Beyond the AI Hyperscalers

Beyond the AI Hyperscalers

Performance Review & Outlook

Highlights

  • U.S. Treasury yields hit multi-year highs in May, with the 10-year reaching 4.70% and the 30-year briefly breaching 5.00% for the first time since 2007, driven by hotter-than-expected inflation data, hawkish Fed commentary, and questions around incoming Fed Chair Kevin Warsh’s policy outlook.
  • Both yields retreated by month-end, with the 10-year closing at 4.44% and the 30-year at 4.98%, aided by progress on a Middle East peace deal, an in-line PCE reading, and a roughly 15% drop in oil prices.
  • The month closed constructively, with renewed Middle East peace deal optimism and a roughly 15% drop in oil prices stabilizing sentiment heading into June.
  • May presented equity markets with a familiar tension between resilient domestic fundamentals and Iran conflict uncertainty, as markets digested April’s rally that carried the S&P 500 above 7,000 for the first time, with oil prices the central variable throughout.
  • The fundamental earnings backdrop remained supportive, with 2026 S&P 500 earnings growth estimates rising from 15% to 22% since January—we remain constructive while emphasizing balance, diversification, and disciplined rebalancing.
  • Technology leadership continued to broaden, reflecting growing recognition that AI infrastructure spending benefits extend well beyond the hyperscalers.

Equity Market Overview

May presented equity markets with a familiar tension between resilient domestic fundamentals and the persistent uncertainty of the Iran conflict.

After April’s powerful risk-on rally that carried the S&P 500 above 7,000 for the first time, May proved more measured as markets digested outsized gains while continuing to grapple with the stop-start nature of geopolitical developments in the Middle East.

 

Dreams are important.
Aspirations are what help make goals reality.

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