Ahead of Memorial Day Weekend, stock markets added a few points and closed at a record. On May 22, the Dow Jones added 294.04 points (+0.58%), closing at 50,579.70. Despite lingering tariffs, high oil prices adding to inflation, and low consumer confidence, investors are unfazed.
Is it too good to be true?
It might be.
The Dow benefited from the U.S. government announcing $2 billion for nine companies in quantum computing. That lifted IBM shares by 15.75% in the last week. Rigtetti (RGTI) rose by 48% while Quantum Computing (QUBT) added 17% in that time.
Stock markets continued to rally on strong momentum whenever the U.S. government suggested a peace deal with Iran was approaching. Unfortunately, the Strait of Hormuz is still closed. Since February, the economy has been able to weather the sharply reduced oil shipments. Ships that last delivered oil products limited the impact of the oil shortage.
Every week that passes increases the cost of oil, fertilizers, and other energy-based products. A shortage of fertilizers might create a food crisis for Asian and neighboring countries. Still, chemical stocks like LyondellBassell (LYB) are down by 17% from their 52-week high.
Defense contractors like L3Harris (LHX) and RTX are also down. Markets are pricing for the Strait of Hormuz to reopen anytime soon. That remains to be seen.
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