Market Report, 2026-05-19

Inflation and interest rates continue to be the center of attention on Tuesday, as the 30-year Treasury yield touched its highest level since 2007. Unlike the previous market consensus that the energy shock from the U.S.-Iran conflict would be short-lived as a quick resolution took place, the situation has remained in a standoff for months. This is all taking place as Kevin Warsh has recently been sworn in as the latest Chair of the Federal Reserve. The market is challenging Warsh’s dovish bias, as his policy stance is to lower short-term interest rates while shrinking the balance sheet—a seemingly controversial direction during a time of high inflation.

Stocks are not responding well to the rise in yields. The Dow Jones Industrial Average declined by 322 points to 49,364. The NASDAQ declined by 0.61% to 28,819. The S&P 500 lost 0.67% to 7,354. AI and AI-adjacent stocks took a beating today, while the more defensive sectors ended the day in the green.

The bond market sold off sharply as well. The U.S. 5-year Treasury yield and 10-year Treasury yield rose by 5 and 4 basis points to 4.33% and 4.67%, respectively. Gold sold off too and fell below the $4,500 mark.

On the side, AI continues to be a hot topic. On one hand, bank executives are suggesting that AI is estimated to replace roughly 30% of work hours in finance and insurance by 2030. On the other hand, heavy debt issuance to fund AI infrastructure buildout is creating unease in industries such as private credit.

The minutes from the last Federal Reserve policy meeting will be made available tomorrow, and we at Adams Wealth Advisors will continue to bring you updates. Thank you for listening.