U.S.-Iran Deal Hopes Drive Oil Lower and S&P 500 to Record Highs as BlackRock Midyear Forum Convenes

Weekly Market Commentary | Week of Jun 1st, 2026

A Recap of Economic and Financial Trends from the Prior Week

By: Michael Horvath, The Quinnipiac University Global Economics Research Team

Last Week in Review

• April PCE rose 3.8% annually, its highest reading since May 2023, and Q1 GDP was revised down to 1.6%, while Fed officials signaled a hawkish tilt as multiple policymakers indicated further rate hikes could be warranted

• U.S. indexes closed at record highs in the holiday-shortened week, led by the Nasdaq, as reports of a U.S.-Iran 60-day ceasefire extension drove Brent crude down 11% to near USD 92 per barrel and Treasury yields retreated from one-year highs

• European markets advanced modestly on de-escalation hopes while Japan's Nikkei surged to historic highs on AI enthusiasm, and China's industrial profits jumped but equity gains were tempered by a regulatory crackdown on offshore brokerages

Economic Recap

U.S. economic data last week presented a deteriorating inflation backdrop alongside mixed growth signals. The Bureau of Economic Analysis reported that the PCE price index rose 0.4% month over month in April, slowing from a 0.7% increase in March, while the annual rate rose to 3.8%, up from 3.5% in March and the highest reading since May 2023. Core PCE, which excludes food and energy, rose 0.2% for the month but ticked up to 3.3% on an annual basis, its hottest reading since November 2023. Personal spending rose 0.5%, while personal income was roughly flat. The BEA also revised Q1 2026 GDP growth down to a 1.6% annualized pace from the initial estimate of 2.0%, primarily driven by downward revisions to investment and consumer spending, though the revised figure represented an improvement from the 0.5% pace in Q4 2025. April durable goods orders rose 7.9%, up from a revised 1.3% increase in March, driven by a 21.5% jump in transportation equipment orders, though core capital goods orders fell 1.1% after a strong March gain. Initial jobless claims for the week ended May 23 came in at 210,000, near consensus estimates, while continuing claims edged modestly higher. Several Federal Reserve officials maintained a notably hawkish tone during the week: Governor Lisa Cook indicated she was prepared to raise rates if inflation continued moving in the wrong direction, while Vice Chair Philip Jefferson said inflation risks remained tilted to the upside.

Internationally, the ECB published minutes from its late April monetary policy meeting indicating that some members were open to raising rates, warning that the energy price shock had been both large and highly persistent, while various board officials publicly signaled that a June interest rate hike is likely. Germany's seasonally adjusted unemployment rate unexpectedly slipped to 6.3% in May from 6.4% in April, though the Federal Employment Agency cautioned that unemployment is expected to rise in coming months. Italy's Q1 2026 GDP was revised up to 0.3% growth from a prior estimate of 0.2%. Japan's Tokyo-area core CPI rose 1.3% year over year in May, decelerating from 1.5% in April and marking the sixth consecutive month of deceleration and the fourth straight month below the Bank of Japan's 2% target, as government energy subsidies and private school fee relief continued to weigh on prices. In China, industrial profits jumped 24.7% year over year in April, accelerating from 15.8% growth in March, with the January through April period showing an 18.2% increase year over year, though weakness in consumer-facing industries and property-linked activity reinforced that China's recovery remains uneven.

Market Recap

Source: JPMorgan Asset Management, “Weekly Market Recap” (June 1st, 2026). (Chart © JPMorgan Asset Management. Chart used under fair use for educational commentary by The Quinnipiac Global Economics Research Team.)

Major U.S. stock indexes rose during the holiday-shortened week, with several benchmarks closing at record highs, as investor sentiment was supported by rising hopes for a U.S.-Iran peace agreement, falling oil prices, and continued AI-driven momentum. The Nasdaq Composite led major benchmarks, gaining 2.39% on the week and now up 16.33% year to date, while the S&P 500 advanced 1.44% to 7,580 and is up 11.27% year to date. The Dow Jones Industrial Average gained 0.91% to 51,032 and is up 6.86% year to date. Small-cap stocks outperformed, with the Russell 2000 rising 1.77% on the week and now up 18.15% year to date. At the style level, the Russell 1000 Growth gained 2.28% on the week and is up 8.23% year to date, while the Russell 1000 Value rose a more modest 0.73% and is up 13.68% year to date. Early reports that the U.S. and Iran were moving toward a 60-day ceasefire extension and a reopening of traffic through the Strait of Hormuz helped push Brent crude oil prices down 11% to near USD 92 per barrel, with the Philadelphia Semiconductor Index rising 5% on the week and gaining in eight of the past nine weeks. U.S. Treasury yields pulled back from recent one-year highs, with the 10-year yield falling 14 basis points to near 4.43% as of Friday, supported by solid demand at the Treasury Department's 7-year note auction.

Internationally, the MSCI EAFE gained 1.08% on the week and is up 9.74% year to date, while MSCI EM advanced 3.96% and is now up 25.74% year to date. The pan-European STOXX Europe 600 edged up 0.14% in local currency terms, with Germany's DAX rising 0.87%, France's CAC 40 gaining 0.83%, and Italy's FTSE MIB adding 1.06%, while the UK's FTSE 100 slipped 0.54%. Japan's Nikkei 225 surged 4.72% to historic highs, with semiconductor and electronic component manufacturers leading the advance on renewed AI enthusiasm.

Market Themes

BlackRock Midyear Forum: Speed Meets Scarcity as Mega Forces Intersect

BlackRock Investment Institute convenes approximately 100 portfolio managers and investment executives at its biannual Midyear Investment Forum this week, with the overarching theme centered on a world shaped by supply in which speed and scarcity are defining how mega forces intersect. The AI buildout's planned capital spending, already historic at the start of the year, has only accelerated, with mega cap hyperscaler investment estimates having soared in just two quarters and projected annual spending now approaching USD 1 trillion by 2028. This is testing the constraints BlackRock laid out in its 2026 Global Outlook: hyperscalers are financing the buildout via increased debt issuance as rates reprice higher, the AI buildout's big power needs for data centers are crossing with the energy transition mega force, and constraints are increasing from political opposition to data centers. BlackRock notes that AI-driven earnings growth has proved strong enough to help offset the drag from higher interest rates, underpinning the firm's overweight to U.S. equities, and that the jump in bond yields this year highlights how traditional portfolio ballast is less reliable, reinforcing what the firm calls its diversification mirage theme and the need for a more dynamic, whole portfolio approach. BlackRock will use the Forum to stress test its tactical views and refresh investment themes for its Midyear Outlook on June 30.

AI Winners and Losers Emerge as IPO Pipeline and Valuation Questions Intensify

A growing set of questions about AI's ultimate beneficiaries and losers is emerging as a central debate at BlackRock's Midyear Forum. At the company level, the key question is whether AI adoption is translating into greater profit margins or revenues, or whether token usage for complex tasks is eroding other gains. A growing pipeline of major AI-related initial public offerings, including SpaceX, OpenAI, and Anthropic, will likely increase competition for capital and intensify investor scrutiny of valuations across the AI complex. Disrupted software companies present an additional dimension, with BlackRock noting that AI is already creating winners and losers and raising the question of what comes next for those facing competitive displacement. The Philadelphia Semiconductor Index rose 5% in the prior week and has gained in eight of the past nine weeks, reflecting continued investor confidence in AI infrastructure beneficiaries, while the broader question of whether valuations across the AI ecosystem are justified by earnings growth remains a central point of debate heading into the second half of 2026.

Chart of the Week

Source: BlackRock Investment Institute, with data from Bloomberg, "Scaling Away: Hyperscaler Capex Estimates, 2026-30," May 2026. Notes: Bars show estimated annual capital expenditures for selected hyperscalers based on forecasts from Q4 2025 and Q2 2026. Hyperscalers include Alphabet, Meta, Microsoft, Amazon, Oracle, Tencent and Alibaba. (Chart © BlackRock Investment Institute. Used under fair use for educational commentary by The Quinnipiac Global Economics Research Team.)

The chart compares hyperscaler capital expenditure consensus estimates for 2026 through 2030 at two points in time: Q4 2025 and Q2 2026. Across every year in the forecast window, Q2 2026 estimates are materially higher than those made just two quarters prior. In absolute terms, 2026 estimates rose from approximately USD 525 billion in Q4 2025 to approximately USD 725 billion in Q2 2026, with projected annual spending approaching USD 1 trillion by 2028 under Q2 2026 estimates. The upward revisions accelerate through 2028 before moderating slightly in 2029 and 2030. BlackRock notes this represents the fastest capital spending buildout in history, reinforcing its view that the AI mega force is accelerating rather than plateauing. The chart also illustrates how the AI buildout is increasingly intersecting with other mega forces, as surging power demand for data centers collides with the energy transition agenda and financing constraints from higher interest rates create new pressures on hyperscalers to issue debt at elevated rate levels.

Market Outlook

BlackRock Investment Institute will focus this week on U.S. labor market data as the primary macro catalyst, with April job openings and May payrolls expected to show modest but stable hiring that reinforces the view of a still-resilient labor market and keeps the Federal Reserve focused on sticky inflation. ISM manufacturing and services PMIs are expected to show ongoing growth, though higher energy costs from Middle East disruptions could slow momentum. The fate of the reported U.S.-Iran 60-day ceasefire extension remains the single most important near-term variable for energy markets and global risk appetite, as any breakdown in negotiations could rapidly reverse the oil price decline and equity market gains seen during the prior week. BlackRock maintains its overweight to U.S. equities and EM equities, stays underweight long-term U.S. Treasuries, and will use this week's Forum to stress test these tactical positions ahead of the June 30 Midyear Outlook publication.

Calendar Events

Economic Data:

• Jun. 1 (Mon): U.S. ISM Manufacturing PMI (May)

• Jun. 2 (Tue): U.S. Job Openings (Apr); Euro area flash inflation (May)

• Jun. 3 (Wed): U.S. ADP Employment Change (May)

• Jun. 5 (Fri): U.S. Payrolls (May); U.S. ISM Services PMI (May)

Major Corporate Earnings:

• Jun. 2 (Tue): Palo Alto Networks (Q3 2026)

• Jun. 3 (Wed): Broadcom Inc. (Q2 2026); CrowdStrike Holdings (Q1 2027)

• Jun. 4 (Thu): Lululemon Athletica Inc. (Q1 2026)

  
  

Sources

J.P. Morgan Asset Management. "Weekly Market Recap PDF." J.P. Morgan Asset Management. https://am.jpmorgan.com/content/dam/jpm-am-aem/americas/us/en/insights/market-insights/wmr/weekly_market_recap.pdf

J.P. Morgan Asset Management. "Economic Update." J.P. Morgan Asset Management. https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/economic-update/

T. Rowe Price. "Global Markets Weekly Update." T. Rowe Price Insights. https://www.troweprice.com/personal-investing/resources/insights/global-markets-weekly-update.html

BlackRock Investment Institute. "Weekly Investment Commentary: Midyear Forum: Speed Meets Scarcity." BlackRock, June 1, 2026. https://www.blackrock.com/us/individual/literature/market-commentary/weekly-investment-commentary-en-us-20260601-midyear-forum-speed-meets-scarcity.pdf

BlackRock Investment Institute. "Weekly Commentary Archives." BlackRock. https://www.blackrock.com/corporate/insights/blackrock-investment-institute/archives

Apollo. "The Daily Spark." Apollo. https://www.apollo.com/wealth/the-daily-spark

MarketWatch. "Economic Calendar." MarketWatch. https://www.marketwatch.com/economy-politics/calendar

Yahoo Finance. "Earnings Calendar." Yahoo Finance. https://finance.yahoo.com/calendar/earnings/