The bull market keeps shrugging off every reason to stop.
The S&P 500 — as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) — closed the week on track for an eighth straight weekly gain. That’s its longest winning streak since December 2023, even as the Federal Reserve signals that the next rate move could be up, not down.
Minutes from the April FOMC meeting flipped the script: officials would back rate hikes if inflation stays sticky, after consumer prices jumped to 3.8% in April. Markets are now pricing in an 82% probability of a rate hike by year-end, with a full hike priced in by January 2027.
A year that opened with talk of cuts is now openly debating tightening.
| MEETING DATE | 3.50%-3.75% (on hold) | 3.75%-4.00% (+25 bp HIKE) |
| 06/17/2026 | 96,26% | 3,74% |
| 07/29/2026 | 84,50% | 15,50% |
| 09/16/2026 | 60,79% | 39,21% |
| 10/28/2026 | 47,50% | 52,50% |
| 12/09/2026 | 17,57% | 82,43% |
| 01/27/2027 | 1,50% | 98,50% |
A Manufacturing Renaissance Is Here, Thanks To AI
U.S. manufacturing, meanwhile, is running hot.
S&P Global’s flash manufacturing PMI hit a 48-month high in May. The driver is the colossal wave of Al infrastructure capex — hyperscalers alone are set to spend a combined $725 billion this year – pulling chip and equipment investment back to American soil.
Washington pressed that advantage.
The Department of Commerce committed $2 billion in CHIPS Act funding to nine quantum computing companies, with International Business Machines Inc. (NASDAQ:IBM) the single largest recipient at $1 billion. IBM shares posted their best week since October 2002.
Other beneficiaries included GlobalFoundries Inc. (NASDAQ:GFS), which received $375 million, alongside Atom Computing, Diraq, D-Wave Quantum Inc (NASDAQ:QBTS), Inflection, PsiQuantum, Quantinuum and Rigetti Computing Inc. (NASDAQ:RGTI)
But beyond Wall Street doors, the mood kept darkening — widening the strange gap between a record stock market and a depressed Main Street.
The University of Michigan’s final May Consumer Sentiment Index landed at 44.8. That’s down from 49.8 in April and the lowest reading ever recorded in the survey’s near-80-year history.
Surveys of Consumers director Joanne Hsu pointed straight at the cost of living, as Strait of Hormuz supply disruptions continue to lift gasoline prices.
More troubling for the Fed, households now expect the inflation pain to spread well beyond energy: long-run inflation expectations climbed from 3.5% in April to 3.9% in May.
The week’s marquee corporate event was Nvidia Corp. (NASDAQ:NVDA)
The world’s biggest company delivered another record quarter — $81.62 billion in revenue against a $78.86 billion consensus, data center sales nearly doubling to $75.2 billion, and second-quarter guidance at a staggering $91 billion, plus an $80 billion buyback and a higher dividend.
Eight weeks up, records on the screens, a four-year high on the factory floor — and the most depressed consumer in the history of the survey.
The market has decided the Al boom can outrun both a hawkish Fed and a fearful consumer.
Image: Shutterstock
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