Key Takeaways
- Strong corporate earnings and steady job growth helped push markets higher once again.
- S&P 500 earnings rose 25% in the first quarter, led by continued strength in technology stocks.
- Oil prices remain elevated as tensions surrounding the Strait of Hormuz continue.
- Inflation reports this week could significantly influence interest rate expectations and market direction.
- Changes to Social Security taxation may unintentionally worsen the long-term funding shortfall.
Market Overview: Profits and Jobs Continue to Support Stocks
Corporate profits and employment data continue to provide strong support for financial markets.
S&P 500 earnings are now running approximately 25% higher for the first quarter of 2026. The “Magnificent 7” technology leaders have seen profits rise nearly 60%, while the remaining 493 companies in the index are still posting a very respectable 19% growth rate.
Add in April job gains of 115,000, along with an unemployment rate of 4.3%, and investors once again pushed markets higher last week.
While geopolitical tensions and inflation concerns remain in the background, markets continue to focus on what ultimately drives long-term stock prices: corporate profitability and economic stability.
Market Index Performance: Last Week & YTD
| Index | Last Week | YTD |
|---|---|---|
| Dow Jones Industrial Average | 0.00% | 2.99% |
| S&P 500 | 2.17% | 7.91% |
| NASDAQ Composite | 4.35% | 12.75% |
| Russell 2000 | 1.42% | 14.95% |
| Foreign Stocks | 1.62% | 8.64% |
| Emerging Markets | 5.74% | 23.94% |
The two leading sectors within the S&P 500 continue to be:
- Energy +23.83% YTD
- Information Technology +15.49% YTD
The two lagging sectors remain:
- Healthcare (7.94%) YTD
- Financials (6.74%) YTD
The 10-year US Treasury yield ended the week at 4.36%, continuing its recent volatility.
WTI crude oil eased slightly from recent highs, finishing the week at $94.68 per barrel.
Oil Prices, Supply Chains, & Inflation Risk
As earnings continue to grow, supply chain disruptions tied to the Strait of Hormuz are becoming a larger concern.
For now, most Americans are feeling the impact primarily at the gas pump, with regular gasoline prices now approaching $4.50 per gallon in many areas. However, if disruptions continue, the cost of additional goods may begin moving higher as well.
It is important to remember that—even with current geopolitical tensions—we remain part of a highly interconnected global economy. Europe and other regions are already feeling a much deeper economic impact from rising energy costs and supply shortages.
Last week, Washington reportedly submitted a 14-point proposal to Tehran. As of this writing, it appears the proposal is going nowhere for the time being.
Inflation Watch: CPI and PPI Reports Ahead
This week, investor attention will begin shifting toward inflation data, particularly the upcoming Consumer Price Index (CPI) and Producer Price Index (PPI) reports.
Current estimates are as follows:
- CPI: 3.8% headline, 2.7% core
- PPI: 4.8% headine, 4.3% core
All remain above long-term trend levels.
The longer the current geopolitical standoff continues, the greater the risk that higher energy and transportation costs begin feeding broader inflation pressures throughout the economy.
In other words, the odds of “sticker inflation” increase the longer these disruptions persist.
For retirees and those planning for retirement, inflation remains one of the most important long-term financial planning variables.
Social Security Update: Tax Relief & Unintended Consequences
Many taxpayers aged 65 and older paid less tax this year because of the temporary additional tax deduction we discussed in a prior Weekly Retirement Report.
Certainly, that is welcome news for many retirees.
However, there may also be an unintended consequence:
Because taxable income has been reduced for many households, less revenue from the taxation of Social Security benefits is flowing back into the system itself. In essence, the deduction may increase the projected shortfall by modestly reducing current funding.
We should receive a clearer picture once the updated Social Security Trust Fund Report is released. By law, the report was due April 1st, though it has been delayed and is now expected sometime in the coming month.
It will be interesting to evaluate the updated projections, though at this stage I do not expect the report alone to force immediate government action.
As I’ve said before, meaningful Social Security reform remains necessary—not eventually, but sooner rather than later.
Final Thoughts: Strong Markets, But Important Crosscurrents Remain
Markets continue to benefit from strong corporate profits, resilient employment data, and ongoing enthusiasm surrounding technology and artificial intelligence.
At the same time, rising energy costs, inflation pressures, and geopolitical uncertainty continue to create meaningful risks beneath the surface.
Successful investing and sound retirement planning are rarely about reacting emotionally to short-term headlines. Instead, they are built on discipline, diversification, and maintaining a long-term perspective.
That remains as true today as ever.
Please feel free to share the Weekly Retirement Report with family, friends, and colleagues.
Thank you for reading!
Paul Levin, CFP®, ChFC®, RICP®, TPCP®
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
All market data sourced from The Wall Street Journal, May 8, 2026.
