Market Musings 6/3/2026
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
#AI drives another massive market rally in May, but covers up growing #Inflation fears…
The S&P 500 rallied again adding another 5% in May as #AI earnings fuel more hype. However, it masks a changing macro as #RateCuts expectations take a U-turn.
May started with a blowout jobs report signaling #LaborMarkets remain fairly strong. However, #Inflation is catching fire from the high energy costs. Both CPI and PPI surged higher showing price increases are spreading beyond just energy and into the broader economy.
Suddenly, the #RateCuts narrative flipped. Investors had entered the year expecting two to three cuts, but the data now has the market pricing in a ~50% chance of #RateHikes instead.
However, those concerns got drowned out by #AI hype. It’s off the normal earnings cycle, but lots of #AI buildout names reported in May including poster child Nvidia. The demand continues to smash records fueling earnings across the #AI buildout ecosystem.
So, what now?
Despite no movement on a US-Iran peace deal, investors still believe the #GlobalTension war is over and essentially moved on. Oil futures were down -17% in May while gas prices have dip a little as well. However, they both still remain sharply higher than pre-war.
While still waving it off, investors will to monitor the #Inflation situation. The best case scenario is a peace deal was made yesterday and the Strait of Hormuz is reopened immediately. Even then, we see the downstream #Inflation impacts outlasting the headline announcement markets are waiting for.
However, any peace deal seems elusive and keeping the Strait of Hormuz closed is Iran’s best leverage. Ongoing #GlobalTension has us cautious on #Inflation in the near-to-mid term.
We’re also closely monitoring the #AI trade. The innovation possible with #AI is undeniable, but we’re still not sold on the amount of money being funneled in.
For us, the #AI question remains: how long can hyperscalers continue to outspend each other? We don’t believe it’s forever, but also don’t see it ending near-term. We are getting more cautious though. Hyperscalers have gone through cash on hand, cutting employees, raising debt and now selling stock to fund it…
So far in June, the market rally appears to have leveled off. However, the market catalysts for the rest of the month remain: any resolution to the US-Iran war, Inflation impact from oil and gas prices and the growing possibility of rate hikes.
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As of the publish date, Ursa portfolios may own NVDA. The stocks mentioned in this article may cease to be owned by Ursa portfolios at any point.
The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.
Original Photo by fauxels.