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Party Like It’s 2002. The major U.S. stock indexes wrapped up May at record levels, while the Nasdaq Composite clocked in its best two-month stretch in decades. |
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The Nasdaq rose 0.2% today, while the S&P 500 rose 0.2% and the Dow Jones Industrial Average gained 0.7%. All three built on yesterday’s closing highs, while the S&P rose for a ninth week in a row. |
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The Nasdaq rose 25% in April and May, its best two-month stretch since October and November of 2002. The S&P clocked in its best two-month stretch since 2020, while the Dow had its best since 2023. |
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Despite all the big milestones, however, a majority of S&P 500 stocks fell on the day. The tech sector escaped the downturn and rose 1.9%, though. Dell Technologies surged 32% on Friday following the company’s blowout earnings report. |
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The only other major S&P 500 sector that closed higher was financials, which rose 0.6%. Consumer staples, communication services, energy, and consumer discretionary all fell 1% or more. |
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“One thing we can say with certainty is that we are back to a lopsided ‘bad breadth’ market,” writes Rosenberg Research’s David Rosenberg. “While the overall market is at all-time peaks, only two of the eleven sectors have managed to reach that status. It is a very rare situation indeed to be talking about a stock market at record highs at the same time that the Financials, of all sectors, are very nearly in correction mode.” |
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Though breadth has been lacking in recent weeks, smaller stocks have been a punching above their weight. The Russell 2000 fell on Friday, but the small-cap index is up nearly 17% since the end of March. It’s beating all three major indexes this year. |
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Small-caps are typically more sensitive to interest rates, so the rally in the face of rising expectations of a rate hike could seem a bit out of character. But at a time when investors are chasing riskier trends, the Russell does offer plenty of options. |
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“We’re seeing waves of speculation in areas like quantum computing, space exploration, alongside waves of AI spending that are boosting not only the big names, but small ones too,” Steve Sosnick, chief strategist at Interactive Brokers, tells me. “That is also a catalyst for small-cap investing overall. Hence, the rally in the key small cap index despite some obvious macro headwinds.” |
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It’s also important to note that the index’s entire market cap is smaller than just Nvidia and Apple combined. |
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“Those stocks are certainly susceptible to momentum shifts,” says Sosnick, of Apple and Nvidia. “So why wouldn’t an entire index which is dominated by much smaller and thinly traded products be as susceptible, if not more so.” |
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Watch our TV show on Fox Business Fridays at 7:30 p.m. ET and Saturdays and Sundays at 9:30 a.m. or 10:30 a.m. ET. This week, Morgan Stanley’s Chris Toomey on why the energy trade still has room to run. Plus, why Kevin Warsh’s mission to cut rates is getting harder. |
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| - | Last | Chg% |
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↑ Dow Jones Industrial Average | 51,032.46 | +0.72% | ↑ S&P 500 Index | 7,580.06 | +0.22% | ↑ NASDAQ Composite Index | 26,972.62 | +0.20% |
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5/29/2026, 8:00:31 PM ET |
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The Hot Stock: Dell Technologies +32.8%
The Biggest Loser: Clorox -6.4% |
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Best Sector: Technology +1.9%
Worst Sector: Consumer Staples -2.0% |
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