CWS Market Review – May 22, 2026

“In a roaring bull market, knowledge is superfluous and experience is a handicap.” – Benjamin Graham

On Thursday, the S&P 500 came very close to falling for the fourth time in the last five days, but a late-day rally staved off the decline. In the grand scheme of things, the market’s recent hit is barely a flesh wound. The market is still up a good 17% since late March.

What’s notable about the downturn is that it’s been led by growth stocks. That’s something new. For the last several weeks, growth stocks have pulverized value. Every day, it seemed, tech stocks led and defensive stocks lagged. But now, the market could be turning.

A good example is healthcare stocks. Historically, this has been a great sector for investors, but healthcare has gone nowhere in 2026. That is, until a few weeks ago. Now healthcare is finally out in front.

Healthcare isn’t alone. On our Buy List, stocks like FactSet and FICO are finally showing some strength. In the last week, FICO is up 14%.

Could this be the start of a large-scale rotation? Eh, I’m not so sure. The major concern on Wall Street at the moment is finding out how badly higher oil prices are hurting consumer spending. Higher prices at the pump act like a tax on consumers.

This week, Walmart reported same-store sales growth, excluding fuel, of 4.1%. That’s pretty good, and it beat expectations. The problem was that guidance was sluggish. Walmart said that its customers are buying less gasoline. In Thursday’s trading, Walmart had its largest drop in nearly three years.

Earlier this week, the Federal Reserve released the minutes from its most recent meeting. The minutes showed that the Fed is beginning to consider raising interest rates. The idea of rate cuts seems to be off the table.

That’s not a big surprise. The important metric to watch is the yield on the two-year Treasury, which is often a tell for what the Fed may do. The yield on the two-year has been on the way up, and it recently broke above 4.1%, which is well above where the Fed currently has rates.

The key is inflation. The problem for the Fed is that it’s not just about oil prices. The price for fuel finds itself buried inside the price for nearly everything. The next CPI report will be out on June 10, and the Fed’s next meeting will be on June 16-17.

If there is movement on interest rates, it may not happen for some time. The futures market currently sees the Fed raising rates, but not until December.

Decisions within the Fed may soon get interesting. Mr. Warsh has just taken over, and the last policy statement had four dissenting votes, three of which didn’t want to include language regarding an easing bias.

I should explain. The Fed’s minutes are a study in the use of indefinite pronouns. Fed watchers carefully try to parse what exactly “some said this” and “a few said that” truly mean. In this case, “many” said they also didn’t want an easing bias. This could signal that there are more votes for higher rates. But how many is “many”? I don’t know, but we may soon find out.

What’s changed recently is that interest rates have moved higher. The yield on the 30-year Treasury recently got to 5.18%, which is a 19-year high (see chart above). For comparison, during the initial Covid panic, the yield got down to 0.99%. The 10-year yield has risen from 4% in February to as high as 4.67% this week. This impacts everything from mortgages to corporate mergers.

For the immediate future, I expect to see growth stocks continue to lag, but it will probably be in a zigzag fashion. Many tech stocks are due for a reckoning.

In this week’s issue, we’ll look at Thursday’s earnings report from Intuit. The company beat expectations and raised guidance, but got hit hard after it said it will lay off 17% of its workforce. I’ll have the details in a bit.

I’ll also preview next week’s earnings report from Heico. I also have some Buy List updates for you. First, though, let’s look at what Intuit had to say.

Intuit Falls after Earnings Beat

After the closing bell on Wednesday, Intuit (INTU) said its global revenues rose 10% to $8.6 billion, and its earnings rose 10% to $12.80 per share. Wall Street had been expecting earnings of $12.57 per share. Intuit is the company behind TurboTax and QuickBooks and Credit Karma.

Intuit’s consumer revenue grew 8% to $5.3 billion. TurboTax revenue was up 7% to $4.4 billion, and Credit Karma revenue grew 15% to $631 million.

Global Business Solutions revenue was up 15% to $3.3 billion. Excluding Mailchimp, Global Business Solutions revenue grew 17%, and Online Ecosystem revenue grew 22%.

Intuit’s CEO, Sandeep Aujla, said, “We delivered a strong third quarter of fiscal 2026, reflecting our operational focus and scaling of our growth engines across the business. As a result, we are raising our full-year revenue guidance for fiscal 2026.”

During Q3, Intuit bought back $1.6 billion worth of stock, and the board approved a new $8 billion buyback authorization. Inuit also increased its dividend by 15% to $1.20 per share.

The biggest news is that Intuit said it will reduce its full-time workforce by 17% in order to “simplify its organizational structure and become a faster, leaner, more focused company.” Intuit estimates that it will incur restructuring charges of $300 to $340 million that will be recognized in Q4.

For its Q4, which ends on July 31, Inuit expects revenue growth of 11% to 12% and earnings between $3.56 and $3.62 per share. For the entire year, Intuit sees revenue growth of 13% to 14%. That’s up from the prior guidance of 12% to 13%.

For earnings, Intuit sees a range of $23.80 to $23.85 per share. That’s an increase from the previous range of $22.98 to $23.18 per share. Despite the earnings beat and higher guidance, traders focused on the job cuts. By the closing bell, Intuit traded down 20% to $307 per share. I’m lowering our Buy Below on Intuit to $320 per share.

Preview for Heico’s Earnings Next Week

Heico (HEI) is due to report its fiscal-Q2 earnings after the closing bell on May 27. The stock has started off slow for us this year, but I still like this company. The shares have improved some in recent weeks. The stock is on pace for a 15% gain this month.

In February, Heico reported fiscal-Q1 earnings of $1.35 per share. That’s up 13% over last year, and it topped Wall Street’s consensus by six cents per share. Quarterly sales were up 14% to $1.179 billion, and Heico’s operating margin increased a little bit to 22.1%.

Heico has two operating segments, the Flight Support Group and the Electronic Technologies Group. For Q1, Flight Support reported sales growth of 15% and operating-income growth of 21%. Electronic Technologies had quarterly sales growth of 12%, but its operating income fell 4% to $73.2 million.

Heico said the decrease in operating income was due to “a less-favorable product mix of defense products and the previously mentioned decrease in net sales of space products.”

The weakness in Electronic Technologies upset the market, and shares of HEI fell after the report. I’m not worried about Heico at all. This is a very good company. For next week, the consensus on Wall Street is for Heico to report earnings of $1.33 per share.

Buy List Updates

Shares of FactSet (FDS) and FICO (FICO) have become popular in recent days. Over the last month, FICO is up by 25%. This week, I’m raising our Buy Below on FICO to $1,300 per share.

The Motley Fool had nice things to say about Comfort Systems USA (FIX). The stock still isn’t well known, but it’s been a very big winner for us.

Barron’s recently profiled Casey’s General Stores (CASY). The shares have been on a nice run this year. The company is also having success with its new chicken wings.

Barron’s writes:

Gas prices show no signs of retreating from north of $4.50 a gallon on average in the U.S., crimping household budgets, and though convenience stores benefit from price volatility, consistently high levels are a headwind for the group.

Consensus calls for Casey’s earnings per share to climb 26.7% to $3.33, while a majority of the 19 analysts tracked by FactSet have raised their estimates for the quarter in the past three months.

Nonetheless, even if there is an understandable post-earnings dip, it would be wrong to assume that Casey’s run is done.

The stock was added to the S&P 500 last month. The next earnings report is due out on June 9. Casey’s remains a buy up to $900 per share.

That’s all for now. The stock market will be closed on Monday in honor of Memorial Day. There are a few important economic reports to look out for. On Tuesday, we’ll get the report on consumer confidence. Thursday is new-home sales, orders for durable goods and initial jobless claims. On Friday, the government will revise its report on Q1 GDP growth. The initial report said that the U.S. grew in real annualized terms of 2.0%. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

Posted by on May 22nd, 2026 at 7:08 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.