CWS Market Review – May 12, 2026
Posted by Eddy Elfenbein on May 12th, 2026 at 7:11 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

It’s hard not to be impressed by the market’s recent rally. Through yesterday, the Nasdaq jumped more than 26% in six weeks, but this rally has been heavily skewed to tech stocks. Make that very heavily skewed. If we exclude tech names, then the market was up just 8.5% over those six weeks.

Today was one of the first days in a long time that the Nasdaq finally got some pushback. Here’s a remarkable stat: Ending on Friday, The Nasdaq Composite has outperformed the S&P 500 20 times in 24 days. The S&P 500 retreated today after closing at an all-time high on Monday.

There are a lot of folks out there sounding the “bubble alarm.” I prefer to ignore scaremongering. Peter Lynch famously said, “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”

Decent Jobs Report with Some Red Flags

On Friday, the Bureau of Labor Statistics said that the U.S. economy created 115,000 net new jobs last month. That’s not bad. Economists had been expecting a gain of 55,000. April’s number was down from March, but that month was unusually strong with a gain of 185,00 new jobs.

As good as the report is, there are a few worrying items. For example, one problem spot is wages. Last month, average hourly earnings rose by just 0.2%. That was 0.1% lower than expected. Over the last year, earnings are up by 3.6%. That’s less than inflation, but not by much (I’ll have more on inflation in a bit). The overall unemployment rate held at 4.3% which is still low. It appears that we’re still in the no-hire, no-fire economy. Here’s a look at nonfarm payrolls. The line appears to be cresting:

Another concern is that the labor force is getting smaller. Also, the number of tech jobs is falling.

Here are some details:

Following recent trends, healthcare led with 37,000 new positions, though multiple other sectors also saw gains.

Transportation and warehousing added 30,000, retail rose by 22,000, and social assistance saw a gain of 17,000.

On the downside, information services lost 13,000, part of a continuing trend that has seen the category down 342,000 jobs since November 2022, coinciding with the rise of artificial intelligence. That has equated to a loss of 11% of jobs during the period.

The broader U-6 rate inched upward to 8.2%. The labor force participation rate dipped to 61.8%. That’s the lowest in close to five years. The jobs figure for March was revised upward by 7,000 while February was revised downward by 23,000 to a loss of 156,0000.

I don’t want to sound alarmist. The labor force is fine for now. My concern is if it will remain so in another six months. Frankly, those wages numbers need to get better.

The futures market doesn’t see the Fed making any changes on interest rates for the rest of this year, and they’re probably right. This week, the Senate looks to vote on Kevin Warsh’s confirmation to be the new Fed chairman. Jerome Powell’s term as Fed chairman expires on Friday, but he will stay at the Fed as a governor. The last Fed policy statement had the highest number of dissenting votes in 34 years. Get the popcorn, this could get interesting.

Inflation Hits a Three-Year High

This morning, we got the CPI report for April, and it wasn’t very good. Last month, headline inflation rose by 0.6% (yikes!) and the 12-month inflation rate is now at 3.8%. That’s the highest since May 2023. Wall Street had been expecting a monthly increase of 0.6%.

Of course, high energy prices are a significant factor, but even discounting that, inflation is still a problem. For April, the core rate, which excludes food and energy, rose by 0.4%. Over the last year, core inflation is running at 2.8%.

Here’s a look at gasoline prices via Gas Buddy:

The numbers from the energy sector are shocking. Last month, energy prices rose by 3.8% and food prices were up by 0.5%. For the last 12 months, energy prices are up 17.9%, and gasoline is up 28.5%. As always, bear in mind that energy prices impact everyone.

From CNBC:

Shelter costs rose 0.6% after easing in prior months, indicating that inflation is a problem beyond the Iran war impacts. The tariff-sensitive apparel category increased 0.6% and airline fares accelerated 2.8%, putting the 12-month gain at 20.7%. Tariffs also seemed to hit other areas, with household furnishings and operations up 0.7%.

New vehicle prices fell 0.2% while the index for used cars and trucks was flat. Medical care costs decreased 0.1% and hospital services were down 0.3%. Health insurance also declined 0.4%, while motor vehicle insurance increased 0.1%.

The report also contained bad news for workers, as real average hourly wages slipped 0.5% for the month and fell 0.3% annually.

These numbers put the Fed in a difficult spot. It’s as if the economy needs higher and lower rates at the same time. It needs higher rates to curb any inflation, but lower rates to prevent the labor market from deteriorating.

The Atlanta Fed’s GNDNow model currently sees Q2 GDP tracking at 3.7%. That’s high. If that’s right, then the economy is doing much better than expected. We’ll learn more later this week when the retail sales report comes out. Then on Friday, we’ll get the latest report on industrial production.

Sprouts Soars on Strong Earnings

Since we just finished the Q1 earnings season, I wanted to share our big winner with you, and that was Sprouts Farmers Market (SFM). Sprouts is new to our Buy List but it’s already making a splash.

Sprouts’s business idea is simple: take the look and feel of a farmer’s market and bring it indoors. Think of a big open space, but instead of waiting until the weekend, you can go to Sprouts any day of the week. Sprouts specializes in fresh and organic produce.

I’m particularly impressed by Sprouts’s loyal fan base. Sprouts tends to be less expensive than Whole Foods (owned by Amazon). Its smaller stores aren’t as crowded as Whole Foods, and Sprouts has found an overlooked part of the market: people who want good, fresh, organic produce but not at Whole Foods’s prices.

After the closing bell on April 29, Sprouts said it made $1.71 per share for its fiscal Q1. That’s for the 13-week period ending on March 29. The stock jumped 15% the next day. The CEO said the quarters “played out largely as we expected.”

SFM’s Q1 sales were up 4% over last year. The key figure is that same-store sales were down 1.7%. That’s not good, but it shows some signs for optimism. During the quarter, the company owned six new stores, which brings the total to 483 stores.

For Q2, Sprouts sees earnings between $1.32 and $1.36 per share and same-store sales growth between -2% and flat.

For all of 2026, SFM sees same-stores sales growth between -1% and +1% and earnings between $5.32 and $5.48 per share. The shares have rallied another 6% since the big jump after its earnings. I currently rate Sprouts a buy up to $90 per share.

That’s all for now. The retail sales report is due to come out on Thursday. It will be interesting to see if the war in Iran has had an impact on shopping. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Morning News: May 12, 2026
Posted by Eddy Elfenbein on May 12th, 2026 at 7:12 am

Oil Prices Rise on U.S.-Iran Standoff

EU Seeks to Overcome Complacency in Global Race for Rare Earths

Don’t Buy the Hype on a US-Brazil Rare Earths Deal

A Startup Confronts Water Shortages by Pulling It Out of the Air

China Increasingly Views Trump’s America as an Empire in Decline

How the U.S. Is Trying to Ensure the Dollar’s Dominance During Economic Turmoil

Korea Roils Market by Floating ‘Citizen Dividend’ From AI

Bond Market’s Warsh Trade Falls Apart as Oil Fans Inflation Risk

Wall Street Puts Blockchain to Work in $13 Trillion Repo Market

Private Credit Funds Slash Loan Values as Borrower Stress Rises

JPMorgan’s Markets Business Is Booming After Record Quarter

JPMorgan and the Delicate Art of Paying Off Employees

Your Financial Advisor May Cost More Than Your Doctor

If the Kids’ Future Were Doomed, There Would Be Very Little Debt

Why Is There So Much Anger at the Weatlhy?

EBay Spurns GameStop’s Bid as ‘Neither Credible Nor Attractive’

Nvidia’s Huang Loses Out on Trump’s China Travel Plans

China Earns $500 Million an Hour From Exports Supercharged by AI

The Tiny, Essential Building Blocks Powering the AI Boom

AI’s Big Guns Have a Serious Inflation Problem

Sam Altman’s Business Dealings Under GOP Scrutiny Ahead of OpenAI’s IPO

Is AI Coming for Your Job? A Bigger Government Can Help

RIP, Liberal Arts Colleges. Long Live the Liberal Arts

Boeing Bets Its Comeback on Trump, China and an Elusive New Plane

Obesity Drug Prices Undercut Healthcare Savings, CVS CEO Says

How an ‘Impossible’ Idea Led to a Pancreatic Cancer Breakthrough

Steel Tariffs Are Harming Tin Can Makers and Lifting Food Prices

President Trump Plans to Reduce Tariffs on Cheap Beef Imports. Is He Treating the Symptom, Not the Disease?

The Iran War Is Taking the Color Out of Japan’s Best-Known Snack Bags

Streaming, Toilet Paper, Underwear: Subscription Fatigue Is Setting In

A Chaotic and Politicized World Cup Lumbers Toward Kickoff

YouTube Plays Matchmaker for Sponsors and Stars

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Morning News: May 11, 2026
Posted by Eddy Elfenbein on May 11th, 2026 at 7:09 am

Dangote Said to Seek $50 Billion IPO Valuation for Refinery Arm

BP Is Winning Back Stock Analysts as Buy Ratings Double

Think $6 Gas Is Bad? It’s About to Get Even Worse in California

Modi Asks Indians to Stop Buying Gold, Hitting Jewelry Stocks

China’s Policies Threaten $650 Billion in G-7, US Chamber Says

As Trump Heads to Beijing, China Is ‘Locked and Loaded’ for a Fight

Bessent’s Deep Grasp of Japan Policy to Challenge Takaichi

Donald Trump Vs. Jerome Powell: Keynesian Vs. Keynesian

The Fed Chair Who Fought Back

Ossoff’s Corruption Message Goes Beyond Trump

Ted Turner Was a Cool Contrast to Today’s Oligarchs

Hedge Funds Make Their Move as Litigation Finance Assets Slump

Private Equity’s New Tax Fight

Private Credit: What Advisors Must Do as the SEC Steps In

KKR Injects $300 Million Into Struggling Private Credit Fund

Consumers Lean on a ‘Hamster Wheel’ of Credit to Manage Rising Costs

A Changing Job Market Leans Against Men

Why Two Big Companies Just Cut Paid Family Leave

Why One of the Nation’s Largest Auto Lenders Isn’t Worried About High Vehicle Prices Or ‘Forever Loans’

The Most Common Tax Traps in Retirement — and How to Avoid Them

Business Schools Need Cash. Some Are Counting on Executive Education

With Just One Word, Brandeis Is Trying to Change College Shopping

Microsoft’s Marquee African Data Center Hits Political Stalemate

Behind the Claude Frenzy That Ate Up All the Mac Minis

How a Job at OpenAI Became the Greatest Lottery Ticket of the AI Boom

Parenting Teens in the Age of AI Means Choosing Trust Over Control

The World’s Highest-Flying Repo Men Are Collecting Spirit Airlines’ Jets

Spirit Was the Only Airline in Town. Now What?

World Cup Cities Were Wrong to Ever Expect a Big Payoff

Retailers Are Making Expensive Bets That Shoppers Still Want to Go to Stores

Apollo Strikes Deals for Two Live-Events Businesses

Wordle to Become Primetime TV Show, With Savannah Guthrie as Host

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CWS Market Review – May 8, 2026
Posted by Eddy Elfenbein on May 8th, 2026 at 7:08 am

“We suffer more in our imagination than in reality.” – Seneca

It’s hard to not be impressed by this latest market surge. As you know, I’m not one for predicting bubbles, but things are getting a bit unreal.

Since March 30, the S&P 500 has gained 15% while the Nasdaq is up more than 24%. Over that time span, the S&P 500 Tech ETF is up by 33% while the non-tech part of the index is up a scant 9%.

It’s an odd market when you’re up by 9% in a little over a month and yet feel that you’ve badly underperformed the market.

Crude oil fell recently on the hopes that some deal can be reached between Iran and the U.S. regarding the Strait of Hormuz. Consumers are feeling stretched. Shares of Whirlpool got clocked on Thursday after the appliance maker said that its business has run into a brick wall.

The New York Fed released a report this week that said that lower-income folks are feeling the pinch of higher gasoline prices.

So far, this has been a good earnings season for our Buy List. Except for American Water Works and Stryker, every stock either beat or met earnings.

Last Friday, IES Holdings had a blowout earnings report and the shares rallied to a 52-week high. Allison Transmission beat earnings by more than 20%. Henry Schein beat earnings and reaffirmed guidance. McKesson beat earnings and offered strong guidance.

FactSet gave us a nice dividend hike. This is the 27th year in a row that FDS has raised its dividend. Cencora beat earnings and raised guidance, but it lowered its sales forecast. I’ll go over the details in a bit. But first, let’s look at our final Earnings Calendar for Q1.

Q1 Earnings Calendar

Here’s our complete earnings calendar for the first quarter of 2026:

Five Buy List Earnings Reports

Last Friday, shortly after I sent you last week’s issue, IES Holdings (IESC) reported its fiscal Q2 earnings. For the quarter, the company made $4.16 per share. That’s up 26% over last year’s Q2. Not enough analysts follow IESC for us to say there’s an earnings consensus.

The numbers were pretty good. Quarterly revenue rose 17% to $974 million. Operating income was up 21% to $112.3 million. As of March 31, IES had a backlog of approximately $3.9 billion. That’s a good sign for future business. The company’s business is divided into four divisions: Communications, Residential, Infrastructure Solutions and Commercial & Industrial.

Management said that while the other divisions were doing well, their Residential division “faced continued pressure from weak housing starts and unfavorable weather.” The company also said that it’s started “to see growth in our multi-family backlog.”

IESC said it “ended the quarter with $49.5 million of cash, $35.0 million debt, and $214.0 million of marketable securities.” During the quarter, the company bought back 4,112 shares for $1.7 million, or an average price of $418.31 per share. IESC ended the quarter with $166.2 million left in the current buyback authorization.

IESC is a large and multifaceted business. If you want to learn more about the details of IESC, you can check out this Investors presentation from earlier this year. This week, I’m raising our Buy Below on IESC to $700 per share.

After the close on Monday, Allison Transmission (ALSN) reported very good earnings for its fiscal Q1. This is good to see because Allison missed its Q4 earnings but offered reassuring guidance.

For Q1, Allison made $2.57 per share compared with estimates of $2.10 per share. Net sales were up 84% to $1.4 billion, but that figure includes Allison’s Off-Highway which was added at the start of this year.

Allison ended Q1 with $311 million of cash and cash equivalents, and $845 million of available borrowing capacity under its revolving credit facility.

For this year, Allison expects consolidated net sales of $5,575 to $5,925 million, and net income in the range of $600 to $750 million. Both of those are unchanged from the previous guidance. The guidance works out to 2026 earnings of about $2.50 per share.

Allison is turning into a nice winner for us this year. We’re sitting on a 26% YTD gain. Allison remains a buy up to $130 per share.

On Tuesday afternoon, Henry Schein (HSIC) reported Q1 earnings of $1.32 per share. That’s up 15% over last year’s Q1 and it topped Wall Street’s consensus by 10 cents per share.

If you’re not familiar with Henry Schein, it’s a one-stop shop for healthcare products with a focus on dental supplies and veterinary products.

This was a good quarter for HSIC. CEO Fred Lowery said, “I am pleased with our strong first quarter results that reflect continuing momentum from the second half of last year as we grow market share and expand gross margins.”

Total net sales were up 6.3% to $3.4 billion. Adjusted EBITDA for the quarter was $289 million, up from $259 million for last year.

During Q1, HSIC bought back $1.6 million shares at an average price of $77.64 per share for a total of $125 million. They’re not done. The company has another $655 million authorized to buy back more shares.

The company also stood by its guidance for this year. HSIC expects earnings to range between $5.23 and $5.47 per share. It also sees sales growth of 3% to 5%. This week, I’m dropping our Buy Below on Henry Schein to $80 per share.

On Wednesday, before the opening, Cencora (COR) said it had Q2 sales of $78.4 billion. That’s up 3.8% over last year but it was below Wall Street’s expectations. Cencora also lowered its full-year sales guidance to growth of 4% to 6%. The previous guidance had been for sales growth of 7% to 9%.

Cencora blamed the lower guidance on “lower expectations for revenue growth in the U.S. Healthcare Solutions segment.” Traders punished the stock on Wednesday’s trading. By the closing bell, Cencora had lost 17%.

Still, the company had a decent Q2, plus it raised its earnings guidance. Cencora’s Q2 earnings rose 7.5% to $4.75 per share. That beat the Street by two cents per share. Cencora raised its full-year guidance range to $17.65 to $17.90 per share. The previous guidance was $17.45 to $17.75 per share.

Cencora recently bought the equity it didn’t already own in OneOncology, a leading management-services organization for oncology practices.

CEO Robert P. Mauch said, “As we move into the second half of our fiscal year, we are pleased to have made progress on debt paydown and to be in a position to resume opportunistic share repurchases.” Cencora said it’s aiming to buy back $1 billion in shares this year.

I know this was a tough week for Cencora, but I still like the stock. It’s been a nice winner for us. This week, I’m dropping our Buy Below on Cencora to $275 per share.

On Thursday, McKesson (MCK) reported fiscal Q4 sales of $96.3 billion. That’s an increase of 6%. Earnings rose 16% to $11.69 per share which was 12 cents more than estimates.

McKesson started a $2.25 billion accelerated share buyback program. The board also approved a $5 billion increase to the current buyback program. That brings the total authorization to $7.7 billion.

For the entire fiscal year, McKesson increased its revenues by 12% to $403.4 billion. Earnings increased 18% to $39.11 per share. Cash flow from operations was $6.2 billion and free-cash flow was $5.4 billion. Last year, McKesson returned $5.1 billion to shareholders through $4.8 billion of stock repurchases and $381 million of dividends.

For the new fiscal year, McKesson expects earnings of $43.80 to $44.60 per share. That’s an increase of 12% to 14%. The company targets a long-term growth of 13% to 16%.

I’m impressed by these numbers. McKesson is a buy up to $1,000 per share.

Buy List Updates

FactSet (FDS) announced that it’s raising its quarterly dividend from $1.10 to $1.16 per share. This is the 27th consecutive year that FactSet has increased its dividend. The new dividend will be paid on June 18 to holders of record at the close of business on May 29.

A few weeks ago, FactSet reported very good earnings. For its fiscal Q2, FactSet made $4.46 per share which was eight cents better than Wall Street’s forecast. The company also increased its full-year guidance range to between $17.25 and $17.75 per share. The Q3 earnings report will be sometime in mid-June. FactSet is a buy up to $220 per share.

That’s all for now. No more earnings next week. However, we’ll soon be upon our off-cycle stocks. That means will soon get earnings reports from stocks like Heico and Intuit. The big econ report to look out for will be Tuesday’s CPI report. We know Americans are paying more for gasoline, but has that spilled over into other areas? On Thursday, we’ll get the retail sales report. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

Morning News: May 8, 2026
Posted by Eddy Elfenbein on May 8th, 2026 at 7:07 am

Iran Turns to China Rail Link to Try to Bypass US Blockade

China’s Invisible Hand Is Rebalancing the Oil Market

Oil Prices Steady After U.S. and Iran Test Truce With Military Strikes

Shell Reports Nearly $7 Billion Profit Amid ‘Unprecedented Disruption’

How Energy Prices Are Driving Demand for Solar Panels and Heat Pumps

Trade Court Rules Against Trump’s New Global Tariffs

US Payrolls Exceed Estimates, Jobless Rate Steady

When You’re ‘Fired From Retirement’

Nothing About Being Born In the U.S. Makes You a Victim

Why We’re Dying Like Flies, and Why Libertarianism Can Reverse This

Anthony Scaramucci: My Wall Street Buddies Regret Voting for Trump

As U.S. Debt Hits a Worrying Milestone, Washington Barely Notices

Trump Accounts Are a New Way to Redistribute Wealth

Trust the Numbers? What to Do When the Data Is Under Attack

Stocks Are Exuberant. Bonds Are Subdued. Why the Divergence?

What Could Knock Markets Off the Wall of Worry?

Brookfield’s Profit Rises on Fundraising, Fee-Paying Asset Gains

Unable to Tax Local Tech, the EU Targets U.S. Giants

US Said to Suspect Nvidia Chips Smuggled Via Thailand

Corporate Layoffs Are Down 10% This Year, but the AI Reckoning Has Come for Tech

The AI Revival of the Three Mile Island Nuclear Plant

The Importance of Amazon’s Globalstar Purchase to Growth

‘Terminator’ Fears and Internal Dysfunction: Inside the OpenAI Trial

Why the AI Race Is Being Lost In the File Cabinet

SoftBank Cuts Target for OpenAI Margin Loan by 40% to $6 Billion

How X Is Driving the Politics of Mutually Assured Dysfunction

Sony Sees Double-Digit Earnings Growth Despite Quarterly Miss on EV Losses, Game Weakness

For 70 Years, Whirlpool Paid a Dividend. Suddenly It Can’t Afford One

Rupert Murdoch’s High-Stakes Blitz Against the NFL

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Morning News: May 7, 2026
Posted by Eddy Elfenbein on May 7th, 2026 at 7:02 am

Adnoc’s LNG Tankers Go Dark to Get Gas Shipments Through Hormuz

Oil Prices Slide on Hopes for Renewed Peace Talks

War and Energy Shortages Boost China’s Influence in Asia

Europe Braces for a Fresh Cycle of Chinese Competition

US-China Summit May Be a Nothingburger. Good.

China Asks Banks to Pause New Loans to US-Sanctioned Refiner

Frackers Are Finally Ready to Drill. Trump Won’t See a Return of the Go-Go Days.

ECB’s Next Move Should Be Guided by the Data, Not the Date, Villeroy Says

Fed’s Collins Favored Changing FOMC Statement With Dissenters

Citi Shares Decline as Return Target Falls Short of Expectations

Wall Street Poised for Bonus Increases in ‘Year of the Bank’

Private Credit’s Problem Isn’t the Media

Kalshi, the Prediction Market, Is Now Valued at $22 Billion

Credit Karma Opens Site for Americans With No Credit History

The Billionaires Behind the Most Expensive Midterm Elections in History

A Victory for Capitalism and Common Sense In California

Corporate Layoffs Are Down 10% This Year, but the AI Reckoning Has Come For Tech

How Trump Has Made the Doctor Shortage Worse

Inconsistency From the FDA Has Become a Huge Tax

Selling Pot Is a Tough Business, but One California Company Is Beating the Odds

Catalyst Pharma to Be Acquired by Angelini Pharma in $4.1 Billion Deal

After Stumbles, Technology Meant for Self-Driving Cars Finds a Second Act

Musk’s AI Empire Is Unraveling — the Trial Is Just the Beginning

AI’s Potential Is a Signal That This Isn’t Your Dad’s Internet Mania

Anthropic’s Capacity Pinch Cracks the Door for OpenAI

The Theatrical Release of “Narnia” Restates the Netflix Case

The Iran War Is Crushing Whirlpool’s Profit—and Higher Prices Are Coming

Hertz Reports Worse-Than-Expected Loss in Volatile Start to Year

Kraft Heinz CEO Pushes Value: ‘Consumers Are Literally Running Out of Money’

Fast-Food Sales Rise Despite Higher Gas Prices

McDonald’s Value Machine Is Generating Higher Sales

Raising Cane’s Grew From an Idea a College Professor Hated

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Morning News: May 6, 2026
Posted by Eddy Elfenbein on May 6th, 2026 at 7:06 am

Yen Spikes to 10-Week High and Sparks Intervention Speculation

US Gasoline Hits $4.50, Nears All-Time High as Iran Fuel Crunch Grows

High Gas Prices Wreak Havoc on America’s Army of Supercommuters

The Message Isn’t More Housing Supply, It’s Don’t Own a Home

How Blue States Go From Rent Seeking to Rent Losing

A Fight Over Dirt in Utah Hints at the Future of America’s Public Lands

How Trump’s $12 Billion Stash of Critical Minerals Risks Distorting Markets

The DOJ Is Breaking Its Own Rules to Litigate in the Media

Mnuchin Says There Is No ‘Break-the-Glass’ Solution for US Borrowing

Powell Is Right to Demand Clarity on Fed Independence

End Quarterly Earnings Reports? Here’s the Debate

Inside the Debate About Drastically Expanding Trump Accounts

Morgan Stanley Debuts Crypto Trading, Undercuts Rivals on Price

X User Tricks Grok Into Sending Them $200,000 In Crypto Using Morse Code

Buffett’s Big Bets Will Haunt the Abel Era at Berkshire

Santander Pitches Buy Now, Pay Later Loan Risk to Investors

Illegal Lotteries Are Beating Governments at Their Own Game

A Proposed Billionaire Tax Exposes the Dual-Share Racket

SpaceX Proposes $55 Billion to Begin Terafab Project in Texas

Parents and Tech Companies – Not Government – Must Protect Children

American Factories Lag in Adopting A.I. This Drugmaker Is an Exception

Bayer to Buy Eye-Drug Developer Perfuse Therapeutics for Up to $2.45 Billion

CVS’s Results Add to Positive Momentum for Health-Insurance Industry

Nintendo Under Pressure to Raise Switch 2 Prices to Protect Margins

Disney Films, Parks Lift Profit in Debut Quarter for New CEO

New Disney CEO Gives Vision for Company as Revenue Rises

With Spirit’s Mugging, Antitrust Imagined An Economy That Didn’t Exist

Airlines Are Cracking Down on Portable Power Banks

Storied Toolmaker Closes Its Last Hometown Plant—and Blames Its Tape Measures

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CWS Market Review – May 5, 2026
Posted by Eddy Elfenbein on May 5th, 2026 at 6:05 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

The old Wall Street adage tells us to “sell in May, and go away, don’t come back till St. Leger Day.” There’s a bit of truth to this statement. Wall Street hasn’t performed well over the half of the year from May through October.

I crunched all the Dow’s data going back to 1896. From May 6 to October 29, the Dow has posted an average gain of 0.86%. For the rest of the time, the Dow has gained an average of 7.16%. That’s remarkable. Essentially, 90% of the stock market’s gain has only come during half the year.

Here’s what the average year looks like for the Dow:

To be sure, I certainly don’t advocate for any trading strategy based on this data. It’s wholly impractical. I simply think it’s fascinating that over the long term, the market has showed some calendar biases. This shouldn’t be too surprising.

Wall Street just finished off a very successful April. This was the single best month for stocks in over five years. The S&P 500 gained more than 10%, and the Nasdaq Composite was up over 15%. The tech-heavy index has been on a very impressive run.

On Tuesday, the S&P 500 closed at yet another all-time high. It’s especially welcoming to see these gains come during earnings season.

Another Strong Earnings Season

We’re already nearly two-thirds of the way through earnings season, and Q1 is has turned out to be a very good time for Wall Street. Another 128 stocks are due to report earnings this week. So far, 63% of stocks in the S&P 500 have reported earnings, and of those, 84% have beaten estimates. If that holds up, it will be our best “beat rate” in five years.

Overall, 63% of the companies in the S&P 500 have reported actual results for Q1 2026 to date. Of these companies, 84% have reported actual EPS above estimates.

Not only are more companies beating expectations but they’re beating by larger margins as well. For this earnings season, companies have, on average, topped expectations by more than 20%. That’s nearly three times the five-year average.

Meta beat estimates by 56%. Amazon beat by 70% and Alphabet beat by 90%. Thanks to the Mag 7, earnings growth for Q1 is now running at 27%. To put that in perspective, at the end of Q1, Wall Street was expecting Q1 earnings growth of 13%. The S&P 500 is on pace for its sixth quarter in a row of double-digit earnings growth.

Looking at revenues, 81% of the companies in the S&P 500 have topped their revenue estimates. If that rate holds, then it will be the best quarter for sales beats in five years. The weak spot is that companies aren’t beating top-line growth by very much. Currently, companies have exceeded sales growth forecasts by only 1.9%. That’s roughly in line with long-term estimates.

I’m pleased to see that analysts have been increasing their earnings estimates for next quarter and for the rest of this year. During April, the estimates for Q2 were increased by 2.1%. We won’t get those numbers until the summer. During April, analysts increased their full-year 2026 estimates by 3.4%. They now see earnings for the S&P 500 of $331.23 per share.

For this calendar year, Wall Street currently expects earnings growth of 21.3%. That would give the index a forward P/E Ratio of 20.9, which is high but not crazy.

Looking Forward to Friday’s Jobs Report

This Friday, we’ll get the jobs report for April. This will be an interesting one because it will be the first jobs report to reflect the full impact of Operation Epic Fury. The last report was encouraging, but it came after a long string of disappointing reports. Was March an exception or is the jobs market still slowing down?

This morning, we got the Job Openings and Labor Turnover Survey, better known as the JOLTS report. It said there are currently 6.87 million job openings in March which was basically unchanged from February. The survey said that layoffs rose while hiring improved. Also, more Americans are quitting their jobs, which is a good sign for jobs. It signals confidence that there are better jobs out there.

Job openings have come down more or less steadily since peaking at a record 12.3 million in March 2022 as the U.S. economy bounded back from COVID-19 lockdowns. High interest rates, a response to an outburst of inflation in 2021-2022, uncertainty over President Donald Trump’s policies, and, potentially, the disruptive impact of artificial intelligence have all discouraged robust hiring.

In March, the U.S. economy added 178,00 new jobs. For Friday, the consensus on Wall Street is that the economy added 57,000 and the unemployment rate stayed at 4.3%. For March, average hourly earnings increased by just 0.2%. That’s not so hot. This time, Wall Street is looking for an increase of 0.3%.

We’ll get a preview tomorrow when ADP releases its report on private payrolls. Wall Street expects a gain of 84,000 jobs.

Happy 130th Birthday to the DJIA

I mentioned earlier that I looked at all the Dow’s data going back to 1896. Later this month, the Dow Jones Industrial Average will celebrate its 130th birthday. The index first appeared on May 26, 1896. Its closing value that day was 40.94. To give you an idea of how long the Dow has been around, its birth is closer to the Declaration of Independence than it is to today.

The index was the brainchild of Charles Dow, who was the editor of the Wall Street Journal. When the index started, it only had 12 stocks. The list grew to 20 stocks in 1916, and it reached its present total of 30 stocks in 1928.

The index has only changed 59 times over the last 130 years. That’s an enviably low turnover rate. In fact, the Dow has had two separate streaks of going 17 years without a single change—once from 1939 to 1956, and again from 1959 to 1976.

Until a few years ago, General Electric was the only one of the original 12 from 1896 left in the index, but GE was removed eight years ago. Although it was on the first list, GE was added and a deleted a few times before it was added for a long time in 1907.

A few stocks have been long-time members.

ExxonMobil or Standard Oil of New Jersey (XOM) had been a member since 1928 before it was dropped in 2020. Procter & Gamble (PG) is still in after being added in 1932. Coca-Cola (KO) has been a member continuously since 1987. International Business Machines (IBM) has been in since 1979 after being given the boot in 1939.

The lesson for investors here is how quickly things change. Anyone remember Johns Manville? It was in the Dow for over 50 years.

The reason I bring up the Dow’s history is because therein lies a good investing lesson. The keepers of the index decided to kick out IBM in 1939, only to change their minds 40 years later and bring it back. Over those 40 years, shares of IBM soared 22,000%.

I can’t hide my feelings. I think the Dow is a lousy index. I rarely refer to it here. The reason is that it’s just 30 stocks, and the index is weighted by price instead of by market value. McDonald’s has a greater weighting in the index than Apple even though the latter has 20 times the market value. Perhaps that made sense 80 years ago, but it’s not needed today. The only reason the Dow is still in the news is because the index is owned by the Wall Street Journal.

Also, the Dow hasn’t been a continuous index since 1896. Wall Street shut it down in 1914 with the outbreak of World War I. In 1916, the Dow folks started a new index and later backdated it to 1914.

As a result, the new index is not continuous with the previous index. You’ll often see December 12, 1914, listed as one of the worst days in market history. It’s not. They’re comparing two different indexes.

Still, I have to give credit to Charles Dow for starting the index. In the last 100 years, the index is up 350-fold (not including inflation and dividends). Anything that’s still quoted 130 years later deserves a tip of my cap.

Here’s to 130 more!

That’s all for now. Stayed tuned for Friday’s jobs report. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Morning News: May 5, 2026
Posted by Eddy Elfenbein on May 5th, 2026 at 7:09 am

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Morning News: May 4, 2026
Posted by Eddy Elfenbein on May 4th, 2026 at 7:08 am

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