In this morning market briefing, Kenny Polcari opens from Yahoo Studios in New York, noting that U.S. equities closed higher on Friday and are up again on Tuesday, May 26, 2026. He highlights a broad market rally with the Dow, S&P, Nasdaq, Russell, and equal‑weight indexes gaining, while the mega‑cap (Mag 7) segment lagged, suggesting wider participation. Polcari attributes the rally to optimism around a potential U.S.–Iran diplomatic framework being discussed in Qatar, noting that oil prices have fallen ($3.60 drop to $92.97) as the war premium is stripped away, which could ease inflation pressures. He explains the bond market’s response: 2‑year, 10‑year, and 30‑year Treasury yields all slipped, reflecting expectations of cooler inflation. The centerpiece of the week is the upcoming Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation gauge, with mixed expectations for headline and core numbers. Polcari discusses the Federal Reserve’s stance under new Chair Warsh, the tension between political calls for rate cuts and the Fed’s need to balance the balance sheet, and the importance of the VIX staying low. He reviews key economic releases – consumer confidence (University of Michigan at 44.8, low), Richmond and Dallas Fed indices, personal income/spending, new‑home sales, and building permits – and stresses their impact on consumer‑driven growth. The earnings calendar features Marvell (AI infrastructure), Salesforce (CRM AI platform), Costco (consumer traffic), Dell (servers), and Hewlett‑Packard (hardware), each tied to AI spending or consumer health. Polcari offers a cautious investment outlook, urging listeners to stick to their plans, avoid FOMO, and consider contacting him for portfolio advice. He closes with a Memorial Day tribute, a reminder of the day’s significance, and a detailed lemon zucchini rigatoni recipe for a summer dinner.
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Well, good morning. Yes, it's me, Kenny Polcari, your host of the party, and I'm coming to you live from the Yahoo Studios in New York City. Today is Tuesday, May 26th, 2026, and here are the things you need to know to get your day started. Well, guess what? Stocks closed higher on Friday and they are up again this morning. The US and Iran, well, they're supposedly this close to a deal. Oil is down, bonds are up, yields are down, and gold, well, that's holding steady, a little bit lower but holding steady. The eco data this week includes the all-important PCE report that comes out on Thursday. Earnings, we're going to hear from Dell, Marvell, Costco, CRM, and Hewlett-Packard. What do you have for dinner tonight? We're going to have the lemon zucchini rigatoni. It is delicious and it's a great summer dish. Okay, so before we get into any of this, let's just pause for one second and remember why the markets were closed yesterday. Memorial Day. It isn't a day off, it's a day to honor. A day to remember that every flag placed in a cemetery represents a story unfinished, a family whose lives have been changed forever, and a sacrifice made so that the rest of us can enjoy the freedoms that too many take for granted. So the sacrifice shall never be forgotten. Remember, honor them first. Okay, so now let's get on to what happened on Friday. It felt like every other Friday before Memorial Day always feels. Volumes were light. Investors and most traders were already at the grill or mentally preparing to be at the grill. Yet stocks pushed higher on hopes of a deal with Iran was imminent. What caught my attention, though, was how some of the indexes reacted. The Russell, the Transports and Equal Weighted quietly outperformed while the Mag 7 in the, in the S&P and the Dow took a breather. That's healthier. That suggests a broader participation, not just tech and not just mega-cap tech. Here's what it looked like at 4 PM on Friday afternoon. The Dow made another record, adding 294 points or 6 tenths. The S&P was up 28 points or 0.4%. The NASDAQ added 51 points or 0.2%. The Russell added 25 points or 0.9%. The Transports rose by 163 points or 0.8%, and the Equal Weight S&P rose 75 points or 0.9%, while the Mag 7 ended the day down 48 points or down 0.1%. Over the weekend, news reports confirmed what many had been expecting: the US and Iran are actively negotiating in Qatar. But let's be clear, because we've been here before. There is no signed peace agreement. There appears to be a framework being discussed, and while a ceasefire remains in place, major issues remain unresolved. Iran continues to publicly push back on concessions tied to its nuclear ambitions, while Washington continues to signal that diplomacy is a preferred method, but it's not guaranteed. Trump said negotiations are proceeding nicely. But he warned that if it isn't a great deal, there's not going to be a deal. Rubio, he reinforces the message that diplomacy first, but other options remain on the table if needed. And that was enough for markets to respond overnight. Traders ripped the war premium right out of oil. WTI this morning is down $3.60 at $92.97, but overnight it traded as low as $89.40. And remember what that means. Oil is falling is not just an energy story, it's an inflation story, it's a Fed story, and it's a bond market story. The Strait of Hormuz is the key. If they open it, oil tankers are going to begin to navigate through and energy flows will start to normalize. If that happens, oil goes lower, a lot lower. But let's not get ahead of ourselves. Even if an agreement is reached, energy markets will remain disrupted for months to come. Energy analysts right around the street have warned us that full normalization of the Middle East oil supply may actually not occur until early 2027 due to the scale of the disruptions caused by this conflict, which means oil may fall, maybe not as quickly as some will think initially. Next up is the bond market, why I always call the adult in the room. Stocks can be emotional, but bonds, they're cold and calculating. And eventually though, they always get it right. And this morning, the message from bonds is pretty clear. Inflation risks may be easing. Treasuries are catching a bid on the idea that lower oil could mean cooler inflation. The 2-year yield is down 6 bps at 4.06%. The 10-year is down 6 bps at just under 4.5% at 4.49%, a key level, while the 30-year is easing 4 bps to 5.02%. All eyes now turn to Thursday's PCE report, the Fed's preferred inflation gauge. Expectations suggest a mixed picture. Headline inflation is expected to cool month over month, but year over year remains sticky. Core inflation is expected to stay elevated to remind everyone, well, this fight just ain't over yet. And that sets up the debate because if the PC comes in hotter than expected, then yields will likely move back up and this morning's enthusiasm is gonna start to fade. But, there's always a but, if the markets decide that falling oil and easing geopolitical tensions are ultimately gonna cool inflation over the next couple of months, then investors may choose to look through it. One hotter point, right? And focus instead on where inflation is headed, not where it's been. And that's gonna be the setup. And Thursday, well, that may end up deciding how the whole week reacts. In terms of the Fed, last week traders and investors were pricing in no rate cuts for the remainder of 2026. And actually a rate hike was becoming increasingly likely. Maybe that changes, maybe it doesn't. Warsh is now officially the Fed chair, so let's give it some time. He says— Warsh says that the Fed will remain independent. Trump says he wants rate cuts and they're going to come quickly. That's the rub, because you can't have both in this environment. So you got to sit tight. Remember, the only way the Fed can cut rates is if they also shrink the balance sheet at the same time. Otherwise, they risk igniting an inflationary cycle that will rival the 1980s. And trust me, it wasn't pretty. This is a developing story, so you just sit tight. The VIX, well, that remains in the complacency zone, and that always concerns me. So naturally, US futures are green this morning, right? Green across the board, because the market believes, or at least it wants to believe, that progress here ultimately means an end to the conflict. So yes, while the move is real and the enthusiasm is real, the deal is still not signed. Expectations are moving faster than the facts, So I would say stick to the plan and proceed with caution. This morning, gold is down $40 at $4,528. It remains between the trend lines, right? $4,380 is support, $4,650 is resistance. A deal? Well, if we get a deal, that should see gold test such a support. Whether it holds or not is yet to be seen, right? Uh, if it's a really good deal, then maybe we'll break through the support level and trade lower. Much is going to depend on the tone of the agreement and the speed at which we see it decline. No deal means gold is going to keep testing resistance higher and just on geopolitical unrest. Econ data this week includes consumer confidence. That's out at 10 o'clock this morning. And this one drops as many of you might just be reading this or listening to it, but don't dismiss it because confidence drives behavior. And right now consumers are sending a pretty clear message. They're uneasy. Friday's read on consumer sentiment, University of Michigan sentiment came in at 44.8. It was another decline in one of the weakest readings we've seen in years. Why? Because people feel inflation, they feel higher gasoline prices, they hear about supply disruptions in the street, right? They see grocery bills, they see insurance bills, they see their utility bills, and they're beginning to question whether prices are ever really going to come down, right, to back to where they were. In addition, year-ahead inflation expectations, they pushed up towards 4.8%, while longer-term expectations climbed as well. Well above the range that investors have been expecting. And that's a little bit of a concern. And here's why that matters. Consumer spending drives roughly 70% of the US economy. If confidence keeps falling, eventually people will change their behavior. They'll delay purchases, they'll trade down, they'll spend less, and that begins to show up in earnings. Watch that number at 10 o'clock because if confidence surprises to the upside, Okay, then it reinforces this morning's risk-on move. But if it disrupts, if it disappoints it again, it becomes another reminder that the consumer may not be feeling nearly as good as the market is suggesting. Tomorrow we're gonna get the Richmond Fed Manufacturing Index and the Dallas Fed Services Index. And remember, we're a 75% services economy, so that's important. Thursday brings personal income and personal spending along with the all-important PCE report for April. We're also gonna get new home sales and building permits. So keep your eyes on what happens there. Earnings this week, there are 5 names that matter because they touch on all the themes that's been driving this market action right now. It's AI spending, it's enterprise demand, and it's the health of the consumer. Marvell is gonna be the first one up. This one matters because it sits right in the middle of the AI infrastructure buildout story. Everyone's talking about chips. Well, Marvell helps enable the ecosystem around all those chips. Options are implying a meaningful move, and investors want to know one thing: is AI spending continuing to broaden beyond the obvious names? Salesforce, right? This is probably the headline event. CRM has had a rough year and expectations have come way down. That means the bar may finally be more reasonable, right? What investors want to hear is simple: are companies still spending on software? And more importantly, is AI actually generating revenue? Agentforce, which is Salesforce AI agent platform. Its growth has been strong. Now management needs to prove it, prove that it translates into real business. And remember, this one is a Dow component, so that will make, that'll affect how the Dow reacts. HQ, which is, uh, uh, Hewlett-Packard. It's quietly interesting, right? This becomes another test of whether AI enthusiasm is creating actual hardware demand or if the excitement is getting ahead of reality. You wanna watch for their forward guidance. Costco, forget the stock for a second. This is a consumer report. Traffic, basket size, membership trends at Costco. What are people buying? Are they trading down? Are they stretching their budgets, right? Looking for lower priced items. Costco gives us one of the cleanest reads on the American consumer. And if a market, in a market obsessed with inflation and growth, that matters. Dell, this one's all about AI infrastructure, servers, enterprise spending. Buildout demand after last quarter expectations remain elevated. If Dell delivers, it supports the idea that the AI trend still has legs. If they disappoint, people are going to start asking whether the buildout is running ahead of demand, which has always been kind of the concern, you know, this whole earnings season. Bottom line, Wednesday night into Thursday becomes the next real test. Salesforce is about the— Salesforce is the headliner. Costco tells us about the consumer. Dell and Marvell tell us whether the AI spending remains real. This morning, European markets are all a bit weaker. France Yes, it's down 1%, but the UK is up 0.7%. Everyone else is in between, but they're all negative. US futures are up. Dow futures are up 200. S&P is up 52. The NASDAQ up 320, and the Russell was up 31. This long weekend is now behind us. Summer is now in full swing. The S&P closed at 7473, up 28 points. Friday ended with records. Today may start with euphoria. Oil is down, remember. Bonds are rallying, and futures are green across the board. The chart still looks beautiful, right? It's up and to the right. And now we have a genuine geopolitical catalyst that, if it actually materializes, removes so much uncertainty and could be the single biggest— what could be the single biggest inflation threat. But we're not there yet. The deal isn't signed, the strait isn't open, and ships are not moving. So don't, don't, uh, don't get FOMOized. Participate, stay positioned, trust your plan. Don't get forced into something that you're not sure of, right? You can call me at 561-931-0190. I'm happy to discuss your portfolio and how it's set up and what the risk is in versus where you need to be at the end. Okay, so what do we, what do we have to do tonight? We're going to have the lemon zucchini rigatoni. This is a great summer dish. For this, you need the green zucchini. You can use the yellow. I always use green. You need garlic. You need fresh lemon juice. You need Pecorino Romano cheese, salt, pepper, olive oil, butter, parsley, chicken broth. You can use vegetable broth if you prefer. And you, uh, need the rigatoni. You want to begin by slicing the zucchini into rounds. Then you're going to take a large deep sauté pan. You're going to add the olive oil, heat it up, get it nice and hot. Then you're going to put— add the zucchini into the pan. You're going to season it with a little bit of salt and pepper. And you want to caramelize the zucchini. You want to keep the heat on high, but you want to move the zucchini around so that they don't burn. Once they get caramelized, then kind of remove them and set them aside. Might take you 10 minutes depending on how many zucchini you have in there, right? If you have a lot, do it in batches. In the same sauté pan, when you're done, add a half a pound of the rigatoni and coat it well with the oil, right? Right out of the box, just put it right in the pan, coat it with the oil. Next, you're going to add in the sliced garlic and the chicken broth, enough to cover the pot— the pasta. Now you're going to squeeze the juice of half of a lemon into that pan as well. You're going to keep the heat on high, cook the pasta until it's al dente. Now, if the pasta starts to soak up the broth, you can always add more broth because you want to keep it moist, but you don't want to make it soupy. Right, once it's done, you're going to add in a tablespoon of butter to coat the pasta. Then you're going to add in a handful of chopped parsley, and then you're going to put the zucchini back. You're going to mix it well. You're going to add in a handful of— two— or of Pecorino Romano cheese and mix it well. When you're serving, you're going to dust it with a bit more cheese and a drizzle of good olive oil, and you are going to enjoy this. And this is one of those dishes you're going to set the table outside, you're going to— under the, uh, under the evening sky, you're going to turn on some music, and you are just going to enjoy it. Until tomorrow, take good care.
