The Nasdaq jumped 1.6% while the S&P 500 added 0.7%, officially clawing back its year-to-date losses. You’d think it’s all sunshine—until you see the Dow, which dropped 0.6% thanks to a collapse in UnitedHealth shares after a surprise forecast pull and CEO exit.
Where the Heat Is
Tech: Nvidia soared nearly 6% after cutting a deal to sell AI chips to Saudi Arabia. Palantir? Up 8% thanks to a bullish analyst note. And Coinbase? Up nearly 24% after being tapped to replace Discover Financial in the S&P 500 starting next week.
- Consumer Discretionary: With retail sales still growing and services PMI staying north of 50, you’re seeing a 5% lift in this sector so far in May.
- Energy: Crude oil made gains too—WTI up 1.34%, Brent up 1.42%. Steady demand and cooling inflation are helping.
But Here’s the Reality Check
Things have genuinely improved since early April—but not by enough to justify how far the market’s run. The S&P is now stretched above what most would consider “fair value.” Translation: prices may be running hotter than the data can support.
Here’s what’s better:
- Tariffs: Global reciprocal tariffs are now down to 10%. China also rolled back some of its crazy-high duties, down to 30% (though electronics and chips were conveniently left out). Still, that’s better than the doomsday scenario investors feared just a month ago.
- Economic Strength: Jobless claims are still well below 250k, unemployment’s at 4.2%, and consumers are still swiping those cards. Retail sales are rising, and the services economy is staying afloat.
- Inflation: April CPI came in at 2.3%. That’s lower than expected and has Wall Street whispering about a potential Fed rate cut later this year.
What You Should Be Watching
Fed Rate Hopes: If inflation keeps cooling, rate cuts might come into play. But one bad CPI print could kill that dream fast.
Tariff Adjustments: Watch for more trade moves—especially around electronics and semiconductors. Tech could get another boost, or not.
Earnings Trends: Big names are leading the charge, but small and mid-cap names haven’t joined the party yet. If you’re spread across sectors, that’s something to keep tabs on.
Technical Levels: The S&P is bumping up against resistance near 5,900. If it breaks through, momentum might carry it higher. If not, prepare for a pullback.
The Bottom Line
If you’re feeling FOMO, that’s understandable—but be smart about it. The setup is better than it was, no question. But stocks may already be pricing in the best-case scenario. This isn’t the time to go all-in without checking your blind spots.
