Resilience and Momentum Supporting Market Strength

Executive Summary

Wealth Insights By Hightower Advisors / May 11, 2026 1. Economic Momentum and the AI Investment Cycle Supporting Markets Markets have continued to move higher, with the S&P 500 and Nasdaq Composite now up approximately 17% and 26%,1 respectively, supported by a combination of improving economic data, resilient corporate fundamentals, and continued strength across AI-related investment themes. A key driver behind the rally has been the steady improvement in growth expectations, with the Atlanta Fed GDP tracker now running at approximately 3.7% even in the face of the conflict in Iran and higher gas prices.2 Labor market data has remained particularly constructive. Nonfarm payrolls increased by 115,000, marking the strongest two-month employment gain since 2024,3 while weekly initial jobless claims continue to signal stability. Weekly claims most recently came in at 200,000, with the four-week moving average declining further to 203,250,4 remaining well below levels historically associated with economic weakness. Layoff activity has also remained contained, with Challenger, Gray & Christmas job cuts down 50% year-to-date and 21% year-over-year.5 Broader economic activity continues to reinforce this resilient backdrop. Both ISM Manufacturing and ISM Services remained above the key 50 threshold, signaling continued expansion across the economy. Importantly, much of this strength continues to be tied to the ongoing AI investment cycle. The AI food chain is increasingly benefiting a broad range of industries, extending beyond technology into data center infrastructure, grid and power development, semiconductors, industrials, and even chemicals. As hyperscaler capital expenditures continue to accelerate, these second-order beneficiaries remain well positioned to support both earnings growth and broader economic momentum. 2. Consumer Trends and the Search for Broader Market Participation The next key test for markets will come from upcoming earnings reports across t