--- title: May 2026 Market Update | Sanderson Wealth Management description: Markets reached record highs in May, but a narrowing rally, rising inflation, and new Fed leadership warrant a closer look at risk. image: https://insights.sandersonllc.com/hubfs/May%202026.png --- - [716.566.2420](tel:716-566-2420) - [Client Login](https://www.sandersonllc.com/client-login/) [![Sanderson Wealth Management](https://insights.sandersonllc.com/hubfs/Sanderson_October2019%20Theme/Images/sanderson-logo-stacked@2x.png)](https://www.sandersonllc.com/) - About - [Services](https://www.sandersonllc.com/services/) - [Our Team](https://www.sandersonllc.com/team/) - [John Sanderson](https://www.sandersonllc.com/team/john-sanderson/) - [Justin Sanderson](https://www.sandersonllc.com/team/justin-sanderson/) - [James Warner](https://www.sandersonllc.com/team/james-warner/) - [C. 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The S&P 500 rose 5.3%, its ninth straight weekly advance. While every major geographic region posted gains, leadership narrowed beneath the surface: technology drove a disproportionate share of returns, and most sectors declined during the month. ## Market Moves U.S. large caps gained 5.3%, while mid- and small-caps added 2.5% and 1.0%. Growth led domestic styles, jumping 7.2% on renewed AI enthusiasm versus 2.9% for value, though growth still trails year-to-date (8.8%) behind value (13.9%) and small caps (15.5%). Overseas, foreign developed stocks rose 3.2% and emerging markets surged 9.7%, extending a 25.7% year-to-date gain. Global stocks as a whole rose 5.2%, up 12.4% for the year. ## Earnings, AI, and Concentration The rally rested on earnings: According to FactSet, roughly 85% of S&P 500 companies beat first-quarter expectations, the highest percentage in 5 years, led by technology and energy. Enthusiasm around artificial intelligence reaccelerated, with the four largest U.S. hyperscalers on track to spend approximately $700 billion on AI data-center infrastructure in 2026, based on their latest quarterly results. The flip side is concentration: eight of 11 sectors declined in May even as the index set records. Technology led by a wide margin, rising 20% for a second straight month and finishing more than 16% ahead of Health Care in second place, while energy lagged again, down 5.6%. Narrow leadership can persist, but it reinforces the importance of valuation discipline and diversification. ## The Fed and Inflation May also brought a change atop the Federal Reserve, as Jerome Powell's eight-year tenure ended and Kevin Warsh was sworn in mid-month. He inherits a tricky backdrop: Inflation rose to 3.8%, its highest in three years. As prices firm and the labor market holds up, hopes for near-term rate cuts have faded. As of late May, the CME FedWatch Tool indicates markets anticipate the Federal Reserve will hold interest rates steady in June, while increasingly pricing in potential rate hikes later in the year over cuts. Treasury yields drifted higher, the 10-year ending at 4.45% and the 2-year at 3.98%, while mortgage rates rose to 6.53%. ## Energy and the Economy Energy offered some inflation relief, but not at the pump. A fragile U.S.-Iran ceasefire framework eased the supply fears behind March's selloff, and WTI crude fell to $97.63 from $108.64, though gasoline stayed high. The labor market held steady: unemployment was unchanged at 4.3% for a second consecutive month, and the U.S. added 115,000 jobs, well above the 55,000 expected, even as labor force participation slipped 0.1 point to 61.8%. ## Looking Ahead May was a month to appreciate (record highs, strong earnings, and broad regional gains) but also one for measured caution, with leadership narrowing, inflation firming, and Fed policy less certain under new leadership. It's a good time to celebrate progress while taking an honest look at risk. As always, diversification across regions, sectors, and asset classes remains warranted for whatever the second half of 2026 brings. ![Stock Summary 5.26](https://insights.sandersonllc.com/hs-fs/hubfs/Stock%20Summary%205.26.png?width=800&height=352&name=Stock%20Summary%205.26.png) ![Market Indicators 5.26](https://insights.sandersonllc.com/hs-fs/hubfs/Market%20Indicators%205.26.png?width=800&height=425&name=Market%20Indicators%205.26.png)   ## Disclosure © 2026 Sanderson Wealth Management LLC. This information is not intended to be and should not be treated as legal, investment, accounting or tax advice and is for informational purposes only. Readers, including professionals, should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal, accounting, or tax advice from their own counsel. All information discussed herein is current as of the date appearing in this material and is subject to change at any time without notice. Opinions expressed are those of the author, do not necessarily reflect the opinions of Sanderson Wealth Management, and are subject to change without notice. The information has been obtained from sources believed to be reliable, but its accuracy and interpretation are not guaranteed. ### Let’s talk about your future. 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