By Amaury de Barros Conti, Partner | Vice President Investments
WHAT MOVED MARKET LAST WEEK
Markets navigated a more complex macro backdrop this week as resilient inflation, rising interest rates, and ongoing geopolitical uncertainty challenged the durability of the recent equity rally. While headline index performance was largely flat, underlying crosscurrents, particularly in rates, earnings expectations, and investor positioning, continue to shape the path forward. Importantly, the market remains supported by strong earnings revisions in select sectors and still moderate investor positioning, even as inflation dynamics and policy expectations have shifted meaningfully. For the week, the Dow lost 0.17% and the S&P 500 added 0.13%, while the Nasdaq dipped 0.08%, as per Bloomberg data.
Source: Bloomberg Finance as of May 15, 2026.
- Inflation surprised to the upside, with core CPI rising 0.4% month-over-month in April, above expectations and reflecting a reacceleration from March. This persistence in inflation has coincided with a notable rise in Treasury yields, with the 10-year moving above 4.50%—its highest level in nearly a year.
- The increase in yields reflects a broader repricing of the policy path. Markets appear to have shifted from anticipating rate cuts earlier in the year to now pricing nearly a full rate hike by year-end. This pivot has been driven by firm inflation data, elevated energy prices tied to geopolitical tensions, and continued strength in economic activity.
- Growth indicators remain resilient. The Atlanta Fed’s GDPNow estimate for Q2 has moved closer to 4%, well above consensus expectations, reflecting continued strength in business investment, particularly in technology. At the same time, early signs of labor market shifts are emerging, indicating AI-exposed occupations may experience modest employment declines, which suggests structural changes beneath the headline data.
- Geopolitically, President Trump’s visit to China concluded without major breakthroughs, though both sides signaled a willingness to maintain stable relations. Meanwhile, tensions in the Middle East continue to influence energy markets and inflation expectations. The trajectory of this conflict remains a key swing factor for both inflation and global growth.
LOOKING AHEAD
- The coming week will be pivotal, with Nvidia earnings serving as a focal point for both AI-related sentiment and broader market direction. Options markets imply a meaningful move in the stock, with potential spillover effects across the semiconductor and technology sectors.
- In addition to earnings, investors will closely watch flash PMI data, Fed meeting minutes, and key retail results for insight into consumer health. Geopolitical developments and any evolution in energy markets will remain critical inputs, particularly for inflation expectations.
- Strong earnings momentum and still-neutral positioning provide a constructive foundation, but rising inflation, higher yields, and geopolitical risks re-introduce market uncertainty.
Amaury de Barros Conti
Partner | Vice President Investments
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