Five for Friday – May 15, 2026

Breadth, Concentration, Risks, Jobs, and Speaking of Concentration

1. Breadth

One critique of this rally is that gains have been driven by a narrow group of big names, predominantly in the AI infrastructure space. Hedge fund Citadel noted that only 22% of S&P 500 companies outperformed the index over the 30 days ending May 6, nearly a 30-year low. And while narrower markets haven’t historically meant weaker forward returns, they do make gains more fragile. That said, I think the critique is overblown; leadership may be narrow, but participation is still solid. Take the small-cap Russell 2000 index, which has roughly as much Technology exposure as it does Industrials, Health Care, and Financials, made a new all-time high this month and is outperforming its large-cap counterpart over the last 1-, 3-, 6-, and 12-months. As Finom Group Chief Strategist Seth Golden put it, “it is okay for the generals to lead…if the infantry is following.”  

 2. Concentration

Market concentration concern is hardly new. Since the advent of the big tech dominance era (FAANG, Mag. 7, etc.), and even in decades before that, the view that market concentration was something to fear has been widely propagated. And while we prefer broader participation to the alternative, there’s a sense that concentration in cap-weighted indexes is almost inevitable: markets tend to produce a few very large winners, and cap-weighted indices reflect that dominance. As the earnings power and influence of the biggest companies has grown (paired with a lighter antitrust touch in recent decades), so too has their weight. Further, because of the U.S. economy’s size and depth, the sheer number of companies keeps concentration somewhat in check. The U.S. market is actually one of the least concentrated in the world.  

3. Risks

In a recent piece I sized up the current bull market, in part through the lens of the Strategas Bull Market Top Checklist (which Chief Investment Strategist Jason Trennert talks through here). At this point, the list is largely “unchecked,” indicating a bull market with room to run. Still, certain items are on watch (notably, IPO/M&A activity and market breadth), and the specter of rising interest rates might join the watchlist soon. The year started with the market pricing a 75% chance of two or more interest rate cuts in 2026, but the odds have shifted amid the war in Iran and this week’s hot inflation data. Now the market is pricing a near-zero percent chance of any rate cuts and nearly a 40% chance the Fed actually hikes rates this year. As we wrote last week, a nice hunting ground for bond investors, but a potential irritant for stockholders.       

4. Jobs

That said, the Fed is only likely to pivot to a more hawkish stance if it thinks the labor market is sound enough to handle it. Thus far in 2026, the U.S. economy has added 345,000 private sector jobs – more than all of 2025. Not bad.  

5. Speaking of Concentration

on this day in 1911, the Supreme Court ruled Standard Oil an illegal monopoly and ordered it to be broken up into ~40 spinoffs. At the time, the firm controlled 91% of the U.S. oil market; of the spinoffs, ExxonMobil, Chevron, and ConocoPhillips alone are worth $1.1 trillion today. Fun fact: Standard also spit out Chese-brough Manufacturing Co., the inventor of Vaseline, which was inspired by oil rig workers using drill residue to heal burns. 

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