Following another weekend of zero trustworthy information on the war and peace front, financial markets were hoping to be able to focus their attention for a few days on the more tangible reality of earnings, economic data and evolving narratives surrounding interest rates and AI etc. as a banger of a month of May for stocks gave way to the final month of Q2 on Monday.

Energy traders ignored Trump’s advice to just“sit back and relax” and pushed the oil price back up above $90 after Iran announced that it was breaking off ceasefire negotiations with the US until Israel halted its deadly attacks in Gaza and Lebanon.

This created something of a speed-bump to the recent furious stock rally and the indexes closed barely changed but still fractionally higher enough for an eighth straight day in the green.

On Tuesday, Marvell (on a deal with Nvidia) and Hewlett Packard (on impressive earnings) became the latest tech stocks to explode higher. The indexes only inched up a little but still enough for new all-time highs for a fifth session running. For the S&P 500 index, it was the 14th record high of the year and the 20th for the NASDAQ.

Overnight into Wednesday, Trump declared negotiations with Iran to be “very boring” and implied that the Strait of Hormuz might not open before Labor Day which, along with more exchanges of fire in the region, kept the upward pressure on oil prices. Trump also decided that this would be a good time to revisit his dormant tariff policy, claiming to somehow suddenly care about international child labor laws as a pretext.

Stocks at last succumbed to the negativity and the indexes’ nine-day winning streak finally came to an end as stocks pulled back from their record levels early on and this time never recovered.

Wall Street’s worries spilled into Asian and European markets overnight with increasing concern about the consequences of Trump’s continued inability to bring to an end the war he started and his apparent loss of control and influence over Israel and Russia, third-party geopolitical actors who have both been intensifying their attacks on civilians.

Index heavyweight Broadcom bucked the trend with a poor earnings report and the stock (which had risen 38% since early April) was brutally punished when New York opened on Thursday.

Since Broadcom is the fifth highest constituent of the S&P 500 index and the fourth biggest in the NASDAQ, this put a lid on a broad market advance and the indexes closed little changed with signs of an investor rotation out of the Big Tech/AI stocks and into more old school names, as evidenced by the stupid dinosaur Dow Jones Industrial Average index reaching a new all-time record high while the NASDAQ tumbled.

The May Jobs Report dropped on Friday morning and showed a massive upside surprise in new payrolls although the unemployment rate remained unchanged at 4.3%. Average wages continue to fail to keep up with inflation. Interest rates soared and stocks dumped in response as financial markets reacted by fully pricing in a 0.25% Fed Funds Rate increase before year-end (see INTEREST RATE EXPECTATIONS below).

Things quickly snowballed into a full-blown tech wreck with a rush to the exits on fears of over-valuation in certain names, resulting in the indexes’ first weekly losses since March.

Interestingly, although the S&P 500 index plummeted by 2.7% on the day, less than half the stocks in the index moved lower at all, emphasizing the highly selective nature of the aggressive selling, which was heavily concentrated in large tech and AI stocks.

Some other things I’m thinking about ..

* There has been a subtle shift in Wall Street’s approach to the war. Fed up with having its chain yanked by endless gaslighting nonsense and confused false messaging about an imaginary peace deal that quite obviously doesn’t exist and the US Strategic Petroleum Reserve on pace to hit its lowest level since the early 1980s later this month, traders are now focusing on “Tank Bottom”. This is actual inventory data which suggests that, absent a deal to properly open the Strait of Hormuz soon, severe shortages of energy supplies (especially diesel) will start to noticeably hit US consumers and businesses hard as early as August.

* Crypto has utterly failed to participate in the recent risk-on environment, to put it mildly. Indeed, the price of Bitcoin plunged yet again last week to its lowest level since 2024. Over the last year as of Friday’s close, Bitcoin has fallen by 42% while the S&P 500 index has risen 26%, largely driven by AI. That’s a massive discrepancy for investors to handle and there has been some very significant institutional liquidation of crypto holdings and meaningful net outflows from crypto ETFs, demonstrating a clear shift in sentiment. There’s a certain irony in the fact that crypto is essentially being kept in its box by AI.

* All of the gains in the gold price since the end of last year have now been erased as it went negative for 2026 last week. The many investors who hopped on the bandwagon in late 2025 after falling for the media hype and the pervasive but false myth that precious metals are a good inflation hedge are now most likely nursing losses on their gold position and also missed out on stock market gains as an additional opportunity cost.

If you are not yet a financial planning or investment management client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

Misunderstanding the increasingly blurred line between investing and gambling can severely endanger your financial security. An important article from the wonderful Liz Ann Sonders.

.. AND I QUOTE ..

“Being force-fed shares of SpaceX, Anthropic and OpenAI [in their investment and retirement accounts] may be a bitter pill to swallow for the many, many Americans who are not at all excited about artificial intelligence. In April, a Gallup poll showed just 18% of people ages 14 to 29 feel hopeful about AI, down from 27% in 2025.”

Bess Levin, New York Magazine

LAST WEEK BY THE NUMBERS:

Last week’s S&P 500 market color courtesy of finviz.com

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. It fell 2.7% last week, is higher by 10.0% over the last three months and is up 8.6% so far this year.

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. It fell 3.6% last week, is higher by 11.3% over the last three months and is up 12.5% so far this year.

* VXUS, an International Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. It fell 3.6% last week, is higher by 6.6% over the last three months and is up 10.2% so far this year.

Data shown is total return (including dividends)

INTEREST RATES:

* FED FUNDS RATE * 3.625% (unchanged from a week ago)

* PRIME RATE ** 6.75% (unchanged from a week ago)

* 3 MONTH TREASURY 3.78% (3.69% a week ago)

* 2 YEAR TREASURY 4.17% (3.98% a week ago)

* 5 YEAR TREASURY 4.29% (4.13% a week ago)

* 10 YEAR TREASURY *** 4.55% (4.45% a week ago)

* 20 YEAR TREASURY 5.03% (4.98% a week ago)