New Highs, Narrowing Breadth:

An AI-Led Rally Reclaims Records as Internals Quietly Erode

Market Regime Snapshot

The S&P 500, already standing at record heights, embarked on a holiday-shortened week and continued its upward trajectory without any signs of slowing down. It opened Tuesday after the Memorial Day close with a 0.6% gain, reaching a fresh high, and continued to break new records by Friday, closing near 7,584. Renewed hope for de-escalation in the Middle East was evident, with reports suggesting that the US and Iran had agreed to a 60-day memorandum. Volatility remained benign, and the yield curve remained in contango. On Thursday, the April PCE data was released, which was cooler than anticipated at 0.4% headline and 0.2% core, compared to the consensus of 0.5% and 0.3%. However, a downward GDP revision and midweek US-Iran strikes that briefly increased crude prices caused some market volatility.