OVERVIEW
Markets rallied last week, snapping back from April’s weakness. The S&P 500 rose 1.88%, the Dow gained 1.60%, and the NASDAQ climbed 2.01%. Growth stocks led the way—Russell 3000 Growth jumped 2.26%—while small-caps also bounced, with the S&P 600 up 1.35%.
International stocks added to their gains. Developed markets (EAFE) rose 0.80%, and emerging markets dipped 1.16%. A modest 0.29% rise in the U.S. dollar slightly trimmed overseas returns for U.S.-based investors.
Bonds were mostly positive. Long-term Treasuries jumped 2.09%, intermediate-term bonds gained 0.73%, and short-term bonds edged up 0.07%. Investment-grade corporates added 1.11%, while high-yield bonds gained 0.74%.
Commodities fell across the board. Gold dropped 2.33%, oil slipped 1.24%, and corn tumbled 3.37%. The broader commodity index declined 2.64%. Real estate, on the other hand, posted a strong 2.56% gain. Meanwhile, volatility dropped sharply—the VIX fell over 16%—as investor sentiment improved.
KEY CONSIDERATIONS
I’ll Take a Big Mac D, Please – When you hear “Big Mac,” your first thought might be the drive-thru. But in markets, there’s another kind of Big Mac that’s grabbing attention—the MACD. And right now, it’s serving up a pretty appetizing signal for stock investors.
MACD stands for Moving Average Convergence Divergence. It’s a momentum indicator, and despite the name, it’s not all that complicated. It tracks the relationship between two moving averages—a short-term one and a longer-term one—and looks for when momentum shifts. When the MACD line crosses above the signal line, that’s typically a sign that the trend is strengthening. When it crosses below, it can be a heads-up that momentum is fading.
That’s the basic idea. What matters more right now is what it’s showing.
After a sharp selloff in April, the S&P 500 has bounced back in a big way. And as the index pushed higher in May, the MACD flipped into positive territory and remains comfortably above the zero line. That tells us this isn’t just a dead-cat bounce. Momentum has turned with the trend—and that’s often a good sign for continued strength.
Yes, the histogram (those green bars in the lower panel) has started to cool a bit, which means short-term momentum is easing. But it’s still positive, and the MACD line is above both the signal line and the zero mark. That’s what you want to see in a healthy uptrend.
In plain English? The dip buyers are out. And judging by the way this rally is holding up, they’re not just nibbling—they’re going for the combo meal.
Even better, the MACD isn’t just an isolated bright spot. It lines up with what we’re seeing in our own stock market risk model—where both trend and momentum components remain mostly in bullish territory. When multiple signals are pointing in the same direction, it gives the move more credibility.
No indicator is perfect, and nothing works all the time. But when price, momentum, and our model are all singing the same tune, it’s usually a good idea to listen. Right now, the Big Mac D is saying the bulls are still in control.
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.
Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Past performance does not guarantee future results.
The S&P 500 Index, or Standard & Poor’s 500 Index, is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S.