Most major U.S. stock indexes finished last week lower as optimism surrounding large-cap technology and artificial intelligence (AI)-related stocks was largely outweighed by concerns around accelerating inflation, rising Treasury yields, elevated oil prices, and lingering geopolitical uncertainty.
Within the S&P 500 Index—which closed at a record high on Thursday before pulling back Friday—the energy sector advanced the most, while consumer staples and information technology also posted gains. On the other hand, the consumer discretionary, real estate, and materials sectors led declines.
Last week’s defining story was inflation, with both consumer and producer prices rising at the fastest pace in years. Treasury bonds fell as interest rates rose, while corporate bonds outperformed as credit spreads tightened. U.S. Treasuries also fell over the week as yields increased across most maturities in response to higher energy prices and the week’s hotter-than-expected inflation data. (Bond prices and yields move in opposite directions).
As of Friday afternoon, the yield on the benchmark U.S. 10-year Treasury note had increased to around 4.59%, the highest level in over a year. Oil prices climbed as Middle East tensions re-escalated, and international stocks again underperformed U.S. stocks.
This week’s big events are Nvidia’s earnings report, which will provide more insight into AI capex spending while Walmart / Target share insights about the U.S. consumer and Home Depot / Lowe’s discuss the housing market.
Key Takeaways
1. Inflation Came in Hot, with Both Consumer and Wholesale Prices Surprising to the Upside
Consumer prices rose +3.8% year-over-year in April, the highest in nearly three years. Wholesale prices delivered the bigger surprise at +6.0% y/y, the largest annual gain since December 2022. The two reports measure inflation at different points in the supply chain: wholesale captures what businesses pay, while consumer prices capture what households pay. A hot wholesale print signals the potential for more inflation pass-through. Higher gas prices drove a large share of both increases, but the rise wasn’t limited to energy, with service categories like airfare, hotels, and rent also rising.
Why it matters: The inflation that’s been building in energy markets is now showing up in the data, and the pressure is spreading beyond energy.
2. Oil Prices Rose as U.S.-Iran Tensions Re-Escalated This Week
Oil rose more than +5%, with most of the move coming Monday after President Trump told reporters the Iranian ceasefire was “on life support.” Energy was the second-best-performing sector of the week. Gasoline prices remain near $4.50 a gallon nationally, and the White House floated suspending the federal gas tax, an acknowledgment that pump prices have become a political concern.
Why it matters: The supply side of the inflation story remains unresolved. The longer oil stays elevated, the more the cost shows up in everyday spending categories like fuel, food, and transportation.
3. Interest Rates Rose as Investors Absorbed Inflation Data
Treasury yields rose across the yield curve, including longer-term yields, which was notable. The move higher in long-term yields suggests the market expects inflation to remain elevated, with the 30-year yield rising above 5%. Shorter-term interest rates also rose, an indication the market believes persistent inflation could pressure the Fed to raise interest rates. In related news, the Senate confirmed Kevin Warsh as the next Fed chair by the slimmest margin in modern history, with his first meeting in June.
Why it matters: Futures markets price in zero rate cuts for the rest of 2026, with consensus shifting toward interest rates staying higher for longer.
4. Major Stock Indexes Continued to Set Highs Despite the Rally Remaining Narrow
The S&P 500 and Nasdaq both closed at new all-time highs, gaining more than +2% each. Most of the gain came Wednesday on the start of a Trump-Xi summit in Beijing and strong moves in mega-cap tech stocks, with Apple crossing $300 a share for the first time. Beneath the index level, small-cap stocks and the equal weight factor produced modest gains. Sector leadership rotated as well, with energy and defensive areas like healthcare and consumer staples rising while financials and industrials declined.
Why it matters: The major indexes continue to set new highs, but the broader market paused this week. The divergence doesn’t necessarily break the rally’s longer trend, but it’s worth watching as the inflation and interest rate situation develops.
5. Consumers Continue to Spend Despite Rising Energy Costs
April retail sales beat expectations, growing +4.9% year-over-year. Excluding autos and fuel, the categories most affected by inflation, spending rose +0.5% month-over-month.
Why it matters: April’s retail sales data is encouraging because it suggests consumer spending continues to hold up despite rising energy costs. The consumer’s strength is one of the key trends to monitor through the rest of the year. If spending slows due to higher prices, it could lead to slower economic growth.
Weekly Commentary
Inflation Came In Hot Which Cooled Equity Markets
Stuart Katz
Executive Summary
Most major U.S. stock indexes finished last week lower as optimism surrounding large-cap technology and artificial intelligence (AI)-related stocks was largely outweighed by concerns around accelerating inflation, rising Treasury yields, elevated oil prices, and lingering geopolitical uncertainty.
Within the S&P 500 Index—which closed at a record high on Thursday before pulling back Friday—the energy sector advanced the most, while consumer staples and information technology also posted gains. On the other hand, the consumer discretionary, real estate, and materials sectors led declines.
Last week’s defining story was inflation, with both consumer and producer prices rising at the fastest pace in years. Treasury bonds fell as interest rates rose, while corporate bonds outperformed as credit spreads tightened. U.S. Treasuries also fell over the week as yields increased across most maturities in response to higher energy prices and the week’s hotter-than-expected inflation data. (Bond prices and yields move in opposite directions).
As of Friday afternoon, the yield on the benchmark U.S. 10-year Treasury note had increased to around 4.59%, the highest level in over a year. Oil prices climbed as Middle East tensions re-escalated, and international stocks again underperformed U.S. stocks.
This week’s big events are Nvidia’s earnings report, which will provide more insight into AI capex spending while Walmart / Target share insights about the U.S. consumer and Home Depot / Lowe’s discuss the housing market.
Key Takeaways
1. Inflation Came in Hot, with Both Consumer and Wholesale Prices Surprising to the Upside
Consumer prices rose +3.8% year-over-year in April, the highest in nearly three years. Wholesale prices delivered the bigger surprise at +6.0% y/y, the largest annual gain since December 2022. The two reports measure inflation at different points in the supply chain: wholesale captures what businesses pay, while consumer prices capture what households pay. A hot wholesale print signals the potential for more inflation pass-through. Higher gas prices drove a large share of both increases, but the rise wasn’t limited to energy, with service categories like airfare, hotels, and rent also rising.
Why it matters: The inflation that’s been building in energy markets is now showing up in the data, and the pressure is spreading beyond energy.
2. Oil Prices Rose as U.S.-Iran Tensions Re-Escalated This Week
Oil rose more than +5%, with most of the move coming Monday after President Trump told reporters the Iranian ceasefire was “on life support.” Energy was the second-best-performing sector of the week. Gasoline prices remain near $4.50 a gallon nationally, and the White House floated suspending the federal gas tax, an acknowledgment that pump prices have become a political concern.
Why it matters: The supply side of the inflation story remains unresolved. The longer oil stays elevated, the more the cost shows up in everyday spending categories like fuel, food, and transportation.
3. Interest Rates Rose as Investors Absorbed Inflation Data
Treasury yields rose across the yield curve, including longer-term yields, which was notable. The move higher in long-term yields suggests the market expects inflation to remain elevated, with the 30-year yield rising above 5%. Shorter-term interest rates also rose, an indication the market believes persistent inflation could pressure the Fed to raise interest rates. In related news, the Senate confirmed Kevin Warsh as the next Fed chair by the slimmest margin in modern history, with his first meeting in June.
Why it matters: Futures markets price in zero rate cuts for the rest of 2026, with consensus shifting toward interest rates staying higher for longer.
4. Major Stock Indexes Continued to Set Highs Despite the Rally Remaining Narrow
The S&P 500 and Nasdaq both closed at new all-time highs, gaining more than +2% each. Most of the gain came Wednesday on the start of a Trump-Xi summit in Beijing and strong moves in mega-cap tech stocks, with Apple crossing $300 a share for the first time. Beneath the index level, small-cap stocks and the equal weight factor produced modest gains. Sector leadership rotated as well, with energy and defensive areas like healthcare and consumer staples rising while financials and industrials declined.
Why it matters: The major indexes continue to set new highs, but the broader market paused this week. The divergence doesn’t necessarily break the rally’s longer trend, but it’s worth watching as the inflation and interest rate situation develops.
5. Consumers Continue to Spend Despite Rising Energy Costs
April retail sales beat expectations, growing +4.9% year-over-year. Excluding autos and fuel, the categories most affected by inflation, spending rose +0.5% month-over-month.
Why it matters: April’s retail sales data is encouraging because it suggests consumer spending continues to hold up despite rising energy costs. The consumer’s strength is one of the key trends to monitor through the rest of the year. If spending slows due to higher prices, it could lead to slower economic growth.
Disclosure and Source
Investment advisory services offered through Robertson Stephens Wealth Management, LLC (“Robertson Stephens”), an SEC-registered investment advisor. Registration does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. This material is for general informational purposes only and should not be construed as investment, tax or legal advice. It does not constitute a recommendation or offer to buy or sell any security, has not been tailored to the needs of any specific investor, and should not provide the basis for any investment decision. Please consult with your Advisor prior to making any Investment decisions. The information contained herein was carefully compiled from sources believed to be reliable, but Robertson Stephens cannot guarantee its accuracy or completeness. Information, views and opinions are current as of the date of this presentation, are based on the information available at the time, and are subject to change based on market and other conditions. Robertson Stephens assumes no duty to update this information. Unless otherwise noted, any individual opinions presented are those of the author and not necessarily those of Robertson Stephens. Indices are unmanaged and reflect the reinvestment of all income or dividends but do not reflect the deduction of any fees or expenses which would reduce returns. Past performance does not guarantee future results. Forward-looking performance targets or estimates are not guaranteed and may not be achieved. Investing entails risks, including possible loss of principal. Alternative investments are only available to qualified investors and are not suitable for all investors. Alternative investments include risks such as illiquidity, long time horizons, reduced transparency, and significant loss of principal. This material is an investment advisory publication intended for investment advisory clients and prospective clients only. Robertson Stephens only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Robertson Stephens’ current written disclosure brochure filed with the SEC which discusses, among other things, Robertson Stephens’ business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. © 2026 Robertson Stephens Wealth Management, LLC. All rights reserved. Robertson Stephens is a registered trademark of Robertson Stephens Wealth Management, LLC in the United States and elsewhere. A3353
Talk To Us