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May 22, 2026 | LPL Research

LPL Research provides its Weekly Market Performance for the week of May 18, 2026.

Stock Index Performance

S&P 500 Index Sectors

Fixed Income and Commodities

Source: LPL Research, Bloomberg 5/22/26 @3:15 p.m. ET
Disclosures: Indexes are unmanaged and cannot be invested in directly.

U.S. and International Equities

Global equity markets finished the week higher after rebounding from early declines, supported by easing geopolitical tensions, lower interest rates, and another solid round of corporate earnings. International developed markets outperformed, with the MSCI EAFE Index gaining more than 2%, while emerging markets advanced over 1.5%. The S&P 500 rose 1%, extending its winning streak to eight consecutive weeks, its longest stretch of weekly gains since 2023.

Investor sentiment improved as optimism surrounding a potential agreement between the U.S. and Iran helped reduce geopolitical concerns. Reports indicating progress on the latest peace proposal, combined with a pullback in both Treasury yields and oil prices, provided additional support for broader risk assets.

On the policy front, Kevin Warsh was officially sworn in as the new Chair of the Federal Reserve (Fed) on Friday. Warsh takes over an increasingly divided Fed, with minutes from the April Federal Open Market Committee meeting revealing a more hawkish tone among policymakers. The minutes showed that “many” participants favored removing the easing bias from the Fed’s policy statement as inflation risks remain elevated.

U.S. Equities: Momentum continued this week for U.S. equities, with the S&P 500 finishing the week back near record-high territory. Buying pressure was broad, as advancing shares on the index outpaced decliners by around 3:1. Small caps outperformed, with the Russell 2000 rallying nearly 3% and finishing the week just below its early May high. Hope for a continued path toward deescalation with Iran, stabilizing interest rates, and continued earnings strength supported risk appetite. S&P 500 earnings growth is tracking near 30% for the first quarter, materially ahead of expectations entering reporting season. Performance has once again been heavily influenced by mega-caps. The “Magnificent Seven” delivered earnings growth of roughly 63% during the quarter, accounting for more than half of the S&P 500’s total earnings growth. Still, strength beneath the surface has been better than many appreciate, with the remaining S&P 493 generating a solid 17% earnings growth rate this quarter, according to FactSet.

NVIDIA (NVDA) remained a primary market focus after delivering another strong beat-and-raise quarter, with management highlighting “parabolic” demand tied to AI infrastructure spending. The results reinforced confidence in the secular AI growth theme that continues to drive leadership within large-cap technology.

Retail earnings also drew attention this week following results from Walmart (WMT) and Target (TGT), where management commentary pointed to growing concerns around the durability of lower-income consumer spending trends.

International Equities: International equity markets moved higher this week, led by developed markets as easing geopolitical concerns and lower global interest rates supported risk sentiment. The MSCI EAFE Index gained roughly 2.5% amid growing optimism surrounding a potential Middle East peace agreement. In Europe, the STOXX Europe 600 posted gains in all five trading sessions and advanced 3%, while Germany’s DAX climbed nearly 4% on the back of solid earnings results and improving consumer and business confidence. Japan’s Nikkei 225 recovered from sharp losses earlier in the week to finish up 3%, supported by softer-than-expected inflation data and a decline in Japanese government bond yields. China lagged broader international markets, with the Shanghai Composite slipping 0.5% amid ongoing concerns surrounding domestic growth and uneven economic momentum.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, as measured by the Bloomberg Aggregate Index, were slightly higher on the week, with Treasury yield declines as the primary driver of returns. Investment-grade credit spreads were marginally higher on the week but remain at very low levels.

As discussed in this week’s LPL Market Signals, global bond markets have faced several headwinds since the onset of the Iran conflict. These include rising inflation expectations, higher term premia, a repricing higher in monetary policy rate expectations, and — particularly in the U.K. — an increase in political risk premia. As a result, 10-year developed market yields have risen by roughly 40–60 basis points, with U.K. gilts leading the move higher (+66 bps). In the U.S., the primary driver of higher yields has been an increase in real yields (as reflected in Treasury Inflation-Protected Securities, or TIPS), driven by a repricing of Fed rate expectations. Markets are currently pricing in approximately a 50% probability of two rate hikes over the next 12 months. This week’s FOMC meeting minutes struck a hawkish tone; however, we believe the hurdle for additional rate hikes is higher than the Fed simply maintaining its current policy stance — absent a meaningful unanchoring of inflation expectations, which we have not yet observed. As a result, real yields are now at their highest levels in decades, with the 10-year TIPS yield at 2.14% and the 30-year TIPS yield at 2.84%. TIPS are U.S. government bonds designed to preserve purchasing power, as their principal adjusts with inflation. Investors therefore earn a return tied to CPI increases plus a fixed real yield. In effect, regardless of the path of inflation, investors locking in these securities today can expect to earn approximately 2.14% and 2.84% in real terms over the next 10- and 30-year periods, respectively. For investors seeking inflation protection, current yields are elevated relative to historical levels, offering both explicit protection against inflation surprises and attractive real carry.

Commodities and Currencies: The broader commodity complex moved lower this week, pressured primarily by weakness in energy markets as geopolitical headlines surrounding Iran shifted modestly toward de-escalation. President Trump postponed planned strikes on Iran earlier in the week to allow additional diplomatic negotiations to take place. Still, uncertainty remained elevated amid reports of a proposed Iran-Oman toll arrangement through the Strait of Hormuz, Iran’s resistance to transferring enriched uranium out of the country, and renewed concerns following a strike on a United Arab Emirates nuclear facility, all of which raised questions about the durability of any potential peace agreement.

Brent crude declined roughly 5% on the week but continued to hold above key technical support near $98. Precious metals also weakened as markets increasingly priced in the possibility of a Fed rate hike later this year. Platinum and palladium underperformed in metals, while gold slipped less than 0.5%. Industrial metals were firmer overall, led by a 1.5% gain in copper as ongoing supply concerns continued to support prices.

Agricultural commodities outperformed, with corn, wheat, and soybeans each advancing more than 1%. Fertilizer shortages tied to the effective closure of the Strait of Hormuz have further tightened supply conditions across the agriculture sector, particularly during a critical period for North American crop production.

Meanwhile, the U.S. dollar finished little changed on the week and continued to diverge from rising interest rates. Structural pressures, including central bank diversification away from the dollar, shifting global monetary policy expectations, and concerns surrounding the U.S. fiscal outlook, have continued to weigh on the currency despite elevated Treasury yields.

Economic Weekly Roundup

The economic calendar was relatively light this week, with the April FOMC meeting minutes (Wednesday), University of Michigan survey data (Friday), and the official swearing in of Kevin Warsh as the new Fed Chair (Friday) highlighting the week.

According to the minutes to the FOMC’s April meeting, which was generally perceived as hawkish, FOMC “participants generally” judged that elevated inflation could require keeping the fed funds rate unchanged for longer than they had previously anticipated. Market-implied expectations for the fed funds rate at the end of 2026 were roughly unchanged following the release of the minutes. Markets have priced in one full rate hike in 2026.

Friday’s University of Michigan surveys again noted that inflation and the broader cost of living continue to be first-order concerns. The report also mentioned that “consumers appear worried that inflation will increase and proliferate beyond fuel prices, even in the long run.”

Finally, also on Friday, Warsh was sworn in and will become the 17^th Fed Chair in its history (11^th in the post 1935 Banking Act era). Warsh has noted that he wants to bring “regime change” to the central bank, including shrinking the Fed’s $6.7 trillion balance sheet, establishing a new framework for analyzing inflation, and changing how the institution communicates with the public. Most of his intentions, however, require consensus approval.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: Memorial Day Holiday, no economic releases scheduled
• Tuesday: ADP Weekly Employment Change (May 9), Chicago Fed National Activity Index (Apr), Philadelphia Fed Non-Manufacturing Activity (May), FHFA House Price Index (Mar), House Price Purchase Index (1Q), S&P Case-Shiller 20-City and National House Price Indexes (Mar), Conference Board Consumer Confidence report (May), Dallas Fed Manufacturing Activity (May)
• Wednesday: MBA Mortgage Applications (May 22), Richmond Fed Manufacturing Index and Business Conditions (May), Dallas Fed Services Activity (May)
• Thursday: Personal Income and Spending (Apr), Headline and Core PCE Price Indexes (Apr), Real Personal Spending (Apr), Durable Goods Orders (Apr preliminary), Initial Jobless Claims (May 23), Capital Goods Orders and Shipments (Apr preliminary), Continuing Claims (May 16), GDP Annualized (1Q second reading), Personal Consumption (1Q second reading), Core PCE Price Index (1Q second reading), New Home Sales (Apr), Building Permits (Apr final)
• Friday: Advance Goods Trade Balance (Apr), Retail Inventories (Apr), Wholesale Inventories (Apr preliminary), MNI Chicago PMI (May)

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1114245

How AI May Increase Jobs, Not Replace Them

Dr. Jeffrey Roach | Chief Economist
Last Updated: May 21, 2026

From the April payroll report released on May 8, we realize that not all industries are equally impacted by AI. Diagnostic imaging centers, an area where AI is thought to replace humans, have increased demand for workers, whereas bookkeeping demand has declined in recent years. William Jevons, a British economist born in the same town as the Beatles but less famous, explained that increased efficiencies may spark additional demand and that this concept may help us understand the potential AI impacts on the job market.

The Jevons paradox suggests that when technology makes the use of a resource more efficient, demand for that resource can rise rather than fall because lower costs unlock new uses and broader adoption. Applied to AI and the labor market, this means AI may reduce the time and cost required to perform many tasks, but that does not necessarily imply a proportional decline in labor demand. Instead, by making tasks, software development, customer service, research, and operations more productive, AI can expand the volume of work organizations are able to undertake and create demand for new roles, new products, and new business models. Or in the case of diagnostic imaging centers, as mentioned above, the lower cost of the service is a catalyst for a spike in demand, and so a firm hires more workers to meet the shift in demand.

The implication is that AI’s labor-market impact will likely be less about the wholesale elimination of jobs and more about the reallocation of tasks across workers, firms, and industries. Some routine or automatable tasks will be displaced, and certain occupations will face pressure. But as AI lowers the cost of service, demand may increase for workers who can use AI effectively, improve workflows, and apply human judgment. In this sense, AI could follow a Jevons-like pattern: greater efficiency may increase the overall demand for AI-enabled work, even as it changes the composition of employment and raises the premium on adaptability, digital fluency, and higher-value human skills. And AI may end up being the antidote to a shrinking labor force.

Percent of Working-Age Population Will Shrink

Source: LPL Research, Bureau of Labor Statistics 05/13/26

Policymakers and investors increasingly see AI as a way to offset the economic drag from aging populations, especially in developed economies where the workforce is starting to shrink. As more people move into retirement and a larger share of the population is over 70, fewer workers are available to support overall growth. AI is viewed as a way to fill that gap by boosting how much each worker can produce rather than relying on a larger workforce. It can automate repetitive tasks, enhance decision-making, and allow smaller teams to generate the same or greater output. That dynamic matters for governments as well, since slower workforce growth puts pressure on tax revenue while spending on healthcare and pensions is rising.

From an investor perspective, AI is also tied to long-term profitability in a world where labor is becoming scarcer and more expensive. Companies that adopt these technologies can reduce their dependence on hiring while improving efficiency and output, which helps protect margins. This encourages more spending on technology and capital investment as businesses look to substitute machines for labor. Over time, many investors believe AI could drive a sustained increase in productivity similar to earlier technological shifts. In that sense, it is being treated as a structural solution to demographic challenges, one that could extend the growth trajectory of aging economies while supporting returns even as population dynamics become less favorable.

AI is likely to reshape rather than simply eliminate jobs, with efficiency gains potentially increasing demand for AI-enabled work while raising the premium on adaptability and human judgment.

For more ways AI will shape the outlook for economic growth, inflation, and the job market, check out this month’s Economic Navigator.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1113157

Potential Risks That Could Challenge the Strong Market Narrative

LPL Research
Last Updated: May 20, 2026

Today’s blog is written by Chris Fasciano, chief market strategist at Commonwealth. He represents Commonwealth in various media appearances, advisor speaking events, and Commonwealth conferences. He also oversees and mentors a dynamic team of investment research analysts who specialize in equity and fixed income markets. Prior to this role, Chris spent 10 years as one of the firm’s portfolio managers, involved with asset allocation and fund selection. With a deep background in small- and mid-cap stock research, Chris is uniquely positioned to analyze the latest economic data and offer valuable insights on navigating today’s volatile markets. Chris Fasciano is a guest writer and is not affiliated with LPL Financial.

One of my guiding investment philosophies is that headlines drive markets in the short term but over the long term it is fundamentals that drive markets. That has played out multiple times over the last year. There have been significant sell-offs due to tariff policy and the war in the Middle East. Yet the market rebounded not long after these declines based on an underlying strength in corporate earnings.

Rising markets make everyone feel better, but they also come with higher expectations. Today, the key question is not whether fundamentals are strong but whether the market’s consensus view is too optimistic. Currently, market participants seem to be assuming that the impact from the war will be reversed once an agreement between the U.S. and Iran is reached. Jobs creation will remain positive; inflation will moderate; the economy will continue to grow and earnings will remain strong.

Part of any good investment process is monitoring potential risks to the consensus narrative. Let’s do that now.

It Is All About Earnings

It is easy to see why investors have responded positively to earnings. S&P 500 first quarter earnings are up around 27% versus expectations at the end of March for 13.2% growth. Perhaps more importantly, second quarter earnings estimates have moved higher as well.

Estimates Moving Higher

Source: LPL Research, FactSet 05/15/26
Disclosures: Indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results. Estimates may not develop as predicted and are subject to change.

The “Estimates Moving Higher” chart illustrates where full year 2026 numbers have moved as a result. Since February 27, the day before the war in the Middle East began, 2026 earnings estimates have increased 6.5%. Despite all the headlines over the last few months, the surge in oil prices, and the rise in gas prices, analysts have become more optimistic about the health of corporate America. Current estimates indicate full year earnings growth of 23%!

But if earnings have been driving the market higher and expectations for future growth have increased, then the potential for disappointment has also increased. One of the most important pillars supporting this optimistic outlook is the artificial intelligence (AI) narrative.

The Artificial Intelligence Story

The buildout of AI infrastructure has both been a driver of U.S. economic growth and stock market returns. The best-performing stocks have been the large cap growth stocks most exposed to AI. They have had the best earnings growth profile, and that has led to investors continuing to invest in their stocks.

Early in the Spending Boom

Source: LPL Research, Bloomberg, J.P. Morgan Asset Management 05-15-26
Disclosures: Data 2026, 2027, and 2028 reflect consensus estimates. Capex shown is company total. Past performance is no guarantee of future results. Estimates may not develop as predicted and are subject to change. Any companies referenced are being presented as a proxy, not as a recommendation. Hyperscalers are the large cloud computing companies that own and operate data centers with horizontally linked servers that, along with cool and data storage capabilities, enable them to house and operate AI workloads.

The “Early in the Spending Boom” chart indicates that AI infrastructure capital outlays are beginning to ramp up. This trend will unfold over years and decades. As a result, the theme is likely to remain an important part of the market narrative. But once again, given the optimism surrounding the consensus view for the power of AI’s future, any changes on the margin to capital spending could lead to ripple-effect disappointments for both the economy and market. Simply pushing spending plans out a quarter or two, supply chain issues, or even higher borrowing costs, could unnerve investors and pressure AI related stocks. NVIDIA’s earnings report and conference call after the market closes this evening will be the next key data point in this story.

At the same time, macroeconomic pressures are also beginning to challenge optimistic narratives.

Inflation Is Starting To Run Hot

For the most part, the stock market has ignored rising oil prices as the ceasefire and ongoing negotiations seemed to indicate a potential end to the war in the Middle East. However, the Strait of Hormuz has now been closed for 11 weeks, removing key oil supplies for the global economy. Gas at the pump continues to move higher across the country.

Both the Consumer Price Index (CPI) and the Producer Price Index (PPI) came in higher than anticipated in the month of April. Consumer prices rose at an annual rate of 3.8%. Even more concerning was the increase in producer prices, which rose 6%. Supply chain concerns are beginning to show up in the data.

Inflation Is Beginning To Accelerate

Source: LPL Research, Bureau of Labor Statistics (BLS), FactSet, J.P. Morgan Asset Management 05/15/26
Disclosures: Past performance is no guarantee of future results. Contributions mirror the BLS methodology on page 7 of the CPI report. Values may not sum to headline CPI figures due to rounding and underlying calculations. Headline and core PCE deflator inflation shows are based on seasonally adjusted data due to data availability. Official October 2025 data unavailable due to government shutdown and data shown are J.P. Morgan Asset Management estimates.

The “Inflation Is Beginning To Accelerate” chart examines the key components that are driving consumer price inflation. We are still a long way from inflation reaching the levels seen in 2022 when the Fed reacted by raising interest rates aggressively. However, the drivers of the current increase in inflation are the same as they were back then — energy, food at home, and core goods. That isn’t surprising since the current concern is higher energy prices and supply chain constraints, which were the issues when Russia invaded Ukraine. Higher inflation in those areas could be a drag on other parts of the consumer budget. Given that consumer spending makes up 70% of U.S. economic growth, a headwind for the economy could impact profitability for companies.

Driven by concerns about accelerating inflation and where it might be headed, the yield on the 10-year Treasury bond rose substantially and now is over 4.6%. The 10-year yield is a key benchmark for mortgage rates, which also impacts the spending power of the consumer.

Moderate inflation is manageable, but higher or unpredictable inflation can lead to downward pressure on markets. No matter how well companies are doing, higher interest rates tend to lead to lower valuations for stocks. And if inflation continues to rise, rates are likely to follow. As a result, just the uncertainty about inflation alone can increase volatility even if the longer-term outlook remains anchored.

But it is important to remember that inflation doesn’t impact all companies, sectors, and stocks in the same way. While some companies will be hurt by higher inflation and interest rates, others will benefit.

Portfolio Diversification Remains Key

When markets are priced for optimism, it doesn’t take bad news, only less good news, to trigger volatility. Risk management is a key part of any investment process. Knowing what investor expectations are priced into the market and understanding what could prove them to be either optimistic or pessimistic is a worthwhile exercise to go through.

Timing markets is hard, if not impossible, so wholesale changes to portfolios based on assumptions about the future don’t make sense. As we have learned time after time, assumptions can change very quickly. But there are certainly ways to mitigate risk while preserving the opportunity to participate in further upside.

It is possible that none of the potential risks to the consensus narrative materialize, but with stocks near all-time highs, now is a good time to revisit long-term goals and determine whether your current portfolio accomplishes these goals. If not, some changes may be warranted given the strong moves in numerous asset classes that have occurred over the last year. But if investors do only one thing year in and year out, it should be to rebalance portfolios. Bringing portfolios back in line with diversified allocations should help navigate any uncertainty on the horizon.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1112461

Why Most Portfolio Manager Mistakes Seem Smart at the Time

Carter France | Senior Investment Analyst
Last Updated: May 19, 2026

Most portfolio manager mistakes don’t feel reckless when they’re initially put into motion. The manager’s compelling track record and narrative over time leads to reasonable outlooks, portfolio themes, positioning, and trades. The story makes sense. Near term performance in these scenarios ranges from defensible to even impressive, and nothing appears broken yet from an outsider’s perspective.

A contrasting lens tends to be used when we view these mistakes in a backward-looking fashion. Often, lead portfolio managers and key investment professionals don’t fail because they lose skill or discipline. They fail because something subtle has changed — and no one had the time, perspective, or framework to catch it early. The mistake evolves into something that appears obvious, and the initial decision-making no longer looks smart but rather avoidable. Those early conversations that centered around opportunity have now evolved into explanations as managers find themselves playing defense.

The Problem Isn’t Bad Managers — It’s a Focus on the Symptoms Over the Root Cause

When many investors review investment strategies, performance is often the starting point. And understandably so. Returns are visible, easy to compare, and they’re typically what clients notice first when presented with a fact sheet, marketing materials, or research database.

But performance screens are backward‑looking by design. They tell you what has happened — not whether the conditions that made that performance possible still exist.

In our research, early warning signs rarely show up in returns. Instead, they surface quietly in places like:

• A shift in how decisions are made inside the firm
• Asset growth that subtly changes how a strategy is implemented
• Incentives that start favoring asset gathering over process discipline
• Risk exposures that look benign individually but could be dangerous in combination

Few of these warning signs present early, alarming symptoms. By the time symptoms reach an alarming level, the damage to 1- and 3-year-trailing performance figures is sometimes already done.

That’s why manager mistakes almost always look intelligent in real time. The inputs still appear sound. The output just hasn’t been tested yet.

What Institutional Research Thinks About Differently

One of the biggest differences between institutional manager research and individual selection is the questions being asked. Instead of asking: “Has this manager performed?” We ask: “Are the conditions we’ve identified as conducive to consistent risk-adjusted returns and excess returns still present and what could realistically go wrong?”

That shift matters.

It forces you to move beyond stories and into structure. Beyond past success and optimism and into future durability and probability.

Great past performance doesn’t fail all at once. It erodes at the edges — through capacity strain, process drift, team changes, or creeping exposure to undesirable risks.

Avoiding Mistakes Beats Chasing Stars

High‑quality manager research isn’t always about finding the next star manager before everyone else does. In a large, vast investment universe, that can be a low‑probability game with high opportunity costs.

It’s about avoiding predictable paths to failure.

Managers rarely underperform because of one big decision. They tend to underperform because a series of small changes go unchecked — each one reasonable on its own, but collectively transformative to the strategy’s risk profile.

The goal isn’t perfection but rather stacking the odds in the investor’s favor across full market cycles.

For client portfolios, that often translates to:

• Fewer surprises
• Performance that may align with expectations
• More consistency across different market environments
• And fewer uncomfortable client conversations that begin with, “This made sense at the time.”

That last one matters more than most advisors admit. From an end client’s perspective, reasonableness in hindsight and not in the present doesn’t inspire confidence in an investment professional.

Where Our Internal Coverage List Can Help

We continuously pressure‑test portfolio managers on our internal Coverage List via onsite visits and virtual interviews, not to predict exact outcomes, but to help reduce avoidable mistakes.

We focus less on trying to forecast who will outperform next year and more on understanding:

• Whether a manager’s process is still intact
• Whether firm or strategy growth has altered execution
• Whether decision-making authority is clear and stable
• Whether risk is being taken consciously or accumulating unintentionally

In a world where time is the scarcest resource, signals matter more than stories. Good narratives are easy to find. Durable processes are harder.

The internal Coverage List is designed to help advisors identify strategies that exhibit characteristics that contribute to long‑term outcomes, so portfolios don’t just look smart at the time but potentially hold up when it matters. For LPL advisors, we welcome discussions about the Coverage List. For investors, please contact your LPL advisor for details.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1104517

LPL Research
Last Updated: May 15, 2026

LPL Research provides its Weekly Market Performance for the week of May 11, 2026. U.S. equities held up well this week, with the S&P 500 posting a modest weekly gain and hitting a record high on Thursday, supported by AI-driven enthusiasm despite higher oil prices and rising Treasury yields. Macro headwinds, including rising energy costs and elevated inflation, along with limited progress on U.S.-China trade and Middle East tensions, pressured investor sentiment. International equities underperformed, weighed down by a stronger U.S. dollar, rising global rates, and profit-taking in Asia following a “sell-the-news” reaction to the Trump-Xi summit.

Fixed income markets declined as yields rose globally, driven by inflation pressures, higher oil prices, and political uncertainty, particularly in the U.K. High yield credit remains resilient but expensive, with tight spreads and improving fundamentals suggesting limited upside without a downturn.

Stock Index Performance

S&P 500 Index Sectors

Fixed Income and Commodities

Source: LPL Research, Bloomberg 5/15/26 @3:54 p.m. ET
Disclosures: Indexes are unmanaged and cannot be invested in directly.

U.S. and International Equities

U.S. Equities: As trading for the week drew to a close, the S&P 500 was clinging to a modest weekly gain, setting a fresh all-time high along the way and extending its winning streak to seven weeks. Investor focus was on inflation data early in the week and the Trump-Xi summit late in the week, neither of which offered any relief for oil or the rates markets. A double-digit increase in oil and sharply higher Treasury yields weighed on trading Friday. However, enthusiasm for AI, reflected in the sharp gains in Cisco (CSCO) and NVIDIA (NVDA), the well-received Cerebras Systems (CBRS) IPO, rebounds in some leading software names, and the possibility of trade deals with China were enough to keep large cap indexes above water despite some weakness in semiconductors broadly.

Although the status quo with China was not necessarily viewed negatively by strategists, the lack of confirmed agreements on trade and lack of progress on a resolution to the U.S.-Iran conflict did contribute to a challenging week for sector laggard consumer discretionary, which continues to struggle with high oil prices. The increasingly challenging macroeconomic backdrop also pressured sentiment toward small caps, which finished solidly lower on the week and kept market chatter about a lack of breadth front and center for market-watchers. With earnings season largely over, except for chip giant NVDA on May 20 and some May quarter-end reporters in retail, market attention will be focused on the Strait of Hormuz, ongoing inflation pressures, and the leadership transition at the Fed.

International Equities: Developed international and emerging market equities lagged significantly behind the broad U.S. large cap equity market for the week. A surge in the U.S. dollar and high oil prices, which have contributed to upward pressure on interest rates globally, were the biggest drags on the non-U.S. indexes, although Asian equities were also hurt by the sharp intra-week reversal in Korean memory names.

Weakness in developed international markets was broad based with declines in France, Spain, Germany, and Italy on the European side and Australia and Japan in Asia-Pacific. Political strife in the U.K. continued to weigh on the British market, while yields on Japan’s long bond hit multi-decade highs. Weakness in Asian markets permeated through emerging markets as China, India, and Taiwan lagged the U.S. on the Asia side, in part due to profit taking as the Trump-Xi summit reaction seemed to be a sell the news event. Latin America was also weak as commodities outside of oil were mostly lower, particularly precious metals.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, as measured by the Bloomberg Aggregate Index, declined over the week. The rise in U.S. Treasury yields this week was driven by higher oil prices, firmer inflation readings in the U.S., and the spillover effects from the broader global bond sell-off — most notably in the U.K. In the U.K., intensifying inflationary pressures, combined with increased political uncertainty surrounding Prime Minister Keir Starmer’s leadership, pushed 30-year gilt yields to their highest levels since 1998.

The high yield market also traded lower over the last five days, which remains broadly sanguine yet sensitive to an evolving risk landscape, as the conflict in the Middle East persists, and domestic consumer pressures mount. Per Bloomberg, approximately $41 billion in market value was trading at spreads wider than 1,000 basis points across the high yield index as of May 5, down from $50 billion at the end of February. As such, nearly a quarter of the index’s option-adjusted spread (OAS) is attributable to the widest 5% of issuers by market value. At current levels, OAS are in the third percentile of historical spread valuations (meaning spreads have been higher 97% of the time since 2001). Removing the weakest credits suggests that valuations are even more expensive.

That said, corporate default rates are declining, distressed exchanges are easing, and the number of liability management exercises is falling, indicating improving quality within the broader high yield market. Additionally, the quality of the index has improved in recent years, with BB-rated securities now representing a record-high share of over 56%. As a result, absent an economic contraction (which is not our base case), spreads can remain at these very tight levels; however, we believe the likelihood of further tightening is low. Overall, the additional compensation for owning higher-risk corporate credit is unattractive, in our view.

Commodities and Currencies: The broader commodities complex rose this week on the back of double-digit gains in crude oil prices. WTI crude settled at $105.42 (+4.2% Friday) and Brent closed just shy of $110 as the Trump-Xi summit yielded no progress on reopening the Strait of Hormuz. Trump said he didn’t press Xi on Iran, though both agreed the waterway “must remain open.” While oil was the weekly winner, precious metals finished at the opposite end of the commodities leaderboard. Gold was hurt by a surging U.S. dollar and a more hawkish market outlook for monetary policy that increased the relative attractiveness of bonds relative to gold. A volatile week has left silver prices down as well. Industrial metals held up well as AI investment continued to support copper globally.

The U.S. dollar strengthened this week, with the Bloomberg Dollar Spot Index up 1.2% for its best week since early March. Repricing for a more hawkish Fed and safe haven buying amid heightened geopolitical uncertainty were among key drivers for the greenback which broke back above its 50- and 200-day moving averages. The yen remained in focus, weakening for five straight sessions toward 159. USD/JPY approached levels last seen before the April 30 intervention.

Economic Weekly Roundup

Medical Care Drove Consumer Inflation. April inflation rose 0.6% month over month, pulling the annual pace up to 3.8% from 3.3% in March. The reacceleration was expected, so investors need to focus more on services to get a bead on the overall trajectory. The so-called “Supercore” (which focuses on services ex housing) accelerated to 3.4% from a year ago from rising medical care services. This pace will likely continue as demand for health care increases as the population ages.

The Fed will almost certainly be on hold for the next two quarters as rates remain elevated since inflation is not expected to ease in the same way investors anticipated just a few months ago.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: New York Fed Services Business Activity (May), NAHB Housing Market Index (May), Total Net TIC Flows (Mar), Net Long-term TIC Flows (Mar)
• Tuesday: ADP Weekly Employment Change (May 2), Pending Home Sales (Apr)
• Wednesday: MBA Mortgage Applications (May 15), FOMC Meeting Minutes (Apr 29)
• Thursday: Initial Jobless Claims (May 16), Continuing Claims (May 9), Philadelphia Fed Business Outlook (May), Housing Starts (Apr), Building Permits (Apr preliminary), S&P Global U.S. Manufacturing, Services, and Composite PMIs (May preliminary), Kansas City Fed Manufacturing Activity (May)
• Friday: University of Michigan Consumer Sentiment Report (May final), Kansas City Fed Services Activity (May), Bloomberg U.S. Economic Survey (May)

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1105276

Tactical Update: Rising Conviction on Earnings Growth

George Smith | Portfolio Strategist
Last Updated: May 14, 2026

Rising Conviction on Earnings Growth

In last month’s update, we highlighted a shift from preparation to action as market conditions began to support increased equity exposure. Since then, that positioning has become even more grounded in fundamentals, as earnings have demonstrated strong growth. The improved backdrop also reflects an economy that continues to grow at a solid pace and a market that has remained resilient through recent geopolitical uncertainty.

The LPL Research Strategic and Tactical Asset Allocation Committee (STAAC) recently upgraded equities to overweight (by adding to small cap value), while trimming fixed income to underweight (via a reduction in mortgage-backed securities). That move reflects growing confidence in both the economic backdrop and the earnings outlook. Equity market leadership has remained concentrated in growth and large cap stocks, particularly within the technology sector, where continued investment in artificial intelligence (AI) is driving strong earnings trends. This leadership also reflects the scale of AI-related investment, which is disproportionately benefiting large cap companies with the balance sheet strength to fund that growth.

This earnings season has helped validate that view. As shown in the LPL Research Earnings Season Dashboard below, first quarter results have come in notably strong. Earnings growth is tracking at a torrid pace; a high percentage of companies are beating both earnings and revenue expectations, and forward estimates continue to move higher even late in the reporting cycle. Much of that strength is coming from the largest technology companies (the Magnificent Seven (Mag Seven) stocks have seen an average 57% earnings per share growth in Q1), but the overall tone of the season has been constructive. The average overall S&P 500 upside surprise has been strong, supported by communications services, consumer discretionary sectors, and semiconductors, while both earnings and revenue beat rates are running well above average. Forward estimates have also continued to rise in recent weeks, reflecting resilient demand and continued investment trends.

Earnings Season Dashboard

Source LPL Research, FactSet 05/08/26
Disclosures: All indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.

One of the most important dynamics in equity markets this year has been the relationship between prices and earnings. While the S&P 500 price has moved higher, earnings expectations (as measured by forward earnings per share (EPS)), have increased at a faster rate. The result is a modest decline in valuation multiples (as measured by the forward price to earnings (P/E) ratio, leaving the market somewhat “cheaper” today on a forward basis than it was at the start of the year. That is not something typically experienced during an equity rally to new all-time highs.

Year-To-Date Change in S&P 500 Price, Earnings, and Valuation

EPS = Earnings Per Share, P/E = Price to Earnings Ratio
Source LPL Research, Goldman Sachs GIR, FactSet 05/13/26
Disclosures: All indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.

At the same time, it must be considered that earnings strength has been relatively concentrated, with a narrow group of companies driving both earnings revisions and market performance. That type of setup can lead to periods of volatility, particularly in momentum-oriented areas of the market, as leadership rotates beneath the surface.

Current Tactical Positioning

The STAAC’s recommended tactical asset allocation (TAA) includes an overweight stance toward U.S. equities. With a path to reduced geopolitical risk emerging and a supportive earnings backdrop, we expect equities to continue to find support. The STAAC maintains a preference for growth over value and slightly favors large caps over small caps, reflecting both earnings leadership and balance sheet strength. Continued investment in AI also reinforces that bias.

Fixed income remains less compelling in the near term, as yields are expected to remain rangebound and persistent inflation pressures may delay the timing of Federal Reserve rate cuts. In that environment, the return potential for bonds may be more limited relative to equities. At the same time, with economic and policy uncertainty likely to persist, we believe alternative investments can continue to play a role in helping manage portfolio volatility and improving diversification.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1108759

Beyond Returns: Three Powerful Factors in Active Fund Evaluation

Derek Beiter | Senior Investment Analyst
Last Updated: May 13, 2026

A common approach by investors is to invest in funds that have historically outperformed their benchmark index, hoping that a fund’s past outperformance will continue. Our research finds this approach can often work — until it doesn’t. We see a persistence effect in fund performance data, whereby funds with strong three-year performance often have another three-years of good performance in the following period. But when the relationship breaks down, it is often painful. Our resaerch indiciates the prior winners tend to become losers around big inflection points in the market, such as the 2008 Global Financial Crisis and the 2022 sell-off for stocks and bonds induced by rising interest rates.

We believe investors should consider a fund’s past performance as an important criterion. We also believe it is important to review factors outside of performance, not because performance doesn’t matter, but because certain non-performance factors have been shown to correlate with future performance. In other words, investors may benefit from expanding their criteria beyond performance. Here, we highlight three non-performance indicators supported by academic literature: fund expenses, team-based management, and ownership of fund shares by portfolio managers (PMs).

Fund Expenses

• The evidence. There is generally broad agreement among peer-reviewed academic literature that funds with lower fees generally have better performance. A somewhat recent example comes from Michael J. Cooper, Michael Halling, and Wenhao Yang (2021), who found “a strong negative association between net-of-fee fund performance and fees in a sample of all US and international equity funds.”¹
• On your own. You can find a fund’s fees and expenses in its prospectus document and can compare them to other funds in its asset class using third-party data providers.
• Go further with LPL Research. We assess fund expenses as one factor in our 40-factor evaluation framework. Funds with expenses below the average for their investment category generally receive a green status in our framework. When fees are above average, we prefer to see this offset by strong net-of-fee performance and a reasonable explanation for the higher fee (such as higher costs of resources and data in complex assets). We also evaluate trading costs, such as explicit trading commissions and, for exchange-traded funds (ETFs), implicit costs such as the bid-ask spreads and premiums or discounts to net asset value (NAV).

Team-Based Management

• The evidence. Saurin Patel and Sergei Sarkissian published a paper in 2017 that found that team-based funds generally perform better than funds with a single manager.² They also found that having too many PMs on a fund is associated with underperformance.
• On your own. You can find the names and basic biographic information about a fund’s PMs in its prospectus.
• Go further with LPL Research. Our Investment Manager Research team speaks with PMs on an ongoing basis. Sometimes we uncover nuances, such as key investment professionals who are not listed in the prospectus but still have important roles on the investment team. We also find situations where someone is listed in the prospectus as a PM who does not make day-to-day investment decisions for the fund, but rather provides an oversight function. Through our conversations with PMs and other key staff, we develop an opinion of the key contributors to a fund’s success, and we stand ready to adjust our opinion of the fund when key people depart. We also attempt to understand the communication dynamics on an investment team, as healthy two-way dialog about portfolio decisions may be helpful to performance.

Ownership of Fund Shares by PMs

• The evidence. An article by Khorana, Servaes, and Wedge (2007), as well as more recent studies, find that funds whose PMs invest their personal assets alongside investors tend to have better performance.³  Some observers believe this comes from managers having “skin in the game,” because they do better financially when the fund succeeds.
• On your own. You can find the PM’s ownership of fund shares in a fund’s Statement of Additional Information (SAI), which is typically available on the fund company’s website. Within the document, searching for the PM’s last name may help you find the relevant section among this lengthy document.
• Go further with LPL Research. We assess PM ownership as part of our 40-factor evaluation process. High ownership of fund shares tends to receive a green indicator in our framework, while little to no ownership tends to receive a yellow or orange indicator. If a fund manager does not own shares in the fund they manage, we typically inquire with the manager about this and determine whether the explanation addresses our concerns. For example, the PM may be aligned with shareholder interests in other important ways, such as through a well-designed performance-based compensation plan or investments in similarly managed portfolios.

Final Thoughts

We believe it is important for investors to consider a fund’s past performance and factors beyond performance. The importance of fund expenses, team structure and dynamics, and PM ownership of fund shares are well-supported by academic literature and our internal research. While investors can find relevant information in fund documents, our Investment Manager Research team dives much deeper. We do this by considering implicit as well as explicit costs, regularly speaking with PMs, and understanding how they are incentivized. We believe these are important aspects of our overall, holistic 40-factor evaluation framework for actively managed portfolios.

Footnotes

1. Michael J Cooper, Michael Halling, and Wenhao Yang, 2021. “The Persistence of Fee Dispersion among Mutual Funds.” Review of Finance, European Finance Association, vol. 25(2), pages 365-402.
2. Saurin Patel and Sergei Sarkissian, 2017. “To Group or Not to Group? Evidence from Mutual Fund Databases.” Journal of Financial and Quantitative Analysis, vol. 52(5), pages 1989-2021.
3. Ajay Khorana, Henri Servaes, and Lei Wedge, 2007. “Portfolio Manager Ownership and Fund Performance.” Journal of Financial Economics, vol. 85, pages 179-204.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1105267

Using the Late 90s as a Comp, the AI Boom Still Has Legs

Jeff Buchbinder | Chief Equity Strategist
Last Updated: May 12, 2026

Many have drawn the comparison between the current AI buildout with the dotcom period in the late 1990s, when the infrastructure for the internet was built. It’s a sensible comparison to make because of the massive amount of capital deployed to commercialize the buildout of revolutionary and life-changing technology. It’s also a reasonable comparison to make because technology stocks drove one of the biggest stock market rallies in history more than 25 years ago, and some are using similar language today when discussing the potential (and we underscore potential) of AI and bidding up the valuations of AI companies poised to benefit.

Pros and Cons of the 1990s Comparison

While we don’t think this is a great comparison for a number of reasons — which we cover below — it is interesting to line up the path of the tech-heavy Nasdaq-100 Index from the start of the AI era, which we mark at the launch of ChatGPT, to the birth of the modern internet, i.e., the launch of the first browser, Netscape (later acquired by AOL). As illustrated in the “Based on the Dotcom Era Comparison, the AI Bull Market Seems Fairly Reserved” chart, the Nasdaq-100 advance in recent years is more gradual than that of the advance over a similar four-year time frame. Based on this comparison, the current bull market — nearly four years old — still may have plenty of life left in it. The Nasdaq-100 is up more than 140% since ChatGPT was launched, while the index gained over 1090% from when Netscape was first released until the peak of the dotcom bubble in March 2000.

We’re not saying history will repeat and that the Nasdaq 100 will be up another 900% before crashing. We are simply making the point that the current stock market trajectory is more rational than you might think, and this may be more like 1997 than late 1999 or early 2000.

Based on the Dotcom Era Comparison, the AI Bull Market Seems Fairly Reserved

Source: LPL Research, FactSet 05/11/26 (Data series normalized to 100 on 12/15/94 and 11/30/22)
Disclosures: Indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.

Reasons This Time is Different

We admit these are dangerous words in investing. But when comparing historical periods, every time is different. Despite the similarities between dotcom and AI from a financial market perspective, there are more differences. Some of them include:

• Stronger leadership. The leaders are funding the AI buildout mostly with internal cash flow and not speculative capital raising. Their business models are much more diversified than the website-oriented business models of the dotcom era, and their balance sheets are much stronger than the fiber optic equipment makers of the late 1990s. Some AI sub-segments may be showing some dotcom-like behavior, but that’s not where public market leadership is.
• Grounded valuations. In March 2000, the technology sector peaked at a valuation of 58 times consensus forward earnings, compared to 25 today. During the dotcom era, eyeballs and clicks were oft-cited valuation measures. Today is about earnings, revenue, and cash flows.
• More rational IPOs. The technology IPOs are much larger today, with proven business models and sizable revenue streams. Even for companies operating at a loss today, it’s much easier to see a path to profitability.
• AI is early in its cycle. Today, the buildout is centered around AI infrastructure, while the AI adoption phase has barely begun. During dotcom, the frothy period of the cycle featured consumer websites that could never be sufficiently monetized even after the infrastructure was in place. Today, we don’t know who the AI adoption winners will be. The strong balance sheets of the infrastructure builders are a good start, paving the way for many AI adoption winners to materialize in the future.

Summary

There are clear similarities between the AI bull market cycle and the dotcom boom of the late 1990s. Technology stocks provided stock market leadership; valuations were elevated; there were segments of market speculation; and technology advances were life changing. But in terms of what companies are leading the current technology revolution, how the stock market is valuing them, how much speculation is taking place, and what stage of the cycle we’re in, we see important distinctions.

Bottom line, we think this bull market still has a way to go and expect the technology sector to lead. LPL’s Strategic and Tactical Asset Allocation Committee (STAAC) maintains an overweight stance on the technology sector, as well as industrials, both positioned to benefit from the buildout and adoption of AI.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1105266