Wall Street Opens with Jobs Data and AI Rally in Focus

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•  31 May 2026
 

Wall Street enters the week with strong momentum after the S&P 500 posted its ninth consecutive weekly gain and advanced more than 10% year to date. The Nasdaq has climbed about 16% since the start of the year despite a March correction in technology and mega cap stocks. Semiconductor and AI infrastructure companies have resumed market leadership, with the Philadelphia Semiconductor Index surging about 80% from its late March low and Broadcom $AVGO gaining more than 50% over the same period. The move reflects continued earnings momentum and institutional flows into AI related sectors.

The market advance has not been driven solely by renewed enthusiasm around artificial intelligence. Lower energy prices and hopes for diplomatic progress related to the conflict with Iran have also supported sentiment. According to Bank Hapoalim, Brent crude fell about 12% over the past week to $92 per barrel amid reports of progress in talks between the United States and Iran and expectations that the Strait of Hormuz could reopen. At the same time, the yield on the 10 year US Treasury declined to 4.44% from 4.56% a week earlier, easing pressure on equities after a period when rising long term yields weighed on investor confidence.

The backdrop remains complex despite the market strength. Recent US economic data point to a combination of sticky inflation, a consumer under pressure, a labor market that remains resilient, and bond yields that could rise again if economic reports come in too strong. The PCE price index, the Federal Reserves preferred inflation gauge, increased 0.4% in April, while annual inflation accelerated to 3.8%. Core inflation rose to 3.3% from 3.2% in the prior month. Meanwhile, the household savings rate fell to just 2.6%, down from 3.2% a month earlier and 5.5% a year ago, indicating that consumers continue to spend but are increasingly drawing down financial cushions.

The key test arrives at the end of the week with the May employment report. Economists expect the US economy to add between 85,000 and 93,000 jobs while the unemployment rate is projected to remain at 4.3%. The report presents a delicate balance. A weaker reading could revive concerns about economic slowing, while a stronger result, particularly above 150,000 jobs, could pressure equities by increasing fears that the Federal Reserve may need to tighten policy again. The outcome has direct implications for rate expectations, multiple expansion, and broader market positioning.

Before the employment report, investors will receive several important macroeconomic releases. The ISM Manufacturing Index for May is due Monday, followed by JOLTS job openings data on Tuesday. Wednesday brings the ISM Services Index, factory orders, and the Federal Reserves Beige Book, providing a regional assessment of economic activity. Weekly jobless claims will be released Thursday before the labor market report closes the week. Investors will use each release to assess whether the economy is slowing in an orderly fashion or whether deeper problems are emerging in consumption, employment, or inflation.

The earnings calendar will also attract significant attention, with Broadcom $AVGO at the center of the AI catalyst narrative. Its results could provide another indication of investment trends in AI infrastructure, data centers, and advanced semiconductors. CrowdStrike $CRWD, Hewlett Packard Enterprise $HPE, Palo Alto Networks $PANW, DocuSign $DOCU, Ciena $CIEN, Lululemon $LULU, Ulta Beauty $ULTA, Credo Technology $CRDO, and Medtronic $MDT are also scheduled to report. Broadcom represents more than a single company earnings event because its results will test whether semiconductor and AI valuations continue to be supported by genuine growth in orders and revenue or whether expectations have moved ahead of fundamentals.

The broader technology landscape will remain in focus through major industry events. Nvidia $NVDA, Qualcomm $QCOM, Intel $INTC, Arm Holdings $ARM, and other companies will participate in Computex Taipei, while Microsoft $MSFT hosts its annual Build conference. Both events are expected to emphasize artificial intelligence, data centers, software, and robotics. The IPO market may also draw attention through the planned Quantinuum offering, the Honeywell $HON backed quantum computing company reportedly seeking a valuation of approximately $12.7 billion. Separately, FedEx $FDX is expected to complete the separation of FedEx Freight, creating an independent freight company within the S&P 500.

According to Leader Capital Markets and economist Jonathan Katz, the most important market concern remains the combination of accelerating inflation, consumer spending that exceeds income growth, and a Federal Reserve that could face pressure to raise rates if labor market conditions remain firm. Consumer confidence declined in May, durable goods orders surged in April largely because of aerospace and defense demand, and first quarter growth was revised lower to 1.6%. However, the Atlanta Federal Reserve GDPNow model points to growth accelerating to 3.8% in the second quarter.

Leader highlights the consumer as the central variable. Disposable income was unchanged in April while private consumption rose 0.5%, pushing the savings rate down to 2.6%. Rising equity markets have supported consumer spending through a wealth effect, but the sustainability of that trend remains uncertain. As long as spending continues, corporate profits can remain resilient. If spending increasingly depends on declining savings, however, investors may discover that economic growth is less durable than headline market performance suggests.

The firm also warns that inflation is no longer a secondary concern. Core PCE inflation accelerated to 3.3% and has been trending higher since late 2025, with more than half of the index components rising at least 3% over the past year. Household inflation expectations have also increased, with consumers surveyed by the University of Michigan expecting average inflation of 3.9% over the next five years. If the upcoming employment report is strong, markets may need to confront a scenario in which the Federal Reserve not only delays rate cuts but potentially considers another rate increase.

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