The Week in Review: May 18, 2026
A Profits Gusher
S&P 500 corporate profits are surging in the first quarter, helping to push both the S&P 500 Index and the tech-heavy Nasdaq Composite to new highs this month.
Let’s quickly run through the numbers.
With 90% of S&P 500 companies having reported Q1 results (LSEG), earnings are forecast to rise 28.3% (the projection includes those firms that have reported and the forecast for companies that have yet to report), up from an already robust April 1 forecast of 14.4%.
Clearly, analysts were far too conservative in their estimates. To provide some perspective, quarterly increases have averaged 11.4% over the past two years, according to LSEG, peaking at 13.2% in a single quarter.
What’s responsible for the strong quarter?
Large tech companies and the AI boom, particularly among chipmakers that supply semiconductors to AI centers and cloud providers, are driving Q1’s stellar results.
Demand for various components used to build data centers is incredibly high right now. That said, outside of tech, earnings have also been strong.
Bottom line
An impressive earnings season has driven the S&P 500 and Nasdaq to new highs, helping to offset growing concerns around inflation and rising Treasury yields.
That momentum, however, began to fade on Friday, when the major indexes pulled back.
Any forecast of what the Federal Reserve might do is inherently uncertain. As of Friday, a closely watched CME.
Group tool puts the odds of a rate hike by December at roughly 50%, which reflects rising concerns about inflation.
However, these odds can fluctuate. It’s simply a snapshot of sentiment on a given day.
It’s not that stocks can’t rise in a higher-rate environment, especially when economic growth remains solid, and earnings stay strong.
In the past, equities have risen even as interest rates have gradually moved higher, particularly when those increases reflected a strengthening economy.
A bigger challenge tends to arise when yields move higher due to rising inflation concerns.
Market summary
Two FOR THE ROAD
“The most underrated force in economics is not capital, technology, or policy — it is the human habit of adapting faster than forecasts expect.” – Anonymous
Crime continues to fall across the United States. According to data from 67 major police departments, homicides were down 17.7 percent in the first three months of 2026 compared with the same period in 2025. The same comparison shows a 20.4 percent decline in robberies, a 7.2 percent drop in rapes, and a 4.8 percent fall in aggravated assaults, continuing the post-pandemic drop in violent crime. – Axios, May 10, 2026
I hope you have a wonderful week!
Warmest Regards,
Bill Stordahl, CFP®
Managing Director
Stordahl Capital Management
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1. The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be invested into directly. Past performance does not guarantee future results.
2. The NASDAQ Composite is an unmanaged index of companies which cannot be invested into directly. Past performance does not guarantee future results.
3. The S&P 500 Index is an unmanaged index of 500 larger companies which cannot be invested into directly. Past performance does not guarantee future results.
4. The Global Dow is an unmanaged index composed of stocks of 150 top companies. It cannot be invested into directly. Past performance does not guarantee future results.
5. CME Group front-month contract; Prices can and do vary; past performance does not guarantee future results.
6. CME Group continuous contract; Prices can and do vary; past performance does not guarantee future results.