S&P 500 Rallies for a 9th Straight Week, But Inflation and Fed Risks Loom

The S&P 500 clinched its ninth consecutive weekly gain through May 29, 2026, a rare streak achieved only 10 times since 1957. The index surged 17.3% over the eight weeks to May 22 — the second-best such stretch on record — after a ceasefire in the U.S.-Iran conflict eased supply fears that had briefly triggered an 8% correction in late February. The historical pattern offers a bullish signal: past nine-week win streaks saw the S&P 500 average a 10% return over the following year, pointing to a level around 8,338 by mid-2027. Yet, surging inflation threatens that outlook. Consumer prices rose 3.8% in April, the highest since May 2023, driven by the war’s disruption to Hormuz Strait shipping. The Cleveland Fed’s estimate points to a second-quarter CPI as high as 6.5%, increasing the odds the Federal Reserve will hike rates. Since 1999, the S&P 500 has dropped an average 7% in the three months after the start of a rate-hiking cycle. With the index trading at 21.2 times forward earnings, above its 10-year average of 18.9, valuations offer a thin cushion against policy tightening.