Back at it. Tech was back in the driver’s seat to start the week, as artificial intelligence plays looked to make up lost ground.

The Dow Jones Industrial Average added 0.3% for its 21st record close in 2026, while the S&P 500 rose 0.7% and the Nasdaq Composite gained 1.1%.

Chip stocks haven’t fully recovered from last week’s selloff, but they were leading the way as markets climbed on Monday. Relatively benign background conditions bolstered the rally.

“The sentiment around the AI trade feels a little sour at this point, but it’s possible that the recent weakness is just wringing out the excess in the market and balancing what used to be lopsided positioning in the space,” said Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research. “Outside of the AI theme, the broadening of the rally still appears to be underway, as the economic data and growth forecasts remain strong.”

Oil continued to fall today—even if it’s not back to prewar levels—and gold rallied to its highest point in two weeks.

“We’ve seen stronger markets and stronger economies over the last 30 years, but we’ve rarely seen a healthier intersection of the two. Earnings continue to surprise to the upside, valuations have become more reasonable, inflation expectations are easing, and the economy is holding up without overheating,” writes Mark Hackett, chief market strategist for Nationwide. “Add in an investor base that’s still skeptical rather than complacent, and you have about as close to a Goldilocks environment as markets can hope for.”

Talk about a fairy tale ending.

The Hot Stock: Arista Networks +8.3%
The Biggest Loser: O’Reilly Automotive -6.7%

Best Sector: Communication Services +1.6%
Worst Sector: Healthcare -1.2%

Delta Air Lines will be one of the first companies leading the way into second-quarter earnings season when it reports on Friday, and investors are expecting it to continue a small but mighty market trend of 2026: the triumph of the airline industry.

The sector suffered a selloff at the beginning of the Iran War as oil prices spiked, and the demise of Spirit Airlines in May highlighted the precarious nature of the airline business. But all three major legacy airlines, including United Airlines and American Airlines, are beating the S&P 500 year to date, with Delta in the lead.

The company’s Chief Executive Ed Bastian was on Barron’s Best CEOs list this year (United’s Scott Kirby made the cut last year) and American Airlines was a recent stock pick.

The unexpected uplift is due to a bit of a perfect storm: The wealthiest sliver of Americans now account for more than half of spending, and airlines are catering to those high-end consumers by leaning away from rock-bottom fares, and into loyalty programs, premium cabin amenities, and a plethora of international destinations. That pivot to wealthier customers has also insulated airlines from spikes in fuel costs.

Of course, all this means that investor hopes have been getting higher as well. It’s been well over a year since Delta’s earnings per share missed consensus estimates, and although bottom-line growth is expected to be minor this year, analysts expect EPS to soar double digits in 2027. Another increase in fuel costs, a worsening macroeconomic outlook, a pullback in business travel, or more geopolitical shakeups could throw a wrench in that outlook. Still it’s worth noting that Delta has been on the upswing, with its stock more than doubling over the past five years.

A former airline executive once told me that even on their best day, airlines are just meeting expectations, not really exceeding them. Perhaps these companies really are turning a new page. Or maybe shareholders can comfort themselves with their gains when they have to pay an arm and a leg for their preferred seat and a tepid meal.

The Bureau of Economic Analysis releases the trade balance report for May tomorrow. The consensus call is for a $79 billion trade deficit in goods and services, following a $56 billion shortfall in April.
—Dan Lam

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