Economic Update 5-11-2026

Economic data included the April employment situation report coming in more strongly than expected, in addition to improvements in new home sales. On the other hand, ISM services and JOLTS job openings fell back, and consumer sentiment continued to deteriorate to very low levels.

Equities gained globally, along with hopes for easing Middle East tensions and strong technology earnings. Bonds were flattish with minimal change in yields across the curve. Commodities were mixed, with metals up, but energy fell back.

U.S. stocks fared positively, for the sixth straight week, with continued strength in U.S. stock earnings results (especially technology), decent economic data (including jobs), and a continued ceasefire in the Middle East and renewed talks. By Thu., the Court of International Trade decided that the U.S. administration’s blanket 10% tariffs under IEEPA imposed under Sec. 122 two months ago were illegal, although the ruling is subject to appeal. It’s assumed that if the tariffs remain in effect during that process, the administration will have time to replace them with tariffs under Sec. 301 (unfair trade) and Sec. 232 (national security), although that process is also uncertain, as is the timeline for tariff refunds.

By sector, technology led with a gain of 7%, offsetting declines in energy of -5% and utilities of -4%, with most other sectors little-changed on net. Tech was helped by continued optimism for strong AI demand and infrastructure spending trends, with Intel up in the double-digits along with speculation about a partnership with Apple to produce chips. Real estate was little-changed for the week. Earnings season is winding down, with 89% of S&P 500 firms now having reported, per FactSet, and Q1 year-over-year growth now at 27.7%, which would be the highest rate since late 2021, and 84% of firms surprising on the upside (compared to the 10-year average of 75%). As was expected, leadership was in technology (with 51% EPS growth), communications (49%), materials (43%), and consumer discretionary (40%); health care has been the only negative group at -3%.

Foreign stocks were mixed, with gains in Japan and emerging markets outpacing those in the U.S., while developed Europe were in line with domestic markets. The EM component was led by a dramatic gain in South Korea, which was tied in with general technology optimism, followed by Taiwan, as well as South Africa and Mexico, the latter being more associated with strength in real assets. European sentiment was a bit weaker with announced U.S. tariffs on European autos and a drawdown in military personnel from Germany.

Bond prices appeared little-changed last week, with minimal change in the U.S. Treasury yield curve, with coupon and spread changes providing a small boost to credit over governments. Foreign bonds fared positively, along with a drop in the value of the U.S. dollar.

Commodities weakened overall last week, with declines in energy prices offsetting small rises in precious and industrial metals. West Texas crude oil spot prices fell back by -7% last week to under $95/barrel, along with the continued hoped-for easing of tensions in the Middle East.

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Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.