Stock Market Outlook: May 17th = Uptrend
The stock market outlook shows an uptrend in place after the index reached another all time high.
Oil, Energy, and Large Cap Growth outperformed; Emerging Markets, Consumer Discretionary, and Small/MidCap value underperformed. Inflation data was much higher than expected, pushing interest rates above long-term levels and pressuring other assets.
TREND ANALYSIS
The S&P500 ( $SPX ) rose 0.1% last week. The index is:
- ~8% above the 50-day moving average
- ~10% above the 200-day moving average
The three technical indicators used to identify trends remain bullish.
- Average Directional Index: Bullish
- No change
- Institutional Activity: Bullish
- Another distribution day added to the count ( 4 )
- On-Balance Volume: Bullish
- No change
SPX Price & Volume Chart – 2026-05-17
PERFORMANCE HIGHLIGHTS & COMPARISONS
Asset Classes
Oil ( $USO ) led to the upside last week. Emerging Market Equities ( $EEM) reversed the prior weeks win and led to the downside. U.S. and Development Market Bonds ( $IEF, $BNDX ) fell to bearish bias after a strong move in long-dated interest rates, while the US Dollar ( $DXY ) moved up to neutral bias.
Asset Class Performance – 2026-05-17
S&P500 Sectors
A week after leading to the downside and falling to bearish bias, Energy ( $XLE ) outperformed all other sectors in dramatic fashion, bested the index by than 6%, and reclaimed bullish bias. Consumer Discretionary ( $XLY ) was the worst sector. Consumer Staples ( $XLP ) shifted back to neutral bias, while Industrials ( $XLI ) fell to bearish.
S&P Sector Performance – 2026-05-17
S&P500 Investing Styles
Large Cap Growth ( $IEF ) led to the upside, one of two outperformers. Small and Mid Cap Value ( $IWN, $IJJ ) tied for the worst performance, though High Beta, Mid Cap Growth, and Defensives ( $SPHB, $IJH, $POWA ) weren’t far behind. There were no bias changes.
Sector Style Performance – 2026-05-17
COMMENTARY
Markets
The jump in inflation data ( more below ) sent interest rates up, particularly on the long-end of the curve, with renewed fears of a “higher for longer” environment. 30-year U.S. Treasuries hit 5.12% on Friday, the highest level since July of 2007. Resurgent oil prices and a stronger dollar added to the downward pressure on other asset classes.
According to the International Energy Agency ( IEA ), the crude oil in storage tanks and tanker ships is dwindling at a record pace. They warned that even with a reopened Hormuz , the market could remain undersupplied until October and raising probabilities of global shortages.
Macroeconomic Data & Policy
CPI inflation hit +3.8% in April; up 1.5% verses last years April reading of +2.3%! That’s a big move. Interestingly, Core CPI was flat during the same time period, showing the impact of food and energy prices over the past 12 months.
It was the PPI reading that surprised market participants, hitting +6% in April…up from +2.4% at this time last year (yes, that means PPI is more than double last years figure). Even the month over month was much higher than expected, and that includes an increased to March figures. Core increased to +5.2%, not quite double last years figure of +3.1%, but nothing to celebrate.
Geopolitics
A quiet week in the U.S.-Iran “Maritime Conflict & Ceasefire” saga, as investors focused on the Trump-Xi summit in Beijing. The meetings generated corporate headlines and photo ops, but didn’t not result in any major policy agreements…but be on the lookout for social media diplomacy nonetheless.
EYES ON THE HORIZON
This week is light on high impact news: FOMC meeting minutes on Tuesday. Lower impact data sets includes pending home sales, the Philly Fed Manufacturing Index, and Flash PMI.
- Monday: —
- Tuesday: FOMC Meeting Minutes
- Wednesday: —
- Thursday: —
- Friday: —
Best to Your Week!
The Safe Investing Blog 