• Stocks in risk-off mode —U.S. equity markets were lower on Wednesday after a nine-day winning streak for the S&P 500. The S&P fell about 0.7%, the technology-heavy Nasdaq fell about 0.9%, and Dow Jones was down about 1.2%. This comes as oil prices moved higher and U.S. bond yields climbed as well, dampening market sentiment. From a sector-leadership perspective, energy and consumer staples led the gains, while the technology and financials sectors lagged. U.S. small-cap stocks also underperformed on Wednesday, as uncertainty around U.S.-Iran negotiations and elevated oil prices likely weighed on the outlook for smaller companies. Overall, after a nice rally in U.S. and global equities, we would expect some periods of volatility as investors digest recent gains. However, keep in mind that, historically, the period after U.S. midterm elections tends to be favorable for equity investors.
   
• Inflation remains uncomfortably elevated in Q1 — In last week's first-quarter GDP data, inflation saw a notable move higher. The personal spending deflator, the Fed's preferred measure of inflation, spiked to 3.5% over the first quarter as a whole. Worse, monthly data showed that this jumped even further in April, to 3.8%, and we expect another nudge higher in May. Some of this is an oil story, as gas prices push inflation higher. However, excluding energy prices, inflation was running at 3.3% in April, well above the Fed's target for 2%. Scratching further beneath the surface, core goods prices are running unusually hot at 2.8%, while core services inflation remains elevated at 3.5%. These data put the Fed in a tough spot, and it is interesting to see markets continue to price a hike within the next year, even as risk around oil prices seemingly ease. We think the bar for raising rates remains high, and we don't expect tighter policy unless we see signs of a further pick-up in price growth, particularly on the core side. Instead, we expect the central bank to stay on hold absent any growth scare. Bottom line, in our view: While bond yields have fallen from their highs, further material progress will likely be challenging in an environment of elevated inflation and solid growth.
   
• Employment data takes center stage — Labor-market data will be in focus for investors this week, beginning with Tuesday's JOLTS job openings release for April. Job openings rose to 7.6 million— the highest level since May 2024 — and signaling steady demand for labor, in our view. The ADP private employment report for May also pointed to steady gains, with 122,000 jobs added, versus forecasts for 120,000. The main event will be Friday’s nonfarm-payrolls and unemployment-rate data for May. Economists expect the recent trend of steady job growth and limited layoffs to have persisted, with nonfarm payrolls projected to rise by 100,000 and the unemployment rate holding at 4.3%. So far in 2026, job growth has stabilized, with payrolls averaging monthly gains of 76,000—an improvement from roughly 10,000 per month in 2025. Signs of firing also remain limited. The unemployment rate has held steady at 4.3% for two consecutive months and has been below 5% since 2021. Other measures of layoffs are similarly contained, with initial jobless claims averaging 211,000 this year versus a 30-year average above 300,000. We continue to view 2026 as a year of modest nonfarm-payroll growth—likely in the 50,000 to 100,000 range per month—alongside restrained layoffs, keeping the unemployment rate relatively stable. The key takeaway, in our view, is that steady labor-market conditions should continue to support healthy consumer spending and broader economic activity through the remainder of the year.

Mona Mahajan;
Investment Strategy

^{Source for all data: FactSet.} 

• Stocks close higher with key labor-market data on the horizon —U.S. equity markets finished higher on Tuesday, as investors focused on a busy week of labor-market data. April JOLTS job openings came in well above expectations, rising to 7.6 million — the highest level since May 2024 — and signaling steady demand for labor, in our view. Attention now turns to Friday’s employment report, which will provide an update on nonfarm-payroll growth and the unemployment rate. From a market-leadership perspective, most S&P 500 sectors closed higher, with cyclical areas such as materials, energy and industrials among the top performers. Communication services was the notable laggard, weighed down by shares of Alphabet following the company’s announcement that it plans to raise $80 billion through an equity offering to support AI-related investments. U.S. small-cap stocks also stood out, outperforming likely on the upbeat job-openings data, in our view, with the Russell 2000 rising 0.9%. In bond markets, Treasury yields were little changed, with the 10-year Treasury yield closing at 4.45% and the 2-year yield at 4.05%. Oil prices edged higher, with WTI crude closing around $94 per barrel, as uncertainty remains around the path forward for U.S.-Iran negotiations.
   
• Stocks rallied through May—what does history suggest lies ahead? — U.S. equities posted strong gains over the first five months of 2026, as resilient economic data and solid corporate profit growth outweighed the headwinds from higher oil prices and geopolitical uncertainty. The S&P 500 Price Index rose 10.7% through May, marking the strongest start to a year since 2021. Since 1970, there have been 14 instances in which the S&P 500 gained 10% or more over the first five months of the year.* In those cases, the index delivered an average return of 7.2% over the remainder of the year, with positive returns in 11 of 14 instances (79%).* Looking at the five most recent occurrences (2024, 2021, 2013, 1998, and 1997), equities went on to gain an average of 13.1%, with returns positive in each case from June through December.* While there's no guarantee history will repeat itself in 2026, we believe a solid fundamental backdrop—supported by strong profit growth, steady economic activity, and stable labor-market conditions—provides a constructive environment for equities over the remainder of the year.
   
• Employment data takes center stage — Labor-market data will be in focus for investors this week, beginning with today's JOLTS job openings release for April. Job openings rose to 7.6 million— the highest level since May 2024 — and signaling steady demand for labor, in our view. The ADP private employment report for May follows tomorrow, while the main event will be Friday’s nonfarm-payrolls and unemployment-rate data for May. Economists expect the recent trend of steady job growth and limited layoffs to have persisted, with nonfarm payrolls projected to rise by 100,000 and the unemployment rate holding at 4.3%. So far in 2026, job growth has stabilized, with payrolls averaging monthly gains of 76,000—an improvement from roughly 10,000 per month in 2025. Signs of firing also remain limited. The unemployment rate has held steady at 4.3% for two consecutive months and has been below 5% since 2021. Other measures of layoffs are similarly contained, with initial jobless claims averaging 211,000 this year versus a 30-year average above 300,000. We continue to view 2026 as a year of modest nonfarm-payroll growth—likely in the 50,000–100,000 range per month—alongside restrained layoffs, keeping the unemployment rate relatively stable. The key takeaway, in our view, is that steady labor-market conditions should continue to support healthy consumer spending and broader economic activity through the remainder of the year.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data not cited: FactSet. 
Source for all data cited: *FactSet, Edward Jones. S&P 500 Price Index.} 

• Tech rally leads markets higher despite geopolitical uncertainty — U.S. equity markets closed higher on Monday, despite uncertainty surrounding the path forward for U.S.–Iran negotiations, as well as reports that the U.S. struck Iranian radar and drone sites over the weekend. Despite the geopolitical flare-up, a surge in the technology sector drove gains across all three major U.S. indices. The rally in tech shares was fueled by NVIDIA’s unveiling of a new semiconductor chip designed for personal laptops. Outside of technology, energy was the only other S&P 500 sector to finish higher on Monday. Overseas, European markets were mostly lower, while Asian equities moved higher overnight, led by South Korea’s KOSPI Index, which gained more than 3% amid continued strength in global technology shares. Oil prices also closed higher, with WTI crude rising to $92 per barrel. Treasury yields increased alongside heightened geopolitical uncertainty, with the 10-year yield climbing to 4.46%.
   
• Markets are back at all-time highs. Can the rally continue? — Equity markets have staged an impressive rebound following the March pullback, with the S&P 500 gaining roughly 20%, including dividends, since March 30, while the technology-heavy Nasdaq has advanced nearly 30%. Strong technology earnings and a de-escalation in the war with Iran have been the primary catalysts behind the rally, supporting investor risk appetite over the past two months. Historical seasonality trends suggest the momentum could continue into June. Since 1970, the S&P 500 has generated an average June return of 0.5%, with positive returns occurring 61% of the time.* While those results are not meaningfully stronger than the average month, seasonal trends have been particularly favorable in recent years. Since 2015, the index has gained an average of 1.5% in June, with positive returns in 82% of those years.* That momentum has also tended to carry into July, as the S&P 500 has averaged a 3.2% gain and posted positive returns in every July since 2015.* While there's no promise history will repeat itself this year, we continue to believe the fundamental backdrop for equities remains supportive. Steady economic activity and resilient earnings growth should continue to provide a constructive environment for equity markets, in our view.
   
• May performance recap — Equity markets built on April’s strong momentum in May, with the S&P 500 posting its ninth consecutive weekly gain last Friday and returning 5.3% for the month, including dividends. Investor sentiment was supported by strong corporate earnings growth and expectations for a diplomatic resolution to the war in Iran, which helped drive oil prices lower during the month. From a leadership perspective, the technology sector led the way, gaining 16% in May following strong first-quarter earnings results and continued robust demand for AI-related investment. However, strength in equities was not limited to the U.S. Emerging-market equities gained nearly 10%, led by technology-heavy regions such as Taiwan and Korea, which also continue to benefit from ongoing AI-driven semiconductor spending. International developed large-cap stocks — primarily companies in Europe and Japan — also moved higher, gaining more than 3% for the month and benefiting from lower oil prices. Despite the volatility experienced in March and continued geopolitical uncertainty, each of our recommended equity asset classes has returned more than 9% year to date. Given the sharp rebound from the March lows, we believe a period of consolidation would be normal. Even so, the fundamental backdrop for equities remains constructive in our view, supported by strong corporate profit growth, healthy economic activity, and stable labor-market conditions.

Brock Weimer, CFA;
Investment Strategy

^{Source: FactSet. 
*FactSet, Edward Jones. S&P 500 Price Index.} 

• Stocks add to gains on Middle East ceasefire optimism - Ongoing reports that the U.S. and Iran have reached an agreement to extend their ceasefire by 60 days continue to support investor sentiment. Major equity indexes were slightly higher on Friday and posted their ninth consecutive weekly gain. Oil prices were down about 1.5% today and almost 10% lower for the week, trading near $88 per barrel amid hopes that the Strait of Hormuz will reopen. AI-driven demand continues to support earnings, as illustrated by a 30% jump in shares of Dell Technologies. The company delivered a sales outlook well above consensus estimates, driven by strong demand for AI-related server infrastructure. Tech was a major driver behind the S&P 500's May strength rising 16%. Nonetheless, both the equal-weight S&P 500 and small-cap indexes reached new highs this month, suggesting early signs of broadening market leadership as bond yields retreat.
   
• S&P 500 posts a ninth consecutive week of gains - Despite persistent geopolitical headline noise, U.S. equities have continued to move higher, with the S&P 500 logging 22 record highs so far this year. The rally has been largely tech-led and supported by resilient earnings, but the key question is whether it can be sustained. A nine-week winning streak is a rare occurrence historically. Over the past 70 years, this has only happened 12 other times. Notably, these streaks have tended to occur earlier in the bull market cycle, rather than at its end. Forward returns following similar periods have generally been positive. Three- and six-month and one-year returns were positive in most instances *. The key takeaway, in our view, is that while the market may pause in the near term to consolidate gains, this type of strength has not historically signaled that a peak is imminent.
   
• Inflation is a key risk for the Fed as labor market concerns ease - This week, several Fed officials expressed concern about the recent uptick in inflation, which has pressured bond returns. The recent pullback in oil prices is helping to ease some of those worries, with the 10-year Treasury yield falling below 4.5%. However, with inflation moving further away from the Fed’s 2% target and labor market trends stabilizing or even improving, policymakers may begin to shift away from their easing bias at the June meeting. Looking ahead, next week’s focus will be on the monthly jobs report, which is expected to show a solid pace of job gains of around 100,000, alongside a steady unemployment rate of 4.3%. We expect the Fed to remain vigilant but are unlikely to overreact to what may prove to be a temporary, energy-driven inflation spike. In our base case scenario, we expect the Fed to remain on hold this year and resume rate cuts next year.

Angelo Kourkafas, CFA;
Investment Strategy

^{*Bloomberg, Edward Jones; Source for all data not cited: Bloomberg, FactSet.} 

• Stocks gain with inflation in focus – Equity markets closed higher on Thursday after the April personal consumption expenditures, or PCE, inflation report came in largely in line with expectations. Additionally, initial jobless claims remained contained at 215,000 last week, while first-quarter real GDP was revised lower to 1.6% amid downward revisions to investment and consumer spending. From a leadership perspective, the health care and technology sectors were the top performers, with each gaining more than 1%. Technology was supported by strength among software names following better-than-expected earnings from Snowflake, while strong results from Agilent helped lift sentiment across the health care sector. Bond yields finished slightly lower, with the 10-year Treasury yield closing at 4.45% and the 2-year yield at 4.02%. Oil prices ended only modestly higher, at around $89 per barrel, reversing larger gains from earlier in the day following reports that U.S. and Iranian negotiators reached a memorandum of understanding to extend the ceasefire and begin further negotiations on Iran’s nuclear program.
   
• April inflation data in line with expectations - Inflation was in focus on Thursday, with April personal consumption expenditures (PCE) inflation released this morning. Headline PCE rose 0.4% for the month, driven in part by a 5.5% increase in gasoline prices, and was up 3.8% from a year ago. Core PCE, which excludes food and energy, rose 0.24% for the month and 3.3% on an annual basis. The April reading brought the three-month annualized rate of core PCE to 3.8%, underscoring that near-term inflation pressures remain above the Federal Reserve’s 2% target. In our view, today’s data reinforces the likelihood that the Fed will remain on hold in the near term. That said, we believe the bar for rate hikes remains high, especially as labor-market conditions have come into better balance and annual wage growth has slowed from nearly 6% in 2022 to around 3.5% in April. Taken together, these conditions support a patient approach from the Fed, and in our view, policymakers are likely to hold interest rates steady this year.
   
• Tech-led rally has markets back to all-time highs. Where to from here? – After a volatile close to the first quarter, when the S&P 500 fell 9% from its prior all-time high, equities have staged an impressive rebound since April. The S&P 500 has gained more than 18% since March 30, while the technology-heavy Nasdaq has risen 28%. The rally has been even more pronounced in semiconductors, with the PHLX Semiconductor Index up 80% over the same period, supported by continued AI-related capital spending. While we would not characterize markets as cheap, valuations have not expanded meaningfully during this rally. In fact, both the S&P 500 and Nasdaq are trading at forward price-to-earnings multiples below where they began the year, while the PHLX Semiconductor Index’s forward multiple is little changed. This suggests that the recent move higher has been driven by strong corporate profit growth as opposed to expanding valuations. First-quarter S&P 500 earnings per share rose nearly 27% from a year ago, helped by strength in technology and AI-exposed areas of the market. Importantly, earnings growth has not been limited to tech. Cyclical sectors such as financials, industrials and materials also posted earnings growth of more than 20%, pointing to broader strength in corporate fundamentals. After such a sharp move higher, a period of consolidation would not be surprising. However, we believe the broader backdrop for equities remains supportive, underpinned by solid profit growth, steady economic activity and resilient labor-market conditions.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data not cited: FactSet.}