments from Fed Governor Christopher Waller weighed on stocks when he said he supported making it clear that the Fed’s next interest rate hike is likely because “inflation is not going in the right direction.”
The University of Michigan’s May US consumer sentiment index was revised down to a record low of 44.8 (data from 1978), weaker than expected with no change at 48.2.
The University of Michigan’s US May 1-year inflation expectation rate was revised down from +4.5% to a 9-month high of +4.8%, stronger than the expected +4.6%. Also, the May 5-10 inflation expectations rate was revised upward to a 7-month high of 3.9%, stronger than the expectation of no change at 3.4%.
WTI crude oil prices (CLM26) remain extremely volatile and are expected to be dominated by the Iran war. Prices had a low and a high on Friday and ended with modest gains because the Strait of Hormuz is closed. Crude oil prices briefly fell into negative territory on Friday after a Reuters report said Qatar has sent a negotiating team to Tehran in coordination with the US to help secure an agreement to end the war. Iran said the latest US proposal had “narrowed the gap” between the two sides. That proposal suggested a short-term deal under which Iran would open the Strait of Hormuz and the US would lift the blockade of Iranian ports, after which the two sides would hold deeper talks on Iran’s nuclear program. Also on Friday, Secretary of State Rubio noted “modest progress” in the talks. Late Monday, President Trump said he was canceling Tuesday’s strike on Iran after Gulf allies asked for more time to allow diplomacy.
Last Wednesday, the International Energy Agency (IEA) said in a monthly report that global oil inventories fell by about 4 million bpd in March and April, and the market will remain “severely undersupplied” through October, even if the conflict ends next month. Goldman Sachs estimates that the current disruption has shaved about 500 million bbl from global crude reserves, with the drawdown potentially reaching 1 billion bbl by June.
Markets are discounting a 0% chance of a -25bp FOMC rate cut at the next FOMC meeting on June 16-17.
Earnings season is winding down, and the reports so far have been supportive for the stock. As of Friday, 83% of the 475 S&P 500 companies that have reported Q1 earnings have beaten estimates. According to Bloomberg Intelligence, Q1 S&P 500 earnings are projected to increase +12% year over year. Excluding the technology sector, Q1 earnings are projected to grow about +3%, the weakest in two years.
Foreign stock markets closed with gains on Friday. The Euro Stoxx 50 climbed to a 2-week high and closed up +0.99%. China’s Shanghai Composite recovered from 3-week low to close +0.87% higher. Japan’s Nikkei Stock Average hit a 1-week high and closed +2.68% higher.
interest rates
June 10-year T-notes (ZNM6) closed at +0.5 tick on Friday. The 10-year T-note yield fell -1.2bp to 4.558%. T-notes edged marginally higher on Friday amid a slide in inflation expectations as the 10-year breakeven inflation rate fell to a 1-month low of 2.401%. Additionally, the fall in the University of Michigan’s US May consumer sentiment index to a record low on Friday was supportive for T-notes.
T-notes lost most of their gains on Friday after Fed Governor Waller said he supports a Fed rate hike if inflation does not subside soon. Additionally, the University of Michigan’s May rate hike in inflation expectations was bearish for T-notes. Besides, strength in equities on Friday curbed demand for safe-haven government debt and T-notes are being weighed on.
European government bond yields are falling today. The 10-year German Bund yield fell to a 1.5-week low of 3.022% and ended -6.0 bp lower at 3.038%. UK 10-year gilt yields fell to a 2-week low of 4.887% and fell -6.8bp to 4.897%.
The German May IFO business confidence index unexpectedly rose by +0.4 to 84.9, stronger than expected after a decline to 84.2.
The German June GfK consumer confidence index unexpectedly rose from +3.3 to -29.8, stronger than the expected decline to -34.0.
“In June, the ECB will probably need to raise interest rates because we need to send a signal that we are committed to our medium-term 2% inflation target,” said Alexander Demarco, a member of the ECB Governing Council.
UK April retail sales ex-auto fuel fell -0.4% per cubic metre, weaker than expectations of -0.3% per cubic metre.
Swaps are discounting an 88% chance of a +25bp ECB rate hike at their next policy meeting on June 11.
US Stock Movers
Chip makers rallied on Friday, helping lift the broader market. Qualcomm (QCOM) closed up more than +11% to lead the Nasdaq 100, and NXP Semiconductors NV (NXPI) closed up more than +5%. Additionally, Advanced Micro Devices (AMD), Analog Devices (ADI), and Texas Instruments (TXN) closed up more than +3%, and ARM Holdings PLC (ARM), Marvell Technology (MRVL), ASML Holding NV (ASML), KLA Corp. (KLAC), and Microchip Technology (MCHP) closed up more than +2%. Additionally, Lam Research (LRCX) and Applied Materials (AMAT) closed up more than +1%.
Workday (WDAY) closed with software shares up more than +5% after reporting Q1 adjusted EPS of $2.66, stronger than the consensus of $2.51, and forecast second quarter subscription revenue of $2.46 billion, better than the consensus of $2.45 billion. Additionally, Atlassian Corp (TEAM) and Intuit (INTU) closed up more than +4%, and Salesforce (CRM) and ServiceNow (NOW) closed up more than +2%. Additionally, Datadog (DDOG) and Oracle (ORCL) closed up more than +1%.
Dell Technologies (DELL) closed the day with gains of more than +16%, leading the S&P 50 after Wells Fargo Securities raised its price target on the stock from $180 to $270.
After The Wall Street Journal reported that the company was exploring a sale and had approached entertainment companies as potential buyers, IMAX Corp. (IMAX) closed up more than +15%.
Estée Lauder (EL) closed up more than +11% after its proposed merger with Puig Brands SA fell apart due to Charlotte Tilbury’s compensation demands.
Zoom Communications (ZM) closed up more than +9% after reporting Q1 revenue of $1.24 billion, exceeding the consensus of $1.22 billion, and raised its 2027 revenue forecast to $5.08 billion-$5.09 billion from the previous forecast of $5.07 billion-$5.08 billion, which is better than the consensus of $5.07 billion.
Ross Stores (ROST) closed up more than +8% after reporting Q1 sales of $6.01 billion, stronger than the $5.61 billion consensus.
Alcoa (AA) closed up more than +7% after UBS upgraded the stock to buy from neutral with an $80 price target.
Merck & Co. (MRK) led the Dow Jones Industrials with gains of more than +5% after the European Medicines Agency’s Committee for Medicinal Products for Human Use recommended approving Keytruda in combination with Padsav to treat bladder cancer.
Take-Two Interactive Software (TTWO) closed down more than -4% to lead the losers in the Nasdaq 100 after forecasting net bookings of $8.0 billion to $8.2 billion in 2027, well below the consensus of $9.11 billion.
Coinbase Global (COIN) closed down more than -4% in line with the decline in the S&P 500 as the price of Bitcoin (^BTCUSD) fell more than -2% to a 3-week low.
Summit Therapeutics (SMMT) closed down more than -4% after Bernstein initiated coverage on the stock with an Underperform rating and a price target of $7.70.
Denali Therapeutics (DNLI) closed down more than -3% after reporting that a mid-stage study of its experimental therapy for Parkinson’s disease with partner Biogen did not meet its primary or secondary endpoints.
Inspire Medical Systems (INSP) closed down more than -2% after Bank of America Global Research downgraded the stock from Neutral to Underperform with a price target of $39.
Earnings Report(5/26/2026)
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On the date of publication, Rich Asplund did not have (directly or indirectly) any positions in any securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy here for more information.
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