U.S. stocks posted another month of solid gains in May, supported by continued strength in technology and artificial intelligence related sectors, better than expected corporate earnings, and optimism surrounding further geopolitical de-escalation in the Middle East. Inflation, however, remained a key concern, with April data coming in above expectations. Although first-quarter GDP growth was revised lower, overall economic activity continued to demonstrate resilience.
Bonds markets generated modest positive returns during the month, though rising yields created headwinds across portions of the bond market. Investors increasingly embraced a “higher-for-longer” interest rate outlook as inflation proved more persistent than anticipated, despite a recent decline in oil prices. The Federal Reserve maintained a cautious tone; sustained progress on inflation may be required before additional rate cuts are considered.
International stocks delivered strong performance, with emerging markets outpacing developed markets. In Asia, one of the strongest earnings seasons in recent years, combined with continued demand for technology and semiconductor-related companies, supported market performance. Meanwhile, economic growth across the Eurozone remained subdued as elevated energy costs and softer demand continued to weigh on activity. International bonds posted gains as relatively stable global interest-rate expectations provided support.
Looking ahead, investors will continue to monitor developments surrounding the conflict in Iran and the prospects for a lasting peace agreement in the region. Markets will also focus closely on the Federal Reserve’s June meeting, which will mark Kevin Warsh’s first meeting as Chair. The path of inflation, energy prices, labor market conditions, and interest rates will remain key drivers of market sentiment and asset prices in the months ahead.
Source: Morningstar, Inc. as of 5/31/2026.
Disclosure:Past performance does not guarantee or predict future results.There is no guarantee that any investment strategy, including those described here, will be successful. Any investment or investment strategy can lose money. You should not assume that any discussion or information contained in this market commentary serves as the receipt of, or as a substitute for, personalized investment advice from Raffa Investment Advisers (“Raffa”). This information was gathered from reliable sources, but we cannot guarantee accuracy or completeness. Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated. Raffa actively leverages Artificial Intelligence and Large Language Models within our operations. The use of such technologies, focusing on the safeguard of non-public personal information, protecting of trade secrets, verification of information accuracy, and other pertinent compliance considerations, is outlined in Raffa’s Compliance Manual and acknowledged by Raffa staff. All viewpoints and final content created was reviewed and approved by the Raffa team to verify accuracy, perspective, and compliance with our marketing guidelines.
May 2026 Market Commentary & Outlook
Market Commentary
U.S. stocks posted another month of solid gains in May, supported by continued strength in technology and artificial intelligence related sectors, better than expected corporate earnings, and optimism surrounding further geopolitical de-escalation in the Middle East. Inflation, however, remained a key concern, with April data coming in above expectations. Although first-quarter GDP growth was revised lower, overall economic activity continued to demonstrate resilience.
Bonds markets generated modest positive returns during the month, though rising yields created headwinds across portions of the bond market. Investors increasingly embraced a “higher-for-longer” interest rate outlook as inflation proved more persistent than anticipated, despite a recent decline in oil prices. The Federal Reserve maintained a cautious tone; sustained progress on inflation may be required before additional rate cuts are considered.
International stocks delivered strong performance, with emerging markets outpacing developed markets. In Asia, one of the strongest earnings seasons in recent years, combined with continued demand for technology and semiconductor-related companies, supported market performance. Meanwhile, economic growth across the Eurozone remained subdued as elevated energy costs and softer demand continued to weigh on activity. International bonds posted gains as relatively stable global interest-rate expectations provided support.
Looking ahead, investors will continue to monitor developments surrounding the conflict in Iran and the prospects for a lasting peace agreement in the region. Markets will also focus closely on the Federal Reserve’s June meeting, which will mark Kevin Warsh’s first meeting as Chair. The path of inflation, energy prices, labor market conditions, and interest rates will remain key drivers of market sentiment and asset prices in the months ahead.
Source: Morningstar, Inc. as of 5/31/2026.
Disclosure: Past performance does not guarantee or predict future results. There is no guarantee that any investment strategy, including those described here, will be successful. Any investment or investment strategy can lose money. You should not assume that any discussion or information contained in this market commentary serves as the receipt of, or as a substitute for, personalized investment advice from Raffa Investment Advisers (“Raffa”). This information was gathered from reliable sources, but we cannot guarantee accuracy or completeness. Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated. Raffa actively leverages Artificial Intelligence and Large Language Models within our operations. The use of such technologies, focusing on the safeguard of non-public personal information, protecting of trade secrets, verification of information accuracy, and other pertinent compliance considerations, is outlined in Raffa’s Compliance Manual and acknowledged by Raffa staff. All viewpoints and final content created was reviewed and approved by the Raffa team to verify accuracy, perspective, and compliance with our marketing guidelines.