Equity markets continued their rally through May, extending the S&P 500’s positive return streak to eight weeks in a row, the longest stretch since 2023. Tech companies’ strong earnings drove the index to a record high.

Raymond James Chief Investment Officer Larry Adam expressed confidence in the market’s underlying fundamentals: “Stronger than expected earnings – especially in technology – have continued to underpin market performance, with momentum in the sector showing no signs of easing. Notably, earnings revisions are trending higher, pointing to a durable fundamental tailwind.”

AI-driven optimism led the charge for the tech sector, although investors began to focus on real-world returns from AI investments rather than promises of what the technology might do.

Markets also navigated growing tension between strong economic data and persistent inflation pressures. The US economy appears resilient, with solid growth numbers, expanding manufacturing activity and stable labor markets. But higher oil prices tied to geopolitical conflict kept inflation elevated and pushed interest rates higher.

Fixed income markets saw volatility as Treasury yields moved higher. The markets repriced a more hawkish path for monetary policy, with increasing expectations for a rate hike by the Federal Reserve by year end. The 30-year Treasury closed at 5.18% on May 19, its highest level since 2007. New Fed Chair Kevin Warsh joined the Federal Open Market Committee (FOMC) at a complex moment, and the committee has become increasingly divided.

We’ll dive into more details below, but first, let’s look at how May finished.

*Performance reflects index values as of market close on May 29, 2026.

Equities soar thanks to earnings

Following the S&P 500’s pullback in the first quarter, incremental progress in the Middle East combined with strong earnings in the tech sector led to yet another historic rally. Earnings in the first quarter of 2026 are on pace for 27% year-over-year growth, more than double consensus expectations. Robust capital spending and consumer stimulus from tax refunds have kept the economy on the rails and chugging along.

Job numbers remained steady

Private sector employment grew by 109,000 jobs according to the ADP Employment Survey, the highest level of monthly growth since January 2025. Nonfarm payroll gains were stronger than expected, up 115,000. This growth was broad, with the only sectors reporting lower employment being manufacturing, information technology, financial activities and government. Unemployment remained unchanged at 4.3%.

Tough decisions for the Fed

With the FOMC’s dual mandate of price stability and full employment at odds with current conditions, the Fed’s job hasn’t gotten any easier over the past month. With inflation still on the rise due to geopolitical issues and with labor markets stabilizing, the committee may have to choose one battle over the other eventually. That unemployment is seemingly under control makes it more likely inflation will prevail as the greater of two evils competing for attention. The bond market has priced in this assumption as yields climbed across the entire curve, with some reaching near 20-year highs.

A busy month for diplomacy

May saw two major events involving the US and foreign entities. US-Iran negotiations limped along throughout the month. A partial, phased deal could come shortly and likely will provide for reopening the Strait of Hormuz as a phase one condition, though additional negotiations are still ahead, and the status of talks remains highly fragile. In Beijing, Presidents Trump and Xi met for a long-awaited summit where they discussed the affirmation of a trade truce and the desire to stabilize the bilateral relationship between both nations.

A rocky road to oil supply recovery

With hopes of a US-Iran deal rising, oil prices began to decline. But supply won’t recover overnight. Despite crude prices sinking back down below $100 a barrel, that doesn’t mean that Gulf-supplied oil will snap back to pre-war levels. Supply is unlikely to normalize before July at the earliest, given the logistical hurdles to the resumption of oil shipping and production in the region.

International developed markets face challenges

Euro area equities made new highs in May but failed to keep pace with the US and Asia. Pressure on economic activity and prices intensified because of hostilities in the Middle East, but markets have taken note of the crude price dropping off its earlier highs. The UK’s economic resilience was called into question, and Prime Minister Keir Starmer’s leadership challenged, as more timely data added to the threat of a near-term economic contraction. In Japan, government bond yields rose in May, hitting multi-decade highs in common with yields across developed economies.

China faces headwinds

Despite strengthened external demand for China’s electronics exports, the pace of their industrial output has slowed to its lowest levels since mid-2023. A weak domestic construction sector and disappointing consumption show a shift in household spending away from goods and toward services. Yet, China continues to have some of the lowest inflation rates among major economies.

The bottom line

With equity markets on a seemingly unstoppable path thanks to tech, there’s good reason for optimism. But inflation is still a concern and will likely continue to be as long as global energy supply is disrupted. Investors stand to benefit from both equity markets in the short term and bond markets in the long term. As usual, steady and consistent strategies that let time do the work remain viable.

Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of the Raymond James Chief Investment Officer and are subject to change. There is no assurance the trends mentioned will continue or that the forecasts discussed will be realized. Past performance may not be indicative of future results. Economic and market conditions are subject to change. Diversification does not guarantee a profit nor protect against loss.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australasia and Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 is an unmanaged index of small-cap securities. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. An investment cannot be made in these indexes. The performance mentioned does not include fees and charges, which would reduce an investor’s returns.

Companies engaged in business related to a specific sector, including the technology sector, are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification. Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Income from municipal bonds is not subject to federal income taxation; however, it may be subject to state and local taxes and, for certain investors, to the alternative minimum tax. Income from taxable municipal bonds is subject to federal income taxation, and it may be subject to state and local taxes.

Investing in oil or the energy sector involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors. Investing in small-cap stocks generally involves greater risks, and therefore, may not be appropriate for every investor. The prices of small company stocks may be subject to more volatility than those of large company stocks. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.

Material created by Raymond James for use by its advisors.

How to include online services, important documents and digital family mementos in your estate plan

Your digital life may seem difficult to organize. Locked behind disparate accounts, spread across devices and out of mind because they are out of sight, it may seem challenging to wrangle all your digital belongings. And unlike tangible items like heirloom jewelry or vacation homes, or intangible but well-established considerations like financial securities and accounts, aspects of your digital life aren’t always top-of-mind when building and maintaining an estate plan.

But neglecting these things may create difficulty for your family members later on, and could lead to the loss of items with incredible value – both sentimental and monetary.

As the number and types of digital property are continually growing and are locked within a hodgepodge of accounts and subscriptions, getting a handle on your digital estate can be tricky. A diligent, steady approach to keeping inventory of your digital life can help bring order to this process.

What is part of your digital life?

Their scope and nature continues to evolve, but common examples include financial accounts, service accounts, legal and financial documents, cloud storage, health records and media collections (movies, e-books and the like). Email and social media accounts would also fall under this umbrella.

Priceless family photos or videos that would have previously lived in physical albums or tapes may now live on your phone or other devices. These, also, are considered digital property. In addition to memories you’ve captured are things you’ve created: intellectual property like designs, literary materials, blogs, websites and program code for which you own the copyright.

It’s helpful to take a gradual approach to thinking through your digital life, rather than trying to compile one big list from the get-go. If you start now, a little at a time, you can account for it in your planning in a comprehensive, thoughtful way.

Consolidated storage

For digital property not tied to specific service accounts, including photos, videos and PDFs of health records and legal paperwork, you may consider setting up a cloud-based backup system to consolidate devices, accounts and services. A financial advisor, estate planning attorney or trusted family member can help you access these tools so you can organize them while maintaining gated access and rigorous cybersecurity.

For online accounts, it’s a good idea to change passwords regularly for security reasons. A secure password manager can make it easier to manage strong, complex passwords while providing a simpler way for loved ones to access the accounts if needed.

Organizing now for less stress later

There can be other benefits to organizing your digital life. Inventorying your digital belongings and accounts can also help you eliminate subscription charges from services you no longer use. It can also help to simplify access to important accounts in the case of an emergency. That way if, for example, you became incapacitated your loved ones could access things medical clinic portals or utility bills on your behalf.

Creating an estate plan is an act of love. By making your intentions clear with a holistic, comprehensive plan, you help reduce additional stress and friction for your loved ones. While the idea of a digital life may feel new or complex, accounting for these items in an estate plan follows the same foundational principles as with any other asset.

And with all planning practices, it’s better to have a plan too early than to need one suddenly. Your professional team can assist in accounting for your digital life in your long-term plan.

Complement your retirement plan with a health savings account for the things Medicare doesn’t cover

Retirement is an exciting time and a new phase of life worth celebrating with family and friends; however, planning for retirement can sometimes bring uncertainty. Things like changes in your personal life, market fluctuations and uncertainty around Social Security can raise questions in even the most detailed plan.

Although Medicare covers a variety of medical expenses, it isn’t the all-encompassing healthcare coverage many people assume. Fortunately, you can leverage the benefits of a health savings account (HSA) to accumulate additional savings for medical and health care-related expenses.

An HSA can help cover health care costs that Medicare doesn’t, along with dental, hearing and vision expenses. With comparable – and, in some cases, better – perks than a 401(k) or IRA, your HSA can help you save and prepare.

Who is eligible for an HSA and what are some other requirements?

• Anyone with a high-deductible health policy can qualify for an HSA. It is not limited to employees.
• There are no income limits affecting eligibility.
• You do not need earned income to contribute to an HSA.
• The HSA belongs to you, not to your employer. If you have a qualified high-deductible health policy through your employer but your employer does not offer an HSA, you can still open an HSA.
• An HSA can be set up through any qualified trustee or custodian.
• You may sign up for and contribute to an HSA as long as you have not yet enrolled in Medicare Part A or B. Once you enroll in Medicare, however, you may no longer make contributions to your HSA.

An HSA is a tax-advantaged medical savings account that allows you to set money aside and withdraw funds to pay for qualified medical expenses. HSA accounts are unique in that they are triple tax advantaged. Contributions to an HSA are tax deductible, earnings are tax free, and distributions from HSA accounts are tax and penalty free if the funds are used to pay for or reimburse yourself for qualified medical expenses.

HSAs can be especially useful because they are not “use it or lose it” accounts. Unlike flexible spending accounts, unused HSA dollars roll over every year.

The annual amount you can contribute to an HSA depends on whether you have single or family health coverage, if you have continual coverage throughout the year, and if you are eligible to make a catch-up contribution (for age 55 and older). For 2026, HSA contribution limits are $4,400 for an individual or $8,750 for a family. Individuals 55 and older can contribute an additional $1,000 catch-up contribution for a total of $5,400 per year.

Distributions that are used for other purposes beyond qualified medical expenses are subject to tax and a 20% penalty if you are under age 65. If you are 65 or older, you can use your HSA much like a 401(k) and withdraw funds for any purpose but will have to pay income taxes on withdrawals made for nonmedical purposes.

Thinking ahead

If you or your spouse have creditable health insurance from a group employer, then you could consider delaying Medicare enrollment and continuing to contribute to your HSA, even once you turn 65. Something to consider is that if you decide to delay enrolling in Medicare beyond age 65, when you do eventually enroll, Medicare will automatically give you six months of retroactive benefits when you do enroll. This means if you decide to delay enrollment, you’ll need to stop contributing to an HSA six months before you do decide to enroll in Medicare. If you do delay enrollment, this may also impact how much you can contribute in that final year, depending on when in the year you enroll.

Your decision to delay may depend on the benefits coverage between Medicare and your employer, plan costs or your current tax picture and the tax advantages you gain by contributing to an HSA. No two individuals face the same situation when it comes to their health care benefits. Depending on your personal circumstances, goals and budget, an HSA may help you to maximize your benefits.

Members of the Raymond James Investment Strategy Committee share their views on the markets, the economy and key themes that are impacting investors.

  
Read the full
Investment Strategy Quarterly

All expressions of opinion reflect the judgment of Raymond James and are subject to change. Investing involves risk including the possible loss of principal. Past performance may not be indicative of future results.