Weekly Market Update – May 18, 2026

Price Return Last Week

S&P 500  +0.2%  S&P Mid Cap  (2.4%)  Russell 2000  (2.4%) 

MSCI EAFE (1.7%)     MSCI EM (2.5%)

10 Yr US Treasury Rate – rose from 4.36% to 4.60%

Source: Refinitiv Eikon

---

Recent News

Trump in China – President Trump visited China for two days last week.  The first trip by a U.S. president since 2017.  President Xi described the relationship between the U.S. and China in a new manner, framing it as “constructive strategic stability.”  No major deals were agreed to during the visit.  However, China agreed to buy 200 Boeing planes.  Boeing shares sank on the news as market expectations were for approximately 500 planes to be ordered.  The issue of tariffs was not discussed and no agreements were made concerning Iran or the Strait of Hormuz.  The most notable event was likely President Xi warning Trump that mishandling the situation in Taiwan could push U.S.-China relations to a “dangerous place.”

Source: Thomson Reuters

Earnings Season – As of Friday, 91% of companies in the S&P 500 had reported quarterly earnings.  84% reported a positive earnings surprise, higher than the 5-year average positive beat of 78%.  The aggregate earnings beat is currently 17.9% above expectations, significantly higher than the 5-year average beat of 7.3%.  Companies that have reported positive earnings surprises have seen a price increase of 1.1%, roughly in-line with recent history.  However, companies that have missed earnings have been punished much more than usual, falling -4.6% compared to the 5-year average for missed earnings results of -2.9%.  The blended year-over-year earnings growth rate for the quarter is currently 27.7%, the highest growth rate seen since 2021.  Within the index, the semiconductor industry is having a particularly strong quarter, with semiconductor companies reporting year-over-year revenue growth of 52%.

Source: FactSet

New Fed Chair – Kevin Warsh was confirmed on Wednesday as the new chair for the Federal Reserve, taking over for Jerome Powell and is expected to be sworn in over the next few days.  The vote to confirm Warsh was the most divisive vote for an incoming Fed chair in history, with only 54 Senators voting to confirm.  As previously noted, outgoing chair Jerome Powell will stay on at the Fed as a governor until his term as governor ends in approximately two years.  Warsh’s first meeting as chair is set for June 16-17.  Currently, the market anticipates no change to interest rates at that meeting.

Source: CNBC.com

Rough Start – For the first time in recent memory, a PGA golfer was assessed a two-stroke penalty for arriving late to the tee box.  South African golfer Garrick Higgo showed up one minute late for his 7:18 a.m. tee time putting him two strokes over par before starting the tournament.  Higgo’s error proved costly as he ended up missing the cut by just one stroke and a guaranteed payday of at least $23,000.

Source: Golf.com

---

Upcoming Events

5/19 – Notable Earnings Reports: Home Depot

5/20 – Notable Earnings Reports: Target, Lowe’s, TJX, Intuit, NVIDIA

5/21 – S&P Manufacturing PMI, S&P Services PMI, Notable Earnings Reports: Walmart, Deere & Co, Deckers Outdoor, Workday

Source: Refinitiv Eikon

This material is for informational purposes only and is not investment advice, a recommendation, or an offer to buy or sell any security. Views are as of the date shown and may change. Forecasts and forward-looking statements are not guarantees of future results. Information is believed reliable but not guaranteed for accuracy or completeness; third-party sources are not affiliated with Chesley, Taft & Associates (CTA).  Indexes are unmanaged, not investable, and shown for illustrative purposes only. Past performance is not indicative of future results. Viewing this material does not create an advisory relationship with CTA.