Happy Memorial Day, Investors!

No official newsletter this week as I take time off for Memorial Day. Here’s a quick look at key market highlights and what to watch next week. Enjoy the holiday!

Dear Readers,

Welcome back to the Quality Equities newsletter.

In observance of Memorial Day weekend in the United States, there will be no official weekly newsletter as I take some time off to rest and celebrate with friends and family. However, I’ve included a brief overview of market highlights and key catalysts to watch in the week ahead. For those in the US, happy Memorial Day weekend!

Market Recap and What to Watch

This past week, US stock markets experienced a pullback, with all major indexes posting losses. The S&P 500, Nasdaq, and Dow each fell approximately 2.5%, while the small-cap Russell 2000 slid over 3.5%, bringing all four indexes into negative territory for the year.

The decline was primarily driven by escalating geopolitical and macroeconomic tensions. Notably, President Trump proposed sweeping new tariffs (including a 50% tariff on European Union imports and a 25% tariff on smartphones produced abroad) which spooked investors and weighed heavily on tech giants like AAPL 0.00%↑ Apple.

Simultaneously, rising bond yields intensified market anxiety. The 10-year US Treasury yield climbed to 4.5% and the 30-year surpassed 5%, reflecting growing concerns over the US fiscal outlook following a MCO 0.00%↑ Moody’s credit downgrade and uncertainty tied to a new tax bill. These factors collectively raised fears about corporate profitability and consumer resilience in the face of tightening financial conditions.

Looking ahead, the coming week will be shortened by the Memorial Day holiday on Monday, but it could be pivotal for market sentiment.

NVDA 0.00%↑ Nvidia is set to report earnings, and as the flagship AI chipmaker, its results could strongly influence the broader tech sector. Investors will also be watching key US economic data releases (including consumer confidence and updated Q1 GDP figures) as well as fresh PMI numbers from China, which may signal the health of global manufacturing demand.

Despite recent turbulence, some analysts remain constructive. BAC 0.00%↑ Bank of America views the recent weakness as a buying opportunity, maintaining an S&P 500 target of 6,000+ this summer, and MS 0.00%↑ Morgan Stanley has turned bullish, expecting continued growth momentum into mid-2026. However, volatility is likely to remain elevated as markets continue to digest interest rate dynamics, trade policy shifts, and global growth signals.

All things considered, I remain constructive on the market over the long-term. While short-term volatility is inevitable (especially in the face of macroeconomic uncertainty and shifting policy dynamics), I believe these periods often present valuable opportunities for disciplined investors. My view is that the best course of action is to stay focused on building and holding a concentrated portfolio of high-quality, fundamentally sound businesses. By maintaining a long-term mindset and selectively taking advantage of near-term dislocations, investors can position themselves for strong compounding over time.