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Equities continued their ascent as bond yields and gasoline prices retreated last week. For the week, the S&P 500 Index was +1.4%, the Dow Jones Industrials +0.9%, and the NASDAQ +2.9%. The Technology, Consumer Discretionary, and Materials sectors led the S&P 500 Index for the week, while the Energy, Consumer Staples, and Utility sectors lagged. The 10-year U.S. Treasury note yield was 4.439% at Friday’s close versus 4.554% the previous week.
The American Automobile Association (AAA) reported the national average price for regular unleaded gasoline is currently $4.336/gallon. This is 4.0% lower than a week ago, but 37.6% higher year-over-year. Gasoline prices have been a major focus for consumers since prices began rising in March at the onset of the conflict with Iran.
The April Personal Consumption Expenditures (PCE) Price Index was +0.4% month-over-month and +3.8% year-over-year. Excluding food and energy prices, core PCE was +0.2% month-over-month and +3.3% year-over-year. This inflation reading, along with labor market data, will be key items the Federal Reserve considers when it evaluates monetary policy at the June Federal Open Market Committee meeting. We will see labor market data on Friday with the release of the May Employment Situation report. Current CME Fed funds futures show no change in interest rates at the June through October meetings, and a near even split for no change or a 0.25% increase at the December meeting.
The first quarter earnings reporting period is essentially complete, with 97% of companies having already reported. This week 11 companies are scheduled to report results. First quarter earnings are expected to grow by 28.6% and quarterly revenue growth is expected at 11.8%. Full-year 2026 earnings are expected to grow by 22.6% with revenue growth of 10.7%.
In our Dissecting Headlines section, we look at the current state of the consumer.
Financial Market Update
Dissecting Headlines: Consumer Confidence
The health and confidence of the consumer is a vital component of economic growth. Higher interest rates and, more recently, higher gasoline prices have tested the spending ability of the consumer.
The May Consumer Confidence report showed a decline in the index to 93.1 from an upwardly revised 93.8 in April. This is higher than the start of the year when the January reading was 89.0. Since then, gasoline prices have increased 53.8% to the current $4.322 per gallon average nationwide.
One element that has aided the consumer in the first half of 2026 has been larger than normal income tax refunds as a result of the One Big Beautiful Bill. The IRS reports that the average refund this filing season has been $3,268 versus $2,945 last year. The larger refunds reflect over withholding due to the change being made in mid-2025. Tax payers should also be seeing lower current withholdings and higher relative take-home pay currently.
Still, many consumers are feeling the pressure of higher prices. As part of the May Consumer Confidence report, two-thirds of consumers cited cutting back on spending overall due to rising prices. Those who are cutting back said they bought fewer items and delayed expensive purchases. Items where consumers are cutting back include clothing and footwear, hobby items, and games/toys.
A resolution to the conflict with Iran and lower energy prices would go a long way toward improving consumer confidence.
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Want a printable version of this report? Click here: NovaPoint Weekly June 1, 2026
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