AI Enthusiasm, Easing Tension

Week Ending May 22, 2026

Last week felt like another reminder that markets do not need perfect conditions to move higher. They just need investors to feel a little more comfortable owning risk again.

At the start of the week, there was still plenty for investors to worry about. The Middle East remained a source of uncertainty, bond yields were still elevated, and there were questions about whether the recent rally had already gone too far. But as the week moved along, that caution started to ease. Optimism around artificial intelligence came back into focus, peace talk headlines gave the market something positive to work with, and investors were willing to look past some of the risks that had been weighing on sentiment.

And once that happened, stocks found their footing again.

By the end of the week, the tone felt more confident. Not because the risks disappeared, but because investors were once again focused on the parts of the market that were still working. Technology stayed at the center, AI remained a major driver, and hopes for a calmer geopolitical backdrop helped support the broader move higher.

What stood out most to me was this: the market still looks willing to reward strength. Investors are not buying everything indiscriminately, but they are clearly leaning toward the areas where earnings, momentum, and long-term growth stories still feel strongest.

Market Overview

Weekly Market Performance (May 18 to May 22, 2026)

• S&P 500: +0.88%
• Nasdaq Composite: +0.45%
• Dow Jones Industrial Average: +2.13%
• MSCI EAFE Index: +2.16%
• S&P/TSX Composite Index: +1.9%

Stocks moved higher last week as optimism around AI stayed strong and investors responded positively to renewed hopes for a Middle East peace agreement. The Dow led the way and closed at another record high, while the S&P 500 finished its eighth straight week of gains, its longest weekly winning streak since 2023. Even with some early weakness in chip stocks, the broader tone improved as the week went on and investors became more willing to lean into risk again.

In Canada, the story was constructive as well. The TSX gained 1.9% for the week and moved closer to its record high, helped by strength in technology and financials. BlackBerry surged, retail sales came in better than expected, and investors also began looking ahead to earnings from Canada’s major banks. In other words, Canada participated in the rally too, but with a little more help from domestic strength and sector rotation than pure AI excitement alone. Reuters

Why the Market Moved Higher Anyway

This was one of those weeks where the market had reasons to hesitate, but chose not to.

There was still geopolitical uncertainty. Bond yields were still high enough to keep pressure on investors’ minds. And there were still questions about whether stocks, especially technology names, had already run too far too fast.

But the market looked through all of that.

A big part of the reason was that investors continue to believe the AI theme has real staying power. That does not mean every stock tied to AI will keep rising in a straight line, but it does mean investors are still treating that trend as one of the clearest growth stories in the market right now. When that kind of theme is working, it can do a lot to support overall confidence.

On top of that, headlines around a possible Middle East peace deal helped calm some of the fear that had been building around oil prices and inflation pressure. As oil prices and Treasury yields moved lower during the week, that gave investors another reason to feel more comfortable stepping back into stocks.

To me, that was the bigger message. The market was not saying everything is fine. It was saying that as long as growth themes stay intact and external pressures do not get worse, investors are still willing to push higher.

A Rally Still Led by Leadership

What also mattered last week was how the market moved.

This was not a week where everything suddenly took off together. Leadership still mattered. AI-related names and large technology companies continued to set the tone, while the Dow benefited from a broader shift into more established, blue-chip companies. That is part of why the Dow had the strongest week of the major U.S. indexes.

Early in the week, some pressure in the memory chip space created a wobble in the AI trade and in tech more broadly. But that weakness did not last. By midweek, investors were already looking ahead to earnings from one of the major AI chip names, and confidence returned quickly.

That tells me investors are still very willing to buy the dip in leadership areas when the bigger story remains intact.

What the Fed Minutes Told Us

The Federal Reserve minutes also caught investors’ attention, especially because they came from Jerome Powell’s final Federal Open Market Committee meeting as Fed Chair

The main takeaway was fairly simple: if the Fed does make a move later this year, the discussion sounded more tilted toward a possible rate hike than a rate cut.

That is not exactly what investors want to hear. Higher interest rates usually mean borrowing stays expensive for longer, and that can eventually create more pressure on both consumers and businesses. But last week, the market largely absorbed that message without much trouble.

Why? Because investors seemed more focused on what is happening right now than on what the Fed might do later. And right now, the parts of the market leading the rally still look strong enough to keep confidence in place.

For everyday investors, I think the plain-English version is this: the Fed may not be ready to help the market anytime soon, but investors were still comfortable last week because they did not feel the economy or earnings picture was falling apart.

What Canada Was Telling Us

Canada had a good week too, but the leadership looked a little different.

The TSX rose 1.9% and moved closer to its record closing high, supported by technology, industrials, and financials. BlackBerry was one of the standout movers, and there was also growing investor focus on the major Canadian banks ahead of earnings. That matters because financials carry a lot of weight in the Canadian market, so when bank sentiment improves, it can do a lot of the heavy lifting for the TSX. Reuters

There were also some encouraging signs from the Canadian economy. Retail sales grew 0.9% in March, which was better than expected. That does not mean everything is suddenly booming, but it did suggest that consumers are still holding up better than many people might assume. Reuters

At the same time, not every part of the Canadian market joined in. Materials slipped as gold prices pulled back, which kept the rally from feeling completely broad-based. So the takeaway in Canada was similar to the U.S. in one important way: strength was there, but it was still coming from specific areas rather than everywhere at once.

Looking Ahead

This week will give investors a fresh set of tests, and they are important ones.

On the economic side, markets will be watching housing data, consumer confidence, weekly jobless claims, durable goods, GDP, and the PCE Index, which is one of the Fed’s preferred inflation measures. If last week was about confidence holding together, this week is about whether the data gives investors a reason to keep that confidence in place.

We also have another meaningful batch of earnings, especially in technology and consumer-facing names. Companies like Marvell, Salesforce, Synopsys, Costco, and Dell will help shape the conversation around corporate demand, AI spending, and consumer resilience

If I had to sum up the setup in one sentence, it would be this: the market is still willing to move higher, but it wants the growth story to keep showing up in both earnings and economic data.

As always, I do not think the lesson is to chase whatever just had a good week. The better takeaway is that leadership still matters, diversification still matters, and markets can stay more resilient than people expect when investors feel they still have a few good reasons to believe.

This Week: Key Economic Data

Tuesday, May 26th

• Case-Shiller Home Price Index
• Consumer Confidence

Thursday, May 28th

• Weekly Jobless Claims
• New Home Sales
• Durable Goods

Friday, May 29th

• Gross Domestic Product (GDP)
• Personal Consumption Expenditures (PCE) Index
• Trade Balance in Goods
• Retail & Wholesale Inventories

This Week: Companies Reporting Earnings

Wednesday, May 27th

• Marvell Technology, Inc.
• Salesforce, Inc.
• Synopsys, Inc.

Thursday, May 28th

• Costco Wholesale Corporation
• Dell Technologies Inc.

“If you have passion, a chip on the shoulder, a sense of humor, and you can explain what you do very well, it doesn't matter if you're a plumber or a singer or a politician. If you have those four things, you are interesting.”
– Larry King

At times it begs to be answered, sometimes it interrupts you, but it will never ask you a question. What is it?

_{Last Week's Riddle: They have wings. As they grow up, they also grow down. What are they?
Answer: Geese (or ducks)}

Joanne’s dog, Austin, too tired from paddleboarding to even lay down.

Footnotes and Sources:

1. WSJ.com, May 22, 2026
2. Investing.com, May 22, 2026
3. CNBC.com, May 18, 2026
4. CNBC.com, May 20, 2026
5. CNBC.com, May 21, 2026
6. WSJ.com, May 22, 2026
7. WSJ.com, May 20, 2026
8. IRS.gov, Jan 14, 2026  
9. Eatingwell.com, Feb 19, 2025 

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