Rise Advisors Market Update May 2026
Transcript Below
Hi everybody, this is Zach Harrington from Rise Advisors and on behalf of all of us at Rise Advisors, I want to thank you all for taking the time to watch our market update here in May of 2026. Last time we did one of these right around the end of March and the end of the first quarter, and it's really important to keep in mind that that was about a month into the Iran conflict. With that, we had a ton of shock to oil supply and oil pricing. We had a lot of concerns over what that was going to mean to the consumer, what it was going to mean to the US economy and how long this conflict was going to drag out. There was a ton of unknowns.
And like we do most times in these market update videos, we provide some supportive charts that basically outline and talk through some of the reality of what's taking place at the macro level. Then we also remind ourselves some of the behavioral finance tendencies that lead to better outcomes over long periods of times for investors. So what we talked about in that video was the fact that for most people, you have a long time horizon as investors. So worrying about what's taking place, intraday within markets or what's taking place geopolitically or across the globe isn't going to bode well for you as a long-term investor. It feels like unprecedented times, we hear that a lot from people, whether we're in client meetings or just speaking with people anecdotally. But if you look at the history of markets, you look at the history of the United States, and even if you just look at the last a hundred years, there's felt like a lot of unprecedented times.
If you're ever in our office at Rise Advisors in our conference room, we keep these morning star charts that basically show a hundred years of history and it has all of these awesome facts, whether it's geopolitical events or interest rates or inflation or whatever takes place. But at the end of the day, if you look at those charts, it doesn't matter if there's a great depression, World War II, Vietnam conflict, Korea conflict, Cuban Missile Crisis, Black Monday in 1986, the stagflation and oil issues of the late seventies, the Gulf War of the nineties, NAFTA, the tech bubble, global financial crisis, US China Trade War, Russia invading and taking Crimea, the pandemic, it really doesn't seem to matter. What matters the most to markets. Are our companies growing? Are they delivering earnings to shareholders? And how does the market value each of them based on growth expectations? That's the tug of war that's taking place in markets right now. From a behavioral finance standpoint you can sit there and you can go the Iran conflict, the oil prices, the cost of gasoline, the impact on consumers, the inflation risk to interest rates, all of those are noise.
What matters the most is what's taken place over this last month. When it comes to corporate earnings. It's really important to keep in mind that as we sit here and we look at Q1 earnings as of the first week of May, 2026, we're focusing on companies in the S&P 500 based on market cap. About 70% of companies have reported earnings for the first quarter. The average beat has been around 25%, not based on expectations from a year ago based on estimates going into earning seasons. This has been an absolute blowout quarter for earnings, and we have a couple charts in here that will show you that the last four or five quarters have been just as strong and there's no signs in any of these earnings calls that things are going to start to slow down from a growth expectation in things like that. It's a good sign for equity holders.
The first chart I want to show you is from duality research, and these first few charts are all from duality research. It's a fantastic substack that I subscribe to and really enjoy. And the first one focuses on average National gasoline prices. A lot of folks look at the price at the pump and they start to panic and think about the impact it's going to have on consumers and the economy and all of those things. And for those of you who have sat in meetings over the last four to six weeks, we've talked about some of the drag on the economy of higher gasoline prices when you offset that with the deficit spending to replenish munitions and things like that. At the macro level, the economy isn't necessarily impacted by higher gasoline prices. Not to say consumers aren't, but right now we're sitting at about a $4 and 41 cent average price of a gallon of gasoline here in the US. That isn't even the highest of this decade. Back in 2022 when Russia invaded Ukraine, you had $5 and 11 cents national gasoline come into effect as the everybody trying to figure out how basically the flow of gas from Russia into Europe was going to impact global energy supply.
You had $4 and 16 cent national average gasoline leading into the global financial crisis in 08'. And the second chart to me really tells the story when it comes to gasoline. This looks at this another duality research chart, gasoline prices as a percentage of wages. There's a couple of really important things here. Number one, the bottom portion of this chart, you'll see outlines basically the average hourly earnings over the last 30 years. Average hourly earnings have tripled since 1995. So when we adjust the price of gasoline on a percentage of basically wages, right now we're sitting at 13.7% is the price of gasoline as a percentage of average hourly wage. Once again, not a decade high and not even an anywhere near an all time high. In 2022, when Russia invaded Ukraine, you would have to have basically an additional two and a half dollars increase in the average price of gasoline to have the same impact because average hourly wages are 20% higher than just where they were in February of 2022.
On top of that, when you adjust for all of these variables, the 2008 impact was much, much higher. We would have to have $8 national gasoline to come anywhere close to that 23% number of 2008. This doesn't even go into account adjusting for the enhanced fuel efficiency of vehicles. The smaller motors, the more modern cars coming out of 08’, the Obama administration and the George W. Bush administration has pushed the cash for clunkers, fuel vehicles have become way more efficient, and when we adjust for this, it just really isn't that big of an impact that people would think it would be. The next slide is a big impact. This is looking at S&P 500 earnings, and there's a snake charmer here on the graphic that you can see. And a big part of that is when you look at basically the earnings expectations and estimates throughout periods of time leaning into it so going back to January of 2025, when you look at the projected earnings estimates versus where they came through, there's no wonder the market has been on an absolute tear even coming off of the April of 2025 bottoms from the tariff tantrum. US companies continue to be incredibly well capitalized. They have plenty of demand and they seem to be really capitalizing on the growth and everything taking place within the economy. You have earnings estimates that just at the start of this earning season, we're coming in at about $70 to $72 a share on the S&P 500 for the quarter, and once again, at the time of this recording, we're coming in closer to $80 to $82, about a 25% growth above expectations. Truly Crazy.
This next chart is from ChartKid Matt, which is another great service that we subscribe to. And this piggybacks a little bit off of a chart that we showed at the end of March, which is looking at basically equity return profiles and looking at it and discussing the matter that US equities are at all time highs and they continue to push higher to all time highs, but they're not more expensive. The growth taking place in markets is based on delivery of earnings expectations, not based on valuation multiples expanding. So if we look at things on a year to date basis for the S&P 500, once again, this is looking at things through the end of April. You're looking at basically 0.38% of the return coming from dividend yield. You had 7.41% coming from earnings growth being met. You had a retraction in multiples of negative 2.61% and a total return of 5.18%.
So you have a market that is 5% higher than where it started the year, but on a price to earnings basis, it is cheaper than where it started the year just as it was cheaper at the end of 2025 than where it started 2025. This is a really healthy sign of a bull market. This next one's another great chart that outlines the tech sector. So a lot of times when investors are thinking about tech and the big names and the concentration and all of these other things, and they see the NASDAQ hitting all time highs in the S&P 500, consistently hitting these all time highs, people look at it and get really, really concerned. What's really important is when we look at tech price relative to forward price to earnings ratios, there's a pretty massive divergence taking place right now. What that means is that this spread is very meaningful in that the growth of earnings is not keeping up with the growth of price.
This is a healthy market that is well valued and becoming cheaper even as it continues to hit new 52 week highs. Another chart, when we look at this, and this to me is a really great one, and the last one we'll cover on today's video, we heard about the Magnificent seven for the better part of the last decade. These big tech companies that are leading innovation, that are hyper scaling the AI build out, so on and so forth. When we look at the weighting of the Mag seven, so that magnificent seven and how they are weighted within the S&P 500, they virtually have had no change in weighting from Q1 of 2026 all the way back to Q2 of 2024. So in the better part of 24 calendar months, the S&P 500 has grown 28%. The weighting of those magnificent seven companies has not changed.
It's really important there. This is a market that has broadened. There are more participation, there are more companies, sectors and industries that are benefiting from artificial intelligence, benefiting from the overall economy and once again, just a really healthy sign of what's taking place. So our message remains consistent. Control what you can control, focus on the planning side of it, rebalance your portfolio periodically and remain invested. We can't time the market. You go back to what we showed with the Peter Lynch videos to start the year and everything we've covered in these videos over the last five or six years of doing these market updates at Rise Advisors, being in the market is the most important thing you can do. So with that being said, if you ever have any questions about what's taking place in your portfolio or just want to catch up with what's going on in the state of the world and with Rise Advisors, don't hesitate to reach out to myself or any of us on the team. Thank you so much for watching. Enjoy your early spring here and hopefully it's warmer the next time we do one of these videos. Thank you.
This presentation is for Informational purposes only.
All investment strategies including rebalancing and diversified asset allocation have risk. Past performance of our investment approach, component holdings and methods does not guarantee future results. Advisory services offered through Rise Advisors, LLC ("Rise") Registered Investment Advisor. While all data is believed to be from reliable sources, accuracy and completeness are not guaranteed.