Rally Gathers Steam on Chip Strength, Peace Hopes
Published as of: May 27, 2026, 9:15 a.m. ET
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| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® Index | 7,519.12 | +46.65 | + 0.61% |
| Dow Jones Industrial Average® | 50,461.68 | -118.02 | -0.23% |
| Nasdaq Composite® | 26,656.18 | +312.21 | +1.19% |
| 10-year Treasury yield | 4.46% | -0.02 | -- |
| U.S. Dollar Index | 98.99 | -0.17 | -0.17% |
| Cboe Volatility Index® | 16.78 | -0.23 | -1.35% |
| WTI Crude Oil | $88.50 | -$5.32 | -5.68% |
| Bitcoin | $75,814 | -$80.00 | -0.14% |
(Wednesday market open) Chip stocks kept climbing early, lending the entire market a fresh tailwind following yesterday's gains. While memory chips led the way, plain old semiconductors didn't look too shabby either as markets opened, though industry news was thin. The market gathered strength on sliding Treasury yields and oil prices that fell to the lowest level since April after reports of progress toward a peace agreement that could have the Strait of Hormuz open in a month. Goldman Sachs (GS) also aided bullish sentiment after it raised its year-end forecast for the S&P 500 Index to 8,000 from 7,600, citing a solid earnings outlook.
On the earnings front today, Marvell (MRVL), Synopsys (SNPS), and Snowflake (SNOW) report after the bell. But perhaps the most consequential event of the week takes place tomorrow before the open with the release of April Personal Consumption Expenditures (PCE) prices. An unexpectedly hot core PCE number might prompt a reset of rate expectations. PCE is the inflation metric most closely watched by the Federal Reserve. Consensus from Briefing.com is 0.5% for headline PCE growth, and 0.3% for core PCE excluding food and energy.
On Tuesday, investors kicked off the holiday-shortened week by pushing the S&P 500 Index and Nasdaq Composite to record highs as semiconductor firms led a broad tech rally. Shares of Micron (MU) jumped 19%, with its market cap topping $1 trillion for the first time, after UBS nearly tripled its price target on the stock and positive comments about the company from President Trump last week. In less bullish news, consumer confidence slipped again, thanks largely to rising prices.
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Three things to watch
- AI trade drives Asian economies and markets: Taiwan's stock market on Tuesday passed India's to become the fifth-most valuable in the world, worth nearly $5 trillion. Investors can thank the AI trade. Taiwan is just one of the countries in Asia that is playing a key role in the global AI trade with exports of advanced semiconductors, memory, and other key equipment, said Michelle Gibley, director of international equity research and strategy for the Schwab Center for Financial Research (SCFR). "Certainly, we're seeing countries across Asia really participate in this AI capex boom." Companies in the AI hardware supply chain that support the growth of data centers have been the winners so far this year, while also driving accelerating export growth, economic growth, and consumer spending in Taiwan, South Korea, and Japan, Gibley said. And that in turn is driving economic growth and pushing their stock markets to all-time highs in recent weeks.
- Gas pumps take a bite: If there were any doubt, the Conference Board's consumer confidence survey for May confirmed that higher prices are hurting consumers. Two-thirds of consumers said rising prices are causing them to cut spending on items such as clothing and footwear, according to the survey, which was released Tuesday. Executives at big box retailers echoed related concerns during earnings calls last week. Walmart (WMT), Home Depot (HD), and Lowe's (LOW) all cited higher fuel prices as a cost pressure, with Walmart warning that the elevated prices may lead to broader retail inflation as soon as the current quarter. Home Depot said the higher gas prices are hard to separate from broader pressure on consumer spending, while Lowe's Chief Financial Officer Brandon Sink said only about 20% of tax refunds have been spent so far, with about 50% going into savings and the remainder to offset higher gas prices. Sink added that another $50 billion in refunds remained to be distributed. But the retailers didn't predict a rebound in consumer demand. In fact, Home Depot said its expectations for moderately higher second-half comparable sales were “solely driven by a return to normal storm activity."
- VIX health check: Even as consumer sentiment slumps, expectations for volatility remain at bay. The Cboe Volatility Index (VIX) is down nearly 20% year-over-year and has slumped about 12% in the past month, despite continued geopolitical pressures, rising oil prices, and diminished hopes for a rate cut in the near term. After the long weekend, the so-called "fear barometer" closed Tuesday at 16.93, well off its late-March high of 31.05 and solidly below the 20 threshold, which some view as indicative of low-volatility expectations. Looking ahead, the VIX futures curve is in contango—its typical state—indicating that futures contract prices are above current levels. This suggests expectations for potentially higher volatility in the months ahead.
On the move
- Zscaler (ZS) plunged almost 25% ahead of the open. Earnings and revenue topped analysts' expectations and so did guidance for fiscal fourth quarter earnings per share. Revenue guidance for the quarter fell short of consensus, and the caution damaged shares. Weakness at Zscaler hurt other cybersecurity stocks including Palo Alto Networks (PANW) and CrowdStrike Holdings (CRWD), which both fell more than 3%.
- Marvell popped 6% in early trading ahead of this afternoon's earnings report. Shares of the AI hardware supplier have doubled year-to-date, soaring in early March after its last earnings report on strong guidance. Any change to that outlook would probably grab investors' attention.
- The memory "triple play" of Micron, Western Digital (WDC), and SanDisk (SNDK) maintained their blistering pace early Wednesday, led by 9% pre-opening bell gains for Micron. Barclays raised its target price for Micron to $1,175 from $675. SanDisk also got an upgrade from Barclays.
- Also rising early today were shares of Taiwan Semiconductor Manufacturing (TSM), up almost 5%, and Seagate Technology (STX), up almost 6%. TSM got support from news that Nvidia (NVDA) will invest up to $150 billion toward chipmaking capacity expansion and partnerships in Taiwan, Reuters reported.
- Lululemon (LULU) added 3% in the early going as the company entered into a cooperation agreement with founder and major shareholder Dennis Wilson and added two people to its board of directors. This ends the company's proxy battle with Wilson, Reuters reported.
- MGM Resorts (MGM) jumped 4% after getting upgrades from Truist and JPMorgan Chase. The JPMorgan analyst cited resilience in leisure travel and stronger forecasts for growth at the Las Vegas Strip, CNBC reported.
- Dick's Sporting Goods (DKS) dropped almost 2% even though the company surpassed earnings and revenue expectations and reaffirmed guidance.
- Bath & Body Works (BBWI) surged 10% as the company beat earnings and revenue expectations and reaffirmed fiscal-year guidance.
More insights from Schwab
Inflation concerns continue: Schwab's latest Inflation Monitor looks at how upstream producer prices are surging, raising concerns about higher consumer inflation in the coming months.
Indexes prepare for big IPOs: With a significant wave of initial public offerings (IPO) expected later this year, Nasdaq, S&P Dow Jones, and other index providers are changing or considering changing their rules to allow faster entry for large IPOs.
Shaping a competitive edge: In the latest episode of Invested in the Game, golf pro Kevin Kisner shares how growing up around a golf course shaped his competitive edge and "grit-first" approach to the game.
Chart of the day
Data sources: CME Group. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
WTI crude oil futures (/CL—candlesticks) have made a series of lower highs since the start of the Iran war, with the Relative Strength Index (RSI—lower pane) following suit. Traders have largely bet on a relatively quick resolution to the war, compressing momentum.
The week ahead
Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.
May 28: First quarter GDP second estimate, April Personal Consumption Expenditures (PCE) prices, and expected earnings from Dell (DELL), Dollar Tree (DLTR), MongoDB (MDB), Best Buy (BBY), Costco (COST), AutoDesk (ADSK), and Gap (GAP).
May 29: No major data or earnings expected.
June 1: April construction spending, May ISM Manufacturing PMI®, and expected earnings from Hewlett Packard Enterprise (HPE)
June 2: Expected earnings from Dollar General (DG), Palo Alto Networks (PANW), and Ulta Beauty (ULTA).
June 3: April factory orders, May ISM Services PMI®, and expected earnings from Medtronic (MDT), Macy's (M), Broadcom (AVGO), and CrowdStrike Holdings (CRWD).