May marked another constructive month for financial markets as investor confidence continued to strengthen following the volatility experienced earlier this year.

Strong corporate earnings, resilient economic data, and continued enthusiasm surrounding artificial intelligence helped propel major market indexes higher, with several benchmarks reaching new highs during the month. While concerns surrounding inflation, interest rates, and geopolitical developments remained present, investors generally viewed these risks as manageable against a backdrop of solid economic fundamentals.

Market Recovery Broadens

The recovery that began following the March market pullback continued throughout May. The S&P 500 and Nasdaq both posted strong gains, while participation broadened beyond the largest technology companies.

Small-cap stocks, growth-oriented sectors, and international equities all contributed to market strength, suggesting improving confidence in the economic outlook and a healthier market environment overall.

AI & Technology Continue to Lead

One of the most notable themes throughout May remained the continued leadership coming from technology and artificial intelligence-related investments.

Companies benefiting from AI infrastructure spending, data center expansion, cloud computing, and semiconductor demand continued to attract significant investor interest. Semiconductor stocks have been among the strongest-performing areas of the market this year as businesses and consumers increasingly adopt next-generation computing technologies.

While periods of strong outperformance can lead to elevated valuations, we continue to view artificial intelligence as a long-term structural trend that extends well beyond short-term market cycles.

Economic Fundamentals Remain Supportive

Importantly, economic fundamentals remained supportive throughout the month. The labor market continues to demonstrate resilience, with unemployment remaining low by historical standards and job creation continuing at a pace consistent with a healthy economy.

Wage growth has remained positive, consumer spending has shown stability, and corporate earnings generally exceeded expectations during the first-quarter reporting season. Together, these factors have reinforced investor confidence that economic growth remains intact despite elevated interest rates.

Interest Rates & Fixed Income

From an interest rate perspective, inflation has moderated considerably from the highs experienced in 2022 but remains above the Federal Reserve's long-term target. As a result, markets continue adjusting to a higher-for-longer interest rate environment while reassessing the timing and magnitude of future Federal Reserve policy changes.

At the same time, the Treasury yield curve has continued to normalize following the deeply inverted conditions experienced during 2023 and 2024. With intermediate-term Treasury yields offering attractive income opportunities and the yield curve now positively sloped, fixed-income markets are presenting opportunities that have been largely absent for much of the past decade.

What We're Watching Ahead

Looking ahead, investors will continue monitoring inflation trends, labor market conditions, and Federal Reserve policy developments. The upcoming transition to incoming FOMC Chairman Kevin Warsh also introduces a new dynamic for markets, as investors evaluate how monetary policy may evolve under new leadership.

While inflation remains above target and fiscal challenges persist, the broader economic backdrop remains considerably healthier than many had anticipated entering the year.

Staying Focused on Long-Term Fundamentals

As we move further into the second quarter of 2026, our focus remains on evaluating both risks and opportunities through our disciplined 5-step due diligence process.

While headlines surrounding inflation, interest rates, geopolitical developments, and Federal Reserve policy will likely continue generating periods of market volatility, we believe it remains important to stay focused on long-term fundamentals rather than reacting emotionally to short-term market movements.

Most companies held across our multiple strategies continue to exhibit many of the characteristics we prioritize during uncertain periods: strong balance sheets, durable cash flows, disciplined management teams, and resilient earnings trends. These qualities have historically helped companies navigate changing economic environments while remaining well-positioned for long-term growth.

As we have stated many times before, our primary focus is to provide you with Financial Peace of Mind.

Market volatility will always be a natural part of investing, but maintaining discipline during periods of uncertainty remains one of the most important drivers of long-term success. Our goal is not simply to help manage investments, but to help ensure you remain confident in your financial plan, informed about the environment around you, and focused on the long-term goals that matter most to you and your family.

We hope you are enjoying the summer sun and look forward to speaking with you again soon.