The U.S. economy is beginning to deliver new warning signs, including a cooldown in real estate and consumer sentiment as inflation risks rise. However, performance was strong this week as tech stocks helped to support the S&P 500. New peace talks between the United States and Iran also supported the market this week. Below are five major developments in the markets this week, as well as some of the top market movers this week.
1. Oil Price Decline Amid Inflationary Concerns
The price of oil continued its descent during the week, driven by new peace talks between the United States and Iran. The price of crude oil fell to $88/barrel on Friday, marking an 18% monthly decline.1
Oil equities have pulled back strongly on this news, following their strong YTD rally. The VanEck Oil Services ETF fell by 6.3% during the trading week, while the State Street Select Sector SPDR Energy ETF declined by 5%.
At the moment, a rebound in inflation appears to be one of the highest risks in the market, one that will put pressure on the Federal Reserve’s interest rate policy. The Fed needs to see lower inflation levels before it can consider moving forward with rate cuts.
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2. US Economic Growth Recovers Slightly in Q1 2026
After delivering weaker growth in Q4 2025, the US economy has rebounded slightly this quarter. This news is positive, as concerns have been growing about slower growth amid geopolitical tensions and higher energy prices.
Q1 2026 economic growth was 1.6%, compared to 0.5% in the previous quarter.2
One positive sign in the economy has been the growth in manufacturing activity during the first quarter of this year.3 However, supply-side risks coupled with weaker consumption as inflation picks up could result in lower growth in subsequent quarters. Other regions, such as the EU, have also been cutting their growth forecasts for this year.
3. Consumer Confidence at a New Low
The geopolitical shocks in the Middle East have begun to put new stress on consumers, especially since inflation has risen in many regions since the end of February this year.
The University of Michigan’s Consumer Confidence Index recently plunged to a 1-year low.4
This tension has been evident in the performance of consumer stocks. We previously touched on how even safer consumer staples giants like Walmart have been facing pullbacks amid weaker 2026 guidance. The Vanguard Consumer Staples Index Fund ETF fell by around 2% this week due to the hazy consumer staples sector outlook.
4. Real Estate Slowdown
The U.S. real estate industry is beginning to experience signs of a slowdown this year, as higher financing costs and lower economic optimism have caused housing sales to decline. Recent monthly data from the industry shows that home sales in the United States fell by 6.2% last month.5
Real estate equities have been very sensitive to this stagnating trend. The iShares U.S. Real Estate ETF (IYR) fell by over 2% this week and has had flat performance this month following its mild Q1 rally. This trend is certainly worth monitoring in the coming months, as RE equities and even high-yielding REITs may fall out of favor due to weaker sentiment in the real estate industry.
5. Tech Stock Rally
Although many sectors declined during the trading week, tech stocks were the strongest market movers this week. The iShares U.S. Technology ETF (IYW) rallied by more than 3% this week, providing massive support to the S&P 500 as other sectors lagged. Tech giants like Microsoft rallied strongly during the week, and other older dot-com darling stocks like Dell, Cisco, and Nokia have been booming amid new AI optimism.6
Tech stocks are a key driver of the S&P 500, as they have rallied 26% this year and currently account for around 35% of the S&P 500.7
However, it is still important to keep an eye on valuations and monitor the risk of any future pullbacks this year.
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