Public Markets 3 Days

Last updated: May 27, 2026, 8:30 AM ET

Equities & the AI-Fueled Rally

U.S. stock futures extended record highs with S&P 500 index futures rising 0.3% by midweek, as optimism over artificial intelligence, falling oil prices, and easing bond yields fueled a broad risk-on trade. The rally showed particular strength in chipmakers, with SK Hynix's market value topping $1 trillion and Korea's Kospi index doubling over the past year, a run that analysts are comparing to the Nasdaq bubble of 1999. Across the Atlantic, European stocks neared record levels as technology shares climbed and easing geopolitical tensions sent oil prices lower. Goldman Sachs Group Inc. raised its S&P 500 price target to 8,000, joining peers at Morgan Stanley and Deutsche Bank AG in forecasting a 17% return for the index this year, driven by AI earnings momentum. In another signal of the tech surge, TSMC chief C.C. Wei pledged a more than 30% bump in profit-sharing payouts for staff as AI-driven margins soar, while Samsung workers approved an AI profit-sharing deal that guarantees hefty bonuses for chip-unit employees. The enthusiasm has also lifted PDD Holdings, parent of the bargain-shopping app Temu, though the company reported a first-quarter profit miss amid fierce competition in China, tempering some of the exuberance.

Geopolitics & Energy Markets

The broader rally has been underpinned by optimism that U.S.-Iran negotiations to reopen the Strait of Hormuz remain on track, even as fresh clashes in the Persian Gulf weighed on peace hopes. Oil futures pulled back on the diplomatic signal, with prices easing as traders priced in the possibility of a deal that would unblock critical supply routes. European natural-gas prices slid 5% on the same optimism, while U.S. mortgage rates climbed to their highest level since August, restraining home-purchase activity and prompting a sharp pullback in refinancing volume. The Iran war has also prompted a warning from the European Central Bank, with Vice President Luis de Guindos saying the bank must weigh weaker growth from the conflict when deciding on rates next month. ECB Governing Council member Gabriel Makhlouf stressed the bank's commitment to its 2% inflation target but declined to say whether that would require a rate hike in June. Meanwhile, the ECB warned that leveraged hedge fund bets risk bond market instability and cautioned that financial markets are in danger of a sudden and sharp repricing, with investors downplaying threats from the Iran war and other geopolitical risks.

Retail & Consumer Spending

Retail earnings painted a mixed picture as consumers navigated inflationary pressures. Dick's Sporting Goods reported higher first-quarter sales as its turnaround of the recently acquired Foot Locker delivered results, while Lululemon settled a dispute with founder Chip Wilson, agreeing to add two directors of his choosing in exchange for his agreement to stop publicly criticizing the company. On the other end, Bath & Body Works posted lower first-quarter sales as the company overhauls its strategy to return to growth, and U.S. grocery prices are poised to rise further as another inflation wave hits the food aisles alongside a surge in pump prices. Waitrose is cutting prices to compete for affluent shoppers as slowing grocery sales ignite a battle for the cost-conscious middle class, while Pets at Home saw sales boost from new product lines and lower prices even as profits fell 60%. In New York, hotel workers secured a hefty pay raise under a new union contract, with guests set to foot the bill through already sky-high room rates.

Debt Markets & Corporate Finance

Corporate credit markets remained active despite elevated rates. Warner Bros. Discovery tightened pricing on a $15 billion loan facility a day after upsizing the deal, capitalizing on investor appetite for corporate credit. Ellison privately vowed to keep Paramount's enlarged debt in line as credit analysts scrutinized the Skydance takeover of Warner Bros. Discovery. The ECB warned that the Iran war and U.S. trade volatility could trigger a financial crisis, a concern echoed by advisers to German Chancellor Friedrich Merz, who almost halved their growth forecast as Middle East tensions and trade policy weighed on activity. In banking, Bank of Montreal raised its dividend after logging stronger second-quarter earnings on robust fee revenue, while Scotiabank bumped up its payout as profit climbed on lower credit-loss provisions. South African lenders raised $43 million in loss-absorbing debt to comply with new central bank capital rules, with Sasol's shares doubling this year but drawing analyst skepticism. India's richest civic body plans to raise up to $992 million in municipal bonds, and the country is preparing a $1 billion stake sale in LIC for next month.

China & Tech Listings

China's tech sector saw major developments on the listing front. Memory chip maker CXMT cleared its Shanghai listing review for an approximately $4 billion share offering, on track to be the biggest IPO in mainland China since 2022. China let its one-year policy loan rate fall to a record low to support the economy, while PDD reported a first-quarter profit miss amid fierce domestic competition. SpaceX's rocket monopoly is giving it an edge in the IPO race over OpenAI, and Powerlaw Corp., a closed-end fund owning stakes in SpaceX and OpenAI, is set to debut on Nasdaq. The AI boom is also reshaping traditional industries, with Ford's stock surging on its energy-storage business and Capgemini targeting a 5.5% to 7.5% annual growth rate from agentic AI applications.

Political & Social Developments

In Texas politics, Ken Paxton's victory in the Republican primary over John Cornyn has set up a general-election clash Democrats hoped for, with analysts saying the win could turn Texas into a battleground state that determines Senate control. The pope's appeal to slow down AI development ran into the basic problems of game theory, as an AI-generated video of reality TV star Spencer Pratt illustrated the growing sophistication of political messaging. Meanwhile, the Russian Black Sea port of Tuapse suffered a fire after a Ukrainian drone strike, and Iranians emerged from a three-month internet shutdown as authorities eased restrictions. Uzbekistan resumed full-scale gold exports worth $1.5 billion through April after a half-year pause, while aluminum hit a four-year high on fears of China output cuts compounded by Middle East disruptions. Gold settled 0.46% lower at $4,500.40 as fresh Gulf clashes weighed on peace-deal hopes.