Stocks experienced a strong reversal at the end of Friday’s session following a benign inflation print, closing out one of the strongest Mays on record despite ending the week in the red. The S&P 500, Nasdaq Composite, and Nasdaq-100 all saw fluctuations throughout the day, with the Dow Jones Industrial Average surging higher to mark its best day of the year.

Although the markets ended the week on a downturn, the S&P 500 achieved its best May performance since 2009, while the Nasdaq had its strongest May since 2003. As we enter June, the S&P 500 is near its all-time high, with gains of 5.2% for the month, while the Nasdaq Composite and Nasdaq-100 surged over 7% in May.

Despite the recent pullback in technology stocks, driven by post-earnings selloffs in companies like Salesforce and Dell Technologies, the market has been largely influenced by tech giants such as Microsoft, Apple, NVIDIA, Alphabet, Amazon, and Meta. These companies have significantly impacted the S&P 500’s year-to-date gain, leading to concerns that the market may be over-reliant on these high-flying tech stocks.

As the market grapples with uncertainties, some Wall Street strategists predict a potential shift in market leadership from growth stocks to value stocks for the remainder of the year. Bank of America highlights the likelihood of a transition as investor funds move towards stocks with more reasonable valuations, potentially diversifying market breadth.

Throughout the week, investors closely monitored economic indicators such as the Core PCE report and Treasury note auctions, which impacted market sentiment and stock performance. With yields rising sharply following the auctions, there is a growing sense of unease among investors, signaling potential challenges ahead for equities.