Market Commentary | May 2026

Monthly Update

After a strong rebound in stocks in April after two months of weakness, that momentum continued forward into May with the S&P 500 up 5.2%.¹ Carrying much of the weight were the recipients of the massive capital spend on building out the GenAI infrastructure and for a second month it was mostly semiconductor companies and other tech suppliers.  

Equities: The Rally Continues

The Philadelphia Semiconductor Index jumped 38% in April and by another 22% in May with memory and storage stocks the main drivers.² Micron, mainly a producer of DRAM memory chips, rallied by an astonishing 88% in May alone after spiking by 53% in April.³ Sandisk, a memory and storage company, was up 55% after a 73% increase in April.⁴ The stock of Dell Technologies, the maker of not just PCs but servers and workstations, doubled in May and is up 265% year to date as of this writing.⁵ Earnings are just exploding higher for these companies that are selling into the data center construction as the $800b of expected 2026 CapEx spend by the big hyperscalers such as Alphabet/Google, Meta, Microsoft, Amazon and Oracle create a lot of economic beneficiaries.⁶

With technology dominating the S&P 500, and certainly the NASDAQ, and it being a market cap weighted index, its performance doubled that of the equal weight S&P 500 in May. The technology sector is also carrying the weight in terms of earnings growth as well as seen with strong Q1 results, along with higher energy earnings helped by the March jump in oil and gas prices. Overseas, particular strength was seen in the South Korean Kospi because of the heavy weightings of Samsung and SK Hynix, both DRAM manufacturers and whose stocks rallied by 43% and 82% respectively in May.⁷ The Kospi was up 34% in the month and by a whopping 109% year to date.⁸ 

The GenAI Buildout: Powering Both Markets and GDP

Coincident with the stock market strength in anything touching the GenAI data center buildout, it’s also providing a huge boost to economic activity. Seen in the Q1 US GDP data, of the 1.6% annualized growth, 150 basis points came from CapEx spend on information processing, software and research & development. Compare that to the 95 basis points of contribution to Q1 GDP growth from personal consumption and which makes up about two-thirds of US economic activity vs about 14% for the CapEx categories listed.⁹

A Two-Lane Economy

Other areas of economic and stock market strength has been anything touching the upper income consumer who continue to benefit from the wealth effect of record high stock prices along with a 50% rise in the average value of a home over the past six years according to the S&P Cotality national home price index. Also, the 5.3% US budget deficit as a percent of GDP as of April 30th reflects a high level of government spending that flows into the economy and to its recipients, a lot of which is to the healthcare and defense industry. Also, the more than $1 trillion of US government interest expense is a savers interest income. In response to the Middle East conflict, global manufacturing has gotten a lift as companies pull forward ordering ahead of expected price increases and/or supply chain disruptions.¹⁰

Other parts of the economy and stock market remained more subdued, highlighting this two lane economic and market highway I keep touching upon. The housing market, which contributes anywhere between 15-18% of US GDP growth according to the National Association of Home Builders, remains in a recession in terms of the pace of home transactions which still hover around the lowest level since the mid 1990’s. Also, lower to middle income consumers are having a more difficult time managing the growing inflationary pressures that are now rising again more than wage growth.¹¹

Energy: The Strait Remains the Story

Shifting to the geopolitics of the Middle East and its influence on commodity flows, the ceasefire between the US and Iran remains in place but the Strait of Hormuz is still effectively closed with only a few ships passing through each day. We’ve been expecting an end to the conflict and a full reopening of the Strait since early April but closing the deal has been elusive in large part I believe because of Iran’s wanted control over its enriched uranium. The price of oil did pull back in May by 12% to about $87 after rising by 50% over the two prior months on deal hopes but as of this writing the price of WTI crude is jumping by 8% to almost $95 as a deal with Iran still remains tough to close.¹²

This conflict will end and the Strait will eventually fully reopen but each day that passes without it further drains the world of crude oil supply, along with the supply of aluminum, nitrogen fertilizer, naphtha, a key feedstock in making petrochemicals, sulfur, phosphate, ammonia and helium, to name the key materials that ships passing thru the Strait historically delivers every day. For now, the release of strategic reserves and other producers trying to fill the gap have helped but we watch closely for strains. Looking out over a multi year time frame, the Middle East will dramatically alter its supply chains away from the Strait and Iran will eventually have no leverage over that waterway, hopefully.

Interest Rates: A Global Story

The global move higher in long term interest rates was also an important story as bonds around the world responded to higher inflation worries but also concerns with rising debts and deficits along with government bond holdings being a source of funds to help cushion the blow of higher energy prices. The US 10-yr Treasury yield started the year at 4.17% as we entered the year on hopes the Federal Reserve would cut interest rates in 2026 a few times.¹³ As of today’s writing, on June 1st, it stands at 4.50% as the bond market is now pricing in a chance of one rate increase by year end.¹⁴ We’ve also seen bond yield increases of note in Japan, Germany, France and the UK, places where investors are becoming more cautious with taking duration risk in countries with high debt and deficit levels. The Bank of Japan and European Central Bank are also each expected to raise its overnight rate in June with the Fed and Bank of England most likely on hold. ¹⁵

Conclusion

For now, the tremendous amount of capital spending in building out the GenAI infrastructure and ecosystem is dominating both economic activity and stock performance. The one thing I’m confident in is the incredible technological advancements that it brings and the productivity and efficiency enhancements we will all benefit from, as technology always has done in the history of mankind. The disruption concerns are completely understandable and for some worrisome, but we also don’t believe this time is different and over time it will create more new jobs we can’t even currently think of, than those that will get displaced.

What I am less confident in is how sustainable the enormous capital spending pace will continue on for as it is currently eating up a lot of the free cash flow of the main hyperscaler spenders. That is yet to be a concern though as the spending is still robust but something we are closely watching because of the large dependency the US economy and stock market have currently on this buildout.

With respect to the full reopening of the Strait, we remain hopeful that we’re on the cusp of a deal but the same was said last month and key commodity supplies get further drained. As risk management is a key part of our job, we will continue to watch our back for the risks but remain optimistic about the opportunities that are always out there. 

A Note on Investor Time Horizon

Either way, something we return to in every letter: regardless of what is happening in the markets or the world, it remains essential that investors maintain adequate short-term liquidity to cover two to three years of spending needs. Knowing that near-term period is secured allows the rest of a portfolio to be viewed with a longer perspective – and a long-term time horizon is always an investors best friend.

Disclaimers

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The market and economic data is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information in this report has been prepared from data believed to be reliable, but no representation is being made as to its accuracy and completeness.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Nothing in this material should be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market update is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. No chart, graph, or other figure provided should be used to determine which securities to buy, sell or hold. No representation is made concerning the appropriateness of any particular investment, security, portfolio of securities, transaction or investment strategy. You should speak with your own financial professional before making any investment decisions.

Past performance is not indicative of future results. Neither Bleakley Financial Group, LLC nor Peter Boockvar guarantees any specific outcome or profit. These disclosures cannot and do not list every conceivable factor that may affect the results of any investment or investment strategy. Risks will arise, and an investor must be willing and able to accept those risks, including the loss of principal.

Certain statements contained herein are statements of future expectations and other forward-looking statements that are based on opinions and assumptions that involve known and unknown risks and uncertainties that would cause actual results, performance or events to differ materially from those expressed or implied in such statements. 

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.

Peter Boockvar is solely an investment advisor representative and Chief Investment Officer of OnePoint BFG Wealth Partners.

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