Dow Reached Fresh All-Time High Before Record Low UMich Trimmed Gains: May 22, 2026

Stocks are looking to close their eighth consecutive week of appreciation as optimism about a peace deal with Iran and ongoing AI enthusiasm bolster investor confidence. The Dow Jones reached a fresh all-time high this morning before paring gains subsequent to a sharp downward revision to UMich’s Consumer Sentiment Index, which sent the indicator to a new record low of 44.8. But rising household pessimism is something equities have learned to manage since the pandemic, as bulls have counted on themes that are insensitive to a deterioration in shopper attitudes, such as AI capital expenditures driving a substantial build-out in data centers across the country. Meanwhile, the Treasury complex and the greenback are attentive to the material lift in the report’s inflation expectations, as the yield curve climbs in bear-flattening fashion led by the Fed sensitive shorter maturities while the dollar strengthens just as the next Fed chairman, Chair Kevin Warsh, is set to be sworn in by President Trump early in the afternoon. Elsewhere, it’s a broad rally for shareholders as all major averages advance amidst 9 of the 11 components climbing on the session. Conversely, commodities and cryptocurrencies are retreating overall, but prediction contracts are catching bids.

Consumers’ Dour Moods Worsen

The University of Michigan’s (UMich) Consumer Sentiment Index worsened materially from the preliminary read two weeks ago. Indeed, this morning’s headline result was a historic 3.4 point downgrade to 44.8 from 48.2. The record low was driven by complaints about elevated cost-of-living expenses, pain at the pump and a troublesome outlook characterized by heavier prices going forward. Moreover, inflation expectations in the past 14 days shifted from 4.5% and 3.4% to 4.8% and 3.9% for the coming 1- and 5-years, as the sub-indices of current conditions and future circumstances declined from 52.5 and 48.1 to 45.8 and 44.1. Lower-income households and folks without college degrees especially reflected pessimism.

Optimism Heading into Memorial Day

Animal spirits are thriving as we head into the extended Memorial Day weekend, with equity market participants excited about AI, tech, earnings and long-awaited IPOs from OpenAI and Space X. And the month is poised to end on a strong note, assuming there are no unfavorable geopolitical headlines, with most quarterly profitability reports and significant economic data already behind us. However, June could mark a turning point for Wall Street, as I’m expecting robust payroll numbers to be accompanied by inflation figures north of 4%. Furthermore, new Fed Chair Kevin Warsh’s opinions on those developments will be top of mind as he gears up to lead his first meeting 23 days from today. With fresh leadership at the Fed, will the central bank assume the hawkish posture the Treasury complex is reflecting in order to battle ongoing inflationary pressures, or will policymakers look through incoming 4-handles on the CPI and PCE indicators as one-time shocks that will diminish shortly?

International Roundup

South Korea Consumer Sentiment Improves

South Korea’s May Composite Consumer Sentiment Index climbed 6.9 points to 106.1 after two consecutive months of declines sparked by concerns about the Middle East conflict. A reading above 100 indicates that a larger portion of survey respondents are optimistic than pessimistic. Within the composite index, the current economic conditions component climbed 15 points to 83 and the gauge of prospective domestic economic conditions hit 93, up 14 points. Prospective living standards ascended from 92 to 97 and current living standards rose from 91 to 93. Also this month, prospective household income and prospective household spending strengthened from 98 and 108 to 100 and 110.

Retail Sales Weaken in the UK

April retail sales volumes in the UK fell 1.3% month over month (m/m) and were flat relative to the year ago period, according to the Office for National Statistics. In addition to underperforming estimates for a 0.6% m/m decline and a 1.3% y/y jump, the annual print was the worst in 12 months. Cashier activity also weakened substantially from the 0.6% m/m and 1.4% y/y expansions in March with consumers curtailing their purchases of gasoline in response to higher prices. Indeed, when excluding automotive fuels, sales volumes declined only 0.4% m/m, just slightly worse than the economist consensus estimate for a 0.3% fall but a reversal from the 0.1% growth in March. Sales ex-gasoline, furthermore, were 1.1% higher than in the year-ago period. Economists anticipated growth to occur at the same rate of March, or 1.5%. Among the seven major categories, six experienced m/m declines. The textiles and footwear group was among the weakest categories, a result of unfavorable weather, while non-store retailers (ecommerce) reported a drop in demand.

Canada Retailing Growth Slows

Retail sales in Canada climbed 0.6% last month following the 0.9% climb in March, according to preliminary data from Statistics Canada. The value of March fuel sales was up 12.4% while the volume of purchases slipped 1.9%. Conversely, sales in the building materials and garden equipment category and the automobile and automobile parts group sank 2.9% and 0.5%. The general merchandise sector, the sporting goods and miscellaneous retailers group and the category of furniture, electronics and appliances also weakened with declines of 0.5%, 0.3% and 0.2%.