The market continues to show strength, although increasingly influenced by macroeconomic factors, corporate earnings, and inflation expectations. Major U.S. indexes reached new record highs once again, mainly driven by technology and semiconductors, but the environment is starting to reflect a more complex mix of optimism and caution.

A rally that remains alive

The S&P 500 and Nasdaq closed once again at record levels, consolidating one of the strongest bullish streaks of recent months. Artificial intelligence and the semiconductor sector continue to be the market’s main drivers, with companies linked to technological infrastructure leading gains.

The market continues rewarding growth, efficiency, and AI exposure, especially among companies delivering strong results and clear expansion prospects. However, the rally is no longer as broad-based as it was in previous weeks.

Technology remains the market leader

The spotlight returned to the technology sector. Companies related to chips, data infrastructure, and artificial intelligence drove a significant portion of the market’s positive performance.

Semiconductors remain at the center of the 2026 growth narrative. Investor appetite for companies tied to AI development continues pushing valuations higher and reinforcing Nasdaq’s leadership over more traditional indexes.

At the same time, the market has started showing greater sensitivity toward tech companies with elevated valuations or less aggressive guidance. Expectations around earnings continue to rise.

Inflation and the Fed: macro takes center stage again

Although there were no major Federal Reserve decisions during the period, markets began repositioning ahead of upcoming U.S. inflation data.

Expectations for potential rate cuts remain moderate. Inflation continues to cool, but not fast enough to justify an immediate shift in monetary policy.

This keeps alive the scenario of higher interest rates for longer, increasing pressure on valuations and making markets more dependent on positive macroeconomic data.

The Fed’s message remains largely unchanged: prudence, patience, and full dependence on incoming data.

Lower geopolitical tension brings relief to markets

One of the most relevant developments was the temporary easing of geopolitical tensions involving Iran and the Strait of Hormuz.

Partial stability in the region helped moderate oil prices, reducing part of the inflationary pressure that had impacted markets in previous weeks.

This relief allowed investors to refocus on corporate earnings and economic growth, temporarily reducing the weight of geopolitical risk on financial assets.

Rotation and selectivity

Sector behavior showed a clearer rotation among industries.

• Technology continues to lead clearly.

• Energy lost momentum following oil stabilization.

• Defensive sectors started regaining attractiveness.

• Financials continue showing mixed performance depending on rates and consumer activity.

The dispersion among sectors reflects a less impulsive and more selective market. It is no longer simply about “buying the market,” but rather identifying companies with solid fundamentals and the ability to sustain growth in a more demanding environment.

Liquidity and investor sentiment

Despite record highs, markets are showing signs of greater caution in risk-taking.

Trading volumes remained relatively moderate during several sessions, while investors wait for new macroeconomic catalysts.

This suggests that the rally continues, but with more disciplined participation and less speculation than in earlier stages of the year.

What to watch going forward

In the coming days, market attention will focus on:

• U.S. inflation data (CPI and PPI)

• Retail sales and consumer spending

• Comments from Federal Reserve members

• Continuation of technology sector leadership

• Oil prices and geopolitical developments in the Middle East

The market maintains a solid bullish structure, but is entering a stage where macroeconomic factors are regaining prominence.

The narrative remains positive for risk assets, especially technology, although sensitivity to inflation, interest rates, and valuations continues increasing.

Rather than a euphoric market, what we are currently seeing is a market that continues moving higher, but with greater discipline, stronger selectivity, and less room for disappointment.

The opinions in the preceding commentary are as of the date of publication and are subject to change.  Information has been obtained from third party sources we consider reliable, but we do not guarantee the facts cited are accurate or complete.  This material is not intended to be relied upon as a forecast or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment. We may execute transactions in securities that may not be consistent with the report’s conclusions.  Investors should consult their financial advisor on the strategy best for them.  Past performance is no guarantee of future results. For illustrative purposes only. Does not represent an investment recommendation. For more information, please see our Social Media Disclosure.

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Sources: Bloomberg, Reuters Energy, CNBC Markets, ISM Manufacturing Report