Five for Friday – May 29, 2026

Market, Sentiment, Correlation, Streaks, and On This Day

1. Market

This week, the S&P 500 Equal Weight and Russell 2000 Small Cap made new all-time highs. Within the S&P 500, 37% of constituents are outperforming the index, which is actually quite a bit higher than 2023, 2024, and 2025. Meanwhile, earnings growth continues to be robust. The Magnificent 7 reported Q1 earnings growth of 63% and the “other 493” reported growth of 17% – also the highest since 2021 in both cases. And profit margins – the percent of sales retained by firms – are at their highest since at least 2009. While the intensity of the recent Tech-led rally has some investors on pins and needles, this bull market is 1) not historically stretched in length or magnitude; 2) driven by profits over speculation; and 3) far from just AI. It won’t last forever, but let’s not look a gift horse in the mouth either.   

 2. Sentiment

Putrid sentiment has been one of the dominant trends since 2022. Sentiment data has continued to plumb lows despite a resilient economy, (leading to the widely cited term, “vibecession”). Of the nearly 600 monthly measurements of consumer sentiment going back to 1978, 18 of the worst 25 occurred since mid-2022. But if that was rock bottom, apparently there’s a basement, because May’s reading was the lowest since 1960. The sentiment crisis (part K-shaped economy, part inflation, part housing crisis, part media negativity, part social media comparison trap, etc.) is real. And I won’t try to convince anyone that things are better than their experience says they are. But I can say that weak consumer sentiment is not a sign of a secret recession, nor is it a sign to sell stocks. In fact, if there is any predictive value left in these surveys (which are becoming more politicized and less responded to), it’s that the best forward returns for the stock market come when starting from a point of heightened negativity. Misery may love company, and markets tend to love misery even more.   

3. Correlation

Another feature of the post-Covid world is that stocks and bonds have often moved together (instead of in opposite directions). Higher and more volatile inflation have made bonds a less effective hedge for stock market volatility—in 2022, the generic 60/40 portfolio had its worst year since 1937. Years that dire should still be rare but if the trend continues, a broader view of diversification is warranted (alternatives, real assets, etc.). One simple-ish option for investors is Treasury Inflation Protected Securities, or TIPS. These are U.S. government bonds for which the face value adjusts with changes in inflation (CPI). When a TIPS matures, you get either the inflation-adjusted price or the original principal, whichever is greater. TIPS are liquid (unlike some alternative asset classes), have cash flow (unlike gold/silver) and have a defined portfolio purpose (unlike crypto, which is often bent to fit a narrative). In today’s world, an asset that protects from inflation shocks has real utility. Don’t sleep on TIPS.   

4. Streaks

The S&P 500 has been higher eight weeks in a row, one of just 30 such streaks since 1958. Across those 30 instances, the stock market was higher one year later for 28 of them – with a median return above 13%. Nothing too eyepopping, but an example of momentum and broad participation portending strong returns. For good measure, the longest streak of up-weeks in a row also came in late spring, when the S&P 500 rose for 13 straight weeks in 1957.  

5. On This Day

in 1900, Otis Elevator registered the trademark for “Escalator.” In 1950, the company fell prey to “genericide” when it lost its trademark after a court ruled the term had become the generic descriptor for a moving staircase (also see aspirin, thermos). Punished for being too prominent…tough aspirin to swallow.

Disclosures

This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. Market and economic statistics, unless otherwise cited, are from data provider FactSet.

This report does not provide recipients with information or advice that is sufficient on which to base an investment decision.  This report does not take into account the specific investment objectives, financial situation, or need of any particular client and may not be suitable for all types of investors. Recipients should not consider the contents of this report as a single factor in making an investment decision. Additional fundamental and other analyses would be required to make an investment decision about any individual security identified in this report.

For investment advice specific to your situation, or for additional information, please contact your Baird Financial Advisor and/or your tax or legal advisor.

Past performance is not indicative of future results and diversification does not ensure a profit or protect against loss. All investments carry some level of risk, including loss of principal. An investment cannot be made directly in an index.

Copyright 2026 Robert W. Baird & Co. Incorporated.

Other Disclosures

UK disclosure requirements for the purpose of distributing this research into the UK and other countries for which Robert W. Baird Limited holds an ISD passport.

This report is for distribution into the United Kingdom only to persons who fall within Article 19 or Article 49(2) of the Financial Services and Markets Act 2000 (financial promotion) order 2001 being persons who are investment professionals and may not be distributed to private clients.  Issued in the United Kingdom by Robert W. Baird Limited, which has an office at Finsbury Circus House, 15 Finsbury Circus, London EC2M 7EB, and is a company authorized and regulated by the Financial Conduct Authority.  For the purposes of the Financial Conduct Authority requirements, this investment research report is classified as objective. 

Robert W. Baird Limited ("RWBL") is exempt from the requirement to hold an Australian financial services license.  RWBL is regulated by the Financial Conduct Authority ("FCA") under UK laws and those laws may differ from Australian laws.  This document has been prepared in accordance with FCA requirements and not Australian laws.