Weekly Market Update (May 10, 2026)
HIGHLIGHTS
The S&P500 continues to hit new record highs. The US job market remains solid. Markets expect the upcoming Trump–Xi meeting to likely produce no breakthrough.
- Job: US labor market continues to show economic resilience. Markets are shifting their focus toward inflation outcomes, which could become a more decisive factor for a hawkish pivot. A new US court ruling adds uncertainty to the tariff agenda.
- Eurozone: More indicators point to higher inflation driven by indirect effects. The ECB will face greater pressure to tighten policy in order to limit inflation risks.
- War: US forces fired on Iran in response to attacks on U.S. warships. The UAE’s air defenses engaged Iranian drone and missile attacks. The re-escalation of hostilities has reduced optimism over a potential deal that could reopen the Strait.
MARKETS
| Nasdaq | 26,247.08 | +4.51% |
| S&P 500 | 7,398.93 | +2.33% |
| Dow | 49,609.16 | +0.22% |
| 10-Year | 4.36% | -2bps |
| Brent | 101.29 | -6.36% |
| DXY | 97.84 | -0.38% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
Morgan Stanley: Markets are rushing to recover losses from March’s war-driven selloff. Investors have chosen to focus on the AI capital expenditure boom and strong corporate earnings. However, macro risks such as higher long-duration yields, inflation risks, and a fading Fed easing outlook remain in the background.
Goldman Sachs: More positive earnings revisions are boosting market sentiment. Q1 results have been strong, indicating a shift from buybacks toward capital expenditure, mainly driven by AI hyperscalers.
Fixed Income
Morgan Stanley: Rate cut expectations for 2026 are now at zero. Markets are in a “wait-and-see” mode regarding the new Fed Chair, who is expected to face a divided Board of Governors. We believe this represents more of a regime change than a transitory shift.
UBS: We recommend short- and medium-term bonds. Government bond yields are expected to fall. If oil prices remain higher for longer, yields may decline as market focus shifts toward recession risks and potential rate cuts.
Economy
Goldman Sachs: Labor supply growth has dropped significantly as immigration declined from its 2023 peak, and we expect it to slow further. Payroll growth has rebounded in recent months, while the unemployment rate is stabilizing. However, concerns remain over a weaker growth outlook, rising energy costs, and AI adoption risks.
J.P. Morgan: AI investment is increasing capacity and supporting near-term growth. However, marginal benefits are beginning to decline. There are growing concerns about monetization as expectations continue to rise.