With just one more trading day in the week and the month, the advantage of owning equities appears unshakable.
For the week through Thursday's close, the Dow has added 80 points but is also at a record high. The NASDAQ is up 573 points (2.18%) in just three sessions, and the S&P 500 is ahead by 90 points (1.21%). All in all, index funds continue to look like the proverbial cat's meow, even with conflicts in the Middle East and Ukraine and high inflation in the U.S.
As of Thursday's close the Shiller PE stands at 42.55, just more then 1.5 points from the all-time high of 44.19, set back in December 1999. Without taking into account the nuances of computing the Shiller PE (aka CAPE) and its 10-year earnings structure, the S&P would have to gain another 250-300 points to break the record, or, a record high close to 8,000 on the 500-stock index. Considering the degree to which stocks are currently in favor, that doesn't seem too far-fetched, despite the absolute bubbliest overview. A target of 8,000 on the S&P might be sometime between late July and early October, conveniently just in time for the midterms.
It was recently exposed that Warren Buffett's Berkshire Hathaway had taken about a 1% stake in the quintessential retail chain, Macy's (M), which also owns Bloomingdales and an impressive real estate portfolio estimated at around $3 billion. Buffett may have made the call on this himself, which adds to the intrigue.
On the surface, the Macy's purchase seems to be a pretty shrewd move. The fact alone that Buffett sees value will draw in more investors, pushing the stock higher. Buffett will no doubt continue buying in measured fashion or possibly tender a buyout offer and take the company private under the Berkshire Hathaway umbrella. With the current market cap just above $5 billion, Buffett could offer $10 billion or more without batting an eyelash. He has a war chest of nearly $400 billion on hand, so it wouldn't be a significant move. Macy's could be sold out with a share price of $40 or higher. It's a pretty safe bet, plus, there's the annual dividend of 77 cents per share and a PE ratio kicking around 9 or 10.
Retail has been whipsawed in recent years due to trends toward e-commerce and the lackluster reputation of many regional malls. Macy's owns a load of properties and they're undergoing a major restructuring, closing many of under-performing stores while adding new initiates to those kept open. Retail hasn't been announced dead and buried. It may be just hibernating through a tech winter. People still like the idea of hands-on shopping, especially for apparel, an area in which Macy's excels. There's a lot to like in Buffett's bold move. He and his company haven’t invested in a retailer in about 60 years. The timing and strategy seem elegant with a tinge of contrarianism.
After the close on Thursday, these companies announced first quarter results:
Costco (COST) - small EPS miss, same-store sales up 6.6%, stock down less than 1% pre-market
AutoDesk (ADSK) - beats on revenue, EPS, investors not impressed, shares down 7%
Gap Inc. (GAP) - big EPS miss sends shares down 15%
Dell (DELL) - blows away estimates, stock up 35% pre-open
A little deeper look at Dell's outrageous rise this morning reveals record revenue of $43.8 billion, up 88% year over year, record diluted earnings per share (EPS) of $5.24, up 282% year over year, and record non-GAAP diluted EPS of $4.86, up 214%, record first-quarter cash flow from operations of $4.1 billion. The company benefitted from a close association with President Trump and this week, the company was awarded a $9.7 billion Pentagon contract to provide a suite of software to the U.S. military.
While Dell's results reek of insider activity and self-dealing, there's nothing fake about banking enormous profits. There is likely to be some pullback following the initial euphoria from this blowout quarter, though the stock could rampage higher, given current momentum. One-day gains such as this are truly astonishing and aligned entirely with Trump's vision of a growing U.S. tech base. Whatever comes of it, this will be the headline going into the weekend, suggesting massive gains to close out the week and the month.
As the opening bell approaches, futures ar higher, though uneven. Dow futures are up 115 points, S&P futures gaining 6-10 points, while the NASDAQ lags, up only 20 points after its big run-up Thursday.
With President Trump nixing the latest peace offering from Iran, once again on the nuclear issue, the rhetoric doesn't change from the hope and fear that's been narrated from the White House for the past month. The situation in the Middle East remains in doubt, seemingly suitable to institutional investors. Who knew that uncertainty would drive markets higher?
Gven the chokehold Iran and the U.S. have created over the flow of Persian Gulf oil, it's astonishing to see WTI futures ranging lower, around $87 per barrel prior to the opening bell. Meanwhile, executives at Chevron and ExxonMobil are warning about extremely low inventory levels. The U.S. strategic reverses are being drained, gas prices reamin stubbornly high (national average $4.37). Something has to give, or, maybe not. The stalemate could continue for months given the vagueness of the ongoing peace/war process.
None of this has helped precious metals, with both gold and silver trading near recent lows; gold around $4,500 and silver in the $75 range. Stocks are moving higher and treasury yields have dipped below 4.50% on the 10-year and 5.00% on 30-year bonds.
The weekend and June dead ahead, end-of-month window dressing is on the menu to close out a solid week on Wall Street.
At the Close, Thursday, May 28, 2026:
Dow: 50,668.97, +24.69 (+0.05%)
NASDAQ: 26,917.47, +242.74 (+0.91%)
S&P 500: 7,563.63, +43.27 (+0.58%)
NYSE Composite: 23,302.26, +35.20 (+0.15%)
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