Markets Hold Steady After Sentiment Dip — All Eyes on Inflation Next Week

Markets Hold Steady After Sentiment Dip — All Eyes on Inflation Next Week

After a strong multi-week rally, markets ended last week on a more cautious note. The SPY (S&P 500 ETF) closed Friday at $579.11, pulling back slightly amid rising concerns over new tariff proposals and softer economic data. The University of Michigan Consumer Sentiment Index, released on May 24, came in lower than expected, suggesting that inflation concerns and geopolitical risks may be weighing on household outlooks again. This has cooled some of the optimism that drove stocks higher earlier this month.

The market sentiment now sits in a neutral-to-cautiously-bearish range, as investors digest both technical overbought conditions and a possible shift in tone from economic indicators. Attention is quickly turning to a series of important data releases that could set the tone for June. On May 28, we’ll get the Conference Board’s Consumer Confidence Index, followed by the PCE Price Index on May 31—a report the Federal Reserve watches closely to gauge inflationary pressure. If either report surprises to the upside, it could reignite volatility or spark new debates about interest rate expectations.

For now, traders should remain flexible, avoiding overexposure while SPY consolidates just below the $580 level. Long-term investors may view dips as buying opportunities, while short-term players should monitor volume and price action around key support at $570. The market hasn’t lost its bullish structure yet, but the next few data prints could determine whether this is a healthy pause—or the start of something bigger.