Dow Crosses 50K, But Could Be Followed By Volatile Week

With markets closed Monday for the Memorial Day holiday, this week’s edition arrives a day later than usual. There is a lot to cover. Last week brought a series of meaningful milestones. The Dow crossed 50,000 for the first time since February, Nvidia delivered another exceptional earnings report, and oil fell sharply on real progress in the Iran peace talks. The Federal Reserve also released the notes from its April meeting, which revealed a committee more divided and more concerned about inflation than markets had assumed. Then, in the early hours of Monday, the U.S. military struck Iranian missile sites near the Strait of Hormuz, and Iran has signaled it intends to respond. The week ahead could move in either direction quickly.

Data sources: Yahoo Finance, CNBC, Reuters, Investing.com, as of May 22, 2026 close. Past performance is not indicative of future results.

The week was a tale of two halves. Stocks fell sharply Monday and Tuesday as the 10-year Treasury yield climbed to 4.69%, the highest level in over a year, driven by lingering inflation concerns from the prior week’s data. The tone shifted mid-week. Nvidia reported a strong quarter on Wednesday, the Federal Reserve’s meeting notes were released, oil began falling on Iran headlines, and by Friday the Dow had closed at a new all-time high. Three developments stood out:

The thread tying the week together was oil. When Brent moves lower, inflation expectations typically ease, yields decline, and stocks find room to advance. That dynamic played out clearly on Thursday and Friday. The Iran situation remains the central variable. Monday’s strikes against Iranian missile sites and Iran’s threatened response introduce real risk that last week’s progress could reverse quickly. We are watching closely.

A shortened week, but a consequential one. The Iran situation remains the dominant variable, and the most important economic data of the week arrives Thursday.

Thursday brings Core PCE for April, the Federal Reserve’s preferred inflation measure. It offers the most complete view of whether price pressures across the economy are accelerating. After the hot CPI and PPI readings two weeks ago, this number will help clarify whether those reports represented a turning point or a temporary spike. A higher-than-expected reading could revive rate-hike concerns. A contained number would offer meaningful relief.

Wednesday brings the second estimate of Q1 GDP, which is unlikely to move markets significantly on its own. The more important development would be any public remarks from our new Federal Reserve Chair, who has not yet given a major policy speech. His tone on inflation and rates would draw significant attention. The Iran situation also remains a variable that could override everything else on any given day this week.

The Arnott quote at the top of this letter is worth a moment of reflection. When uncertainty rises, the instinct is to step back and wait for a clearer signal. But the market rarely accommodates that instinct. Investors who held their positions through the March lows have watched the S&P 500 recover and then advance to new highs. Those who waited for confirmation are still waiting.

When we step back from the day-to-day noise, the fundamentals continue to support the market. Corporate earnings this season have been exceptional, with more than 80% of S&P 500 companies that have reported beating expectations and doing so by a wide margin. The labor market remains stable. Consumer spending continues to hold up. These are the foundations a healthy market is built on, and all three are intact.

There are real questions ahead. Inflation could surprise to the upside on Thursday. The Iran situation could escalate. But these are chapter headings, not the full story. The economy has been more resilient than nearly anyone expected when the war began, and that resilience has not broken. For long-term investors, the underlying picture continues to argue for staying engaged. We will keep you informed.

If you have any questions about your portfolio or what any of this means for your specific situation, please don’t hesitate to reach out to your CIAS Investment Adviser Representative. We are here to help you navigate these markets with confidence.

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Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The statements contained herein are solely based upon the opinions of Edward J. Sabo and the data available at the time of publication of this report, and there is no assurance that any predicted or implied results will actually occur. Information was obtained from third-party sources, which are believed to be reliable, but are not guaranteed as to their accuracy or completeness.

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