Global markets moved higher last week, supported by strong earnings from NVIDIA, signs of potentially easing geopolitical tensions, and slightly lower interest rates.
Even continued weakness in consumer sentiment was not enough to slow this ongoing bull market.
📊 Market Index Performance: Weekly Returns & Year-to-Date
| Index | Last Week | Year-to-Date |
|---|---|---|
| Dow Jones Industrial Average | +2.37% | +5.48% |
| S&P 500 | +1.12% | +9.44% |
| NASDAQ Composite | +0.73% | +13.66% |
| Russell 2000 | +2.84% | +15.75% |
| Foreign Stocks | +2.48% | +8.55% |
| Emerging Markets | +1.74% | +21.01% |
| Bloomberg Aggregate US Bond | +0.29% | (0.47%) |
The yield on the 10-year U.S. Treasury moved slightly lower, ending the week at 4.558%.
Meanwhile, U.S. oil prices declined 8.7% for the week, helping ease some inflation concerns.
NVIDIA Leads While Consumer Spending Concerns Linger
Last week’s earnings reports delivered mixed results:
- NVIDIA once again exceeded expectations, reinforcing the continued strength of the Artificial Intelligence (AI) Boom.
- Meanwhile, both Walmart and Target expressed concerns about the spending durability of lower-income consumers.
Despite these concerns, markets continued to move higher.
Consumer sentiment readings remain weak, suggesting many households still feel uneasy about inflation, interest rates, and the broader economy. However, investors continue focusing on:
- Strong corporate earnings
- AI-driven productivity gains
- Resilient economic activity
- Potential stabilization in global conflicts
Federal Reserve Outlook: Are Rate Hikes Coming?
According to the Wall Street Journal, the bond market is now pricing in two additional interest rate hikes over the next 12 months.
Investors will also be closely monitoring comments from newly sworn-in Federal Reserve Chairman Kevin Warsh, who officially assumed leadership last week.
The Federal Reserve’s path forward remains critical for:
- Stock market valuations
- Bond prices
- Mortgage rates
- Retirement portfolios
Is the Stock Market Overvalued?
One of the biggest questions investors continue asking:
“Is the stock market overvalued in 2026?”
The current forward price-to-earnings (P/E) ratio of the S&P 500 stands at 25.53.
Historically, the market has only reached these valuation levels twice before:
- 1999 during the dot-com bubble
- 2021 following the post-COVID reopening, just before inflation accelerated sharply
However, not all sectors are trading at elevated valuations:
Current S&P 500 Sector Valuations
| Sector | Forward P/E Ratio |
|---|---|
| Financials | 14.8 |
| Healthcare | 16.8 |
| Utilities | 18.5 |
| Energy | 19.2 |
| Materials | 19.7 |
| Consumer Staples | 22.7 |
| Communication Services | 23.2 |
| Industrials | 25.4 |
| Information Technology | 26.6 |
| Real Estate | 27.8 |
| Consumer Discretionary | 28.0 |
Artificial Intelligence Continues to Drive Markets
It remains difficult to fight the momentum of the market.
The “Magnificent 7” technology companies saw first-quarter profits rise 63%, while the remaining 493 companies in the S&P 500 increased earnings by 17%.
Artificial intelligence continues playing a major role in market leadership:
AI’s Impact on Corporate Profits
- Technology companies continue investing heavily in AI infrastructure
- Non-technology companies are increasingly using AI to improve productivity
- Companies are boosting efficiency without significantly increasing labor costs
This combination continues supporting higher corporate profits and higher stock prices.
Oil Prices, Bonds, and Geopolitical Developments
Over the weekend, reports suggested the administration may again be moving closer to a potential agreement with Iran.
If tensions continue easing:
- Oil prices could move lower
- Interest rates may decline
- Bond prices could stabilize and recover
The unexpected geopolitical conflict in 2026 has contributed to rising interest rates and declining bond prices earlier this year.
For retirees and income-focused investors, lower rates and firmer bond prices would certainly be welcomed.
What Earnings Growth Means for Retirement Investors
By many traditional valuation measures, the market appears expensive. However, markets can remain overvalued for extended periods when:
- Corporate profits continue to rise
- Economic growth remains positive
- Investor optimism remains strong
At the end of the day, earnings remain the primary driver of long-term market direction — until something materially changes.
For now, investors remain focuesd on:
- Artificial Intelligence growth
- Corporate earnings momentum
- Interest rate expectations
- Oil prices and inflation
- Geopolitical developments
Please feel free to share the Weekly Retirement Report with friends, family, 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 22, 2026.
