Wall Street is dark today — Memorial Day closes all US equity and bond markets, with no major economic data scheduled. It's a quiet start to the week, but last Friday's session left investors with plenty to digest heading into Tuesday's open.
The S&P 500 (SPY) closed Friday at $745.64, up 0.95% for the week. The Nasdaq (QQQ) rose 1.65%, while the Russell 2000 (IWM) posted the standout weekly gain of 3.32%. The small-cap rally extends a multi-week rotation trade that has investors rotating out of mega-cap tech into smaller, more domestically-focused names.
NVIDIA's post-earnings hangover
NVIDIA ($NVDA) was the week's biggest headline — and for the wrong reasons. The AI chip giant reported earnings on Wednesday that met expectations, but the stock slid 3.14% on the week to close at $215.33. The move suggests that elevated pre-earnings expectations had already priced in a beat, leaving the stock vulnerable to a "sell the news" reaction.
Other mega-cap tech names also struggled. Alphabet (GOOGL) dropped 3.52%, Microsoft (MSFT) shed 0.96%, and Meta (META) edged down 0.16%. It was a telling week for the advertising-and-search giants.
Tesla and Apple buck the trend
Tesla ($TSLA) was the standout among megacaps, climbing 3.91% to close at $426.01 — near all-time highs on a weekly basis. Apple (AAPL) also gained 3.69%, closing at $308.82, also near record territory.
Sector rotation in focus
By sector, technology (XLK) led with a 3.46% weekly gain. Healthcare (XLV) added 2.86%, and utilities (XLU) rose 3.21% — a move that typically signals moderated uncertainty. Energy (XLE) was the laggard, falling 1.8% as oil prices retreated.
Caution signals beneath the surface
Despite the green week, warning lights are flashing. The VIX fell to 16.7 — a level that suggests complacency — but Goldman Sachs published a note flagging that short exposure in US macro products has hit a 10-year high. The bank warns that the combination of record shorts and rising call skew creates a setup ripe for a sudden squeeze.
Over the weekend, Donald Trump posted that an agreement between the US, Iran, and Middle Eastern countries has been "largely negotiated." The deal still needs finalization, but the tone marks a potential de-escalation signal for oil markets and geopolitical risk premiums.
On the bearish side, BofA's Michael Hartnett doubled down on his call that this is "the biggest bubble since the railroads," and warned investors not to be complacent. Goldman, meanwhile, reports that hedge funds remain "almost defiantly" bullish — "all in on AI," as one note put it — with sentiment resilient even as short positioning builds.
Jamie Dimon also made headlines over the weekend, warning that AI will likely reduce jobs at JPMorgan and that society needs to think through the implications of rapid AI-driven workforce changes.
The bottom line
Markets are closed today, but the picture from last week shows a market running on two tracks — a rotation into small caps and select mega caps, a correction in AI leaders like NVDA, and a growing tension between bullish sentiment and record macro short positioning. Tuesday's open will be the real test of whether this week's momentum can hold.
