Published as of: May 22, 2026, 9:18 a.m. ET

(Editor's note: U.S. markets are closed Monday, May 25, in observance of the U.S. Memorial Day holiday. The Schwab Market Update will return on Tuesday, May 26.)

(Friday market open) Stocks inched higher early Friday as the U.S. and Iran once again signaled progress on an end to the war despite the two remaining at odds over issues like a toll through the Strait of Hormuz. Back home, Kevin Warsh is expected to take the oath as new Federal Reserve chairman today. Anything he has to say about the economy when he's sworn in at the White House could affect stocks.

Warsh arrives at an auspicious time for the market. Earlier this week, the 30-year bond yield hit a nearly 19-year high thanks to heavy inflation fueled by the Middle East conflict. Since the war broke out February 28, Americans have spent $44.1 billion of extra money on gas and diesel, according to The New York Times. Hopes for rate cuts that dominated trading earlier this year have reversed completely. "We believe the Fed is likely on hold for an extended period of time, but the next move will likely be a hike," said Cooper Howard, director of fixed income research at the Schwab Center for Financial Research, or SCFR.

In Thursday's action on Wall Street, Nvidia's (NVDA) strong earnings failed to ignite much of a fire under the tech sector or in its own shares—not unusual considering its past performance after results. Major indexes fluctuated between losses and gains, ending in a new record high for the Dow Jones Industrial Average and remaining on pace for possible weekly gains. Data-wise, investors receive final May consumer sentiment from the University of Michigan soon after the open today. Earnings are limited today, but more big-box stores open their books next week.

1. Sentiment check: Consensus from Briefing.com is for final May consumer sentiment is 48.2%, unchanged from the preliminary May report and near record lows. It was last near current levels during what the survey called the "trough" reached in June 2022. Any change in long-term inflation expectations—which fell slightly month-over-month in the preliminary report—might be noted. The Fed keeps a close eye on these as it tries to keep inflation expectations "anchored," to borrow a favorite expression of outgoing Fed Chairman Jerome Powell. Long-run inflation expectations fell to 3.4% in the preliminary May report from 3.5% in April, well above the 2.8% to 3.2% range they'd been in before the war. Early May was a time of exuberance amid hopes the war would soon end, but the long spell of high gas prices throughout the month might have an impact on the updated inflation readings.
    
2. As earnings rise, valuations rise less: Retail earnings continue next week even though Walmart (WMT) and some of the other biggest names are now in the books. Ones to watch include Best Buy (BBY), Dollar Tree (DLTR), Costco (COST), and Dick's Sporting Goods (DKS). So far this earnings season, more than 90% of S&P firms having reported and earnings growth averaging nearly 28%, according to FactSet. And analyst expectations for second quarter and full-year earnings have been on the rise, helping fuel the rally to record highs. Despite the sharp rally in major indexes, valuations remain below levels seen at the peak last fall, a function of the rising earnings expectations. Valuations in the high-flying tech sector are among those not moving up much. "Despite a sharp rally, the S&P 500 semiconductor industry's forward P/E is lower year-to-date and well off the highs of 2024," said Kevin Gordon, head of macro research and strategy at SCFR. P/E refers to the price-to-earnings ratio, which compares a company's stock price to its earnings per share.
    
3. Monitoring seasonals: Though the old "sell in May and go away" phrase lost even more of its relevance so far this month, seasonal factors remain at least worth thinking about, especially in coming weeks. It's been a solid earnings season, but with Nvidia (NVDA) now in the books, earnings catalysts get much thinner ahead. That could shift more focus toward the mid-June Fed meeting, when economic and rate projections could offer hawkish views, judging from recent policymaker commentary. Between the lack of earnings, focus on geopolitical tensions, and worries about rate hikes, there are challenges ahead. To make matters worse, June is one of the weakest months, historically, though no rule says it can't be strong. A couple things to watch that might send messages about market momentum include the Relative Strength Index (RSI) for major indexes, and market breadth. A dip in either or both might suggest the bull run approaching a summer slowdown. 

• Arm Holdings (ARM) was among the chip and AI leaders Thursday in a session that saw the PHLX Semiconductor Index (SOX) rise 1% despite Nvidia's benching. After tacking on more than 16% Thursday, though, ARM reversed 2% lower before the open.
   
• Merck (MRK) gained 3% in early trading on reports that its lung cancer treatment, produced with Chinese partner Kelun-Biotech, showed positive phase 3 results.
   
• Zoom (ZM) zoomed up nearly 8% after the company issued better-than-expected earnings and revenue Thursday afternoon. The video conferencing heavyweight also issued upside guidance for fiscal year 2027, topping existing expectations.
   
• Take-Two Interactive (TTWO) drove more than 3% higher on a positive earnings report and confirmation that Grand Theft Auto VI will hit shelves later this year.
   
• IMAX (IMAX) has popped over 14% higher this morning on reports from The Wall Street Journal that the theater chain is in takeover talks.
   
• Ross Stores (ROST) rallied close to 6% ahead of the open. After Thursday's close, the discount retailer reported stronger-than-expected earnings and upped its sales forecast and earnings guidance for the year.
   
• Bitcoin edged slightly lower, retreating further from the psychologically significant $80,000 mark. 

Big chips prepare to report: Earnings from major chip companies including Advanced Micro Devices (AMD) and Nvidia (NVDA) are due this month, and expectations are high going in. Software companies, meanwhile, have slumped from AI's impact. Learn more about what to watch in the second big round of chip and software earnings in our latest tech earnings outlook.

The U.S. Dollar Index ($DXY—candlesticks) reached one-month highs this week but is down from its peak wartime level above 100. The strength accompanies a sharp rally in the 10-year Treasury note yield (TNX:CGI—purple line), bucking a historical trend in which the dollar and yields often move opposite directions. War worries and a resilient U.S. economy might be keeping the greenback elevated for now. The dollar doesn't necessarily drift higher if the war ends, however, because higher rates overseas, rising debt in the U.S., and possible lingering strength in oil could all weigh on the currency.

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

May 2: Expected earnings from Berkshire Hathaway (BRK.B).
May 4: Expected earnings from Palantir (PLTR), Vertex Pharmaceuticals (VRTX), and Tyson Foods (TSN).
May 5: ISM April Services PMI^® and expected earnings from Advanced Micro Devices (AMD), Arista Networks (ANET), Lumentum (LITE), Strategy (MSTR), Eaton (ETN), Shopify (SHOP), Pfizer (PFE), Anheuser-Busch Inbev (BUD), and Duke Energy (DUK).
May 6: ADP April employment and expected earnings from Walt Disney (DIS), Uber Technologies (UBER), Novo Nordisk (NVO), CVS Health (CVS), Marriott International (MAR), Apollo Global Management (APO), Medline (MDLN), Arm Holdings (ARM), AppLovin (APP), DoorDash (DASH), and Warner Bros. Discovery (WBD).
May 7: February construction spending and expected earnings from Shell (SHEL), McDonald's (MCD), Gilead Sciences (GILD), McKesson (MCK), CoreWeave (CRWV), Coinbase Global (COIN), and Airbnb (ABNB).
May 8: April nonfarm payrolls, preliminary May University of Michigan Consumer Sentiment, and expected earnings from Sony (SONY) and Enbridge (ENB).