Weekly Market Recap: Week Ending May 15, 2026

The Big Picture

It was a week that had everything: record highs, an inflation scares, a presidential summit in Beijing, a Fed leadership change, and the Iran conflict grinding on in the background. By Friday's close, the S&P 500 and Nasdaq each finished the week up just 0.3%, while the Dow was essentially flat, a deceptively quiet finish that masked a wild ride getting there. The indexes pulled back sharply on Friday after Treasury yields spiked to nearly one-year highs and oil prices climbed again, erasing much of the mid-week euphoria. The S&P 500 has now logged six consecutive weeks of gains since the March lows, a remarkable recovery that continues to surprise even the most seasoned observers.

The Trump-Xi Summit

The centerpiece of the week was President Trump's two-day visit to Beijing on May 14 and 15 for talks with Chinese President Xi Jinping. The meeting had been anticipated for weeks, with markets quietly treating it as an informal deadline for Iran progress. Trump traveled with 16 top U.S. executives and departed touting "fantastic" trade deals and saying "a lot of different problems" had been resolved. Markets were cautiously optimistic heading into Friday and then cooled when it became clear that no major agreements had been announced and no Iran breakthrough had materialized. Friday's sell-off reflected that disappointment.

Inflation and the Fed Transition

Tuesday's April CPI report was the week's most important piece of economic data, and it delivered a scare. Headline inflation came in hotter than expected, largely driven by energy prices. However, core CPI, which strips out food and energy, came in at 0.3% month over month, right at consensus, which offered some relief and allowed markets to bounce after an initial drop. The bigger story unfolding all week was the end of the Jerome Powell era. Powell's term as Fed Chair ended Friday, May 15. Kevin Warsh, viewed as more open to rate cuts, was confirmed as his successor. The handoff is significant, not because policy wil immediately change, but because the direction of the Fed is now an open question in a way it has not been in years. Chances of a rate hike sometime in 2026 climbed to 45% by Friday morning, driven by energy-fueled inflation fears, up from essentially zero just a month ago.

Tech, AI and Memory

Away from the macro noise, the market's underlying engine kept running. The Roundhill Memory ETF surged nearly 30% on the week alone as AI-driven chip demand showed no signs of cooling. Nvidia climbed to new highs, up 20% over the past month and 27% year to date, with its massive Q1 earnings report now set for Wednesday, May 20. Micron soared more than 15% on the back of high-bandwidth memory orders for AI data centers. The PHLX Semiconductor Index is up 143% over the past year, now trading 32% above its own 50-day moving average, a premium that historically signals some consolidation may be coming, but that has said the same thing for months while chips kept climbing.

Cerebras had one of the week's most spectacular individual stories, surging 68% on its first day of trading as AI enthusiasm lifted it toward a $100 billion valuation on just over $500 million in annual revenue. The AI-driven speculation that characterized late 1990s internet investing is being invoked with increasing frequency on Wall Street, not necessarily as a warning, but as a frame of reference for just how fast capital is moving into this space.

The Iran Situation

The conflict is now 77 days old, and the Strait of Hormuz remains effectively closed. The ceasefire, extended by Trump on April 21 to allow negotiations to continue, held through the week but has produced no deal. Earlier in the month, Trump launched Operation Project Freedom, a Navy mission to escort merchant ships out of the Gulf, before pausing it on May 6 citing "great progress." That progress has not materialized into an agreement. On Monday, Trump told reporters the ceasefire was on "massive life support" after calling Iran's latest counterproposal "unacceptable." Iran is seeking a phased approach that delays nuclear concessions while the U.S. wants immediate denuclearization commitments. The gap remains wide. Gas prices nationally hit $4.54 per gallon mid-week, the highest since July 2022 and up 52% since the war began. Airlines are warning that the jet fuel crisis is approaching Covid-level impact on their businesses. The markets have largely priced in an eventual resolution, but every week the Strait stays closed, the economic damage compounds.

Friday's Pullback

Friday was a reminder that the market's rally remains fragile beneath the surface. The 10-year Treasury yield spiked nine basis points to 4.55%, its highest level in nearly a year. Oil climbed. Tech sold off, with the S&P 500 falling over 1% and the Nasdaq dropping 1.6% on the day. Ford fell 7.1% after investors took profits following a 20% rally earlier in the week. Verizon confirmed a new round of layoffs on top of the 13,000 cuts it made earlier this year. Starbucks said it would lay off 300 more corporate employees in its third round of cuts. The week ended with a tone of caution, not panic, but caution nonetheless.

The Week Ahead — May 18 through 22

Nvidia Earnings — The Market Event of the Year

Everything this coming week flows through one event: Nvidia reports first-quarter fiscal 2027 earnings after the close on Wednesday, May 20. The numbers expected are staggering. Wall Street consensus stands at $1.77 EPS on $78.8 billion in revenue, representing approximately 78% year-over-year revenue growth. Citi believes the company could beat by an additional $1.4 billion. Goldman Sachs is looking for $80 billion in Q1 revenue and $87.7 billion in Q2 guidance. Nvidia has beaten estimates in each of the last four quarters. The stock has historically moved 5% to 10% in either direction on earnings day, and a company with a $5.7 trillion market cap now moves the entire market with it. The bar for a positive surprise is high after a 20% monthly run. Options markets are pricing in an approximately 8% move in either direction. This report will set the tone for the second half of the year.

Retail Earnings

The week is also packed with major retail reports that will provide the clearest picture yet of how the American consumer is holding up under the pressure of $4.50 gas and persistent inflation. Home Depot reports Tuesday, followed by Target and TJX Companies on Wednesday. Walmart kicks off Thursday. Lowe's is also on the calendar. The central question across all of them is whether energy costs, tariff uncertainty, and a cautious housing market are finally showing up in consumer spending. Walmart in particular, near all-time highs and up 15% year to date, will be closely watched for any signs of softening in the low-to-middle income consumer.

The Iran Wildcard

Talks between the U.S. and Iran continue through Pakistani intermediaries, with no timeline confirmed for the next in-person meeting. Trump said Friday it is "too soon" for senior officials to meet directly again. With the ceasefire still technically in place but strained and the Strait still largely closed, the conflict remains the single greatest source of potential volatility in either direction. Any credible progress toward a deal would send oil plunging and stocks surging. A breakdown that resumes active combat would do the opposite.

Kevin Warsh's First Week

The incoming Fed Chair takes the reins this week with inflation above target, energy-driven price pressures still building, and a market that has gone from pricing in cuts to pricing in possible hikes. His first public remarks will be closely parsed for any signal about the pace and direction of policy under new leadership.

Bottom line: Six consecutive weeks of gains, but Friday reminded everyone this market does not do straight lines. Nvidia on Wednesday is the single biggest event of the year so far, retail earnings will tell us whether the consumer is still standing, and the Iran situation is the ever-present wildcard. Buckle up.

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