The S&P 500 is on track for an eighth consecutive weekly advance as enthusiasm around artificial intelligence, aerospace and emerging technologies continues to support equities. Investors are also closely watching bond yields, inflation pressures and geopolitical developments tied to Iran and oil prices.
BNN Bloomberg spoke with Yung-Yu Ma, chief investment strategist at PNC Financial Services Group, about why markets remain highly sensitive to Treasury yields, where opportunities exist across technology and infrastructure themes and why consumer weakness could become more visible in the months ahead.
Key Takeaways
- Equity investors remain highly sensitive to moves in longer-term U.S. Treasury yields as inflation and Federal Reserve expectations continue to shape sentiment.
- Technology, AI and related capital spending themes remain attractive as corporations continue deploying large cash reserves into investment projects.
- Consumer softness is expected to increase in coming months as inflation and higher gasoline prices pressure lower- and middle-income households.
- Clean energy, energy security and infrastructure are emerging as long-term investment themes tied to global technology expansion.
- Consumer staples and retail sectors could face margin pressure as some major companies begin cutting prices to compete for market share.
Read the full transcript below:
LINDSAY: The S&P 500 on track for a winning week as investors show enthusiasm over AI, aerospace and other emerging tech. So let’s get some perspective from Yung-Yu Ma, chief investment strategist at PNC Financial Services Group. Great to have you. Good morning.
YUNG-YU: Thanks. Good morning, Lindsay. Great to be here.
LINDSAY: Yeah, I mean, this is an interesting week, as always. What’s your take on the direction we’ve seen with the markets this week?
YUNG-YU: Well, the markets, equity markets, have been pretty sensitive in the U.S. and globally, to an extent, sensitive to yields, particularly longer-term yields, and I think that sensitivity is going to continue. We’re at a range here where the market is starting to get cautious with any rise in yields, and it gets a little bit more excited or enthusiastic with any decline or reduction in yields. So, of course, that’s tied to what’s happening in Iran, oil prices, concerns about inflation and what the Fed might do. It’s all tied together, but I do think that yields are going to be a sensitivity point for the markets in the short term, and that we’ve seen at least a little bit of backing off of those yields has allowed the underpinnings and the fundamentals of the markets at least to sustain that upward tilt in the markets this week as well.
LINDSAY: Okay, so you say yield sensitivity will continue. Do you feel as though maybe investors are becoming less sensitive to headline news?
YUNG-YU: Well, I think investors don’t know quite what to make of some of the headline news. There’s so much back and forth, particularly about whether or not there may be a deal in Iran, what the contours of that deal might be. I think that at this point there’s some knee-jerk reaction certainly to those news items that come out, but I don’t think there’s the intense focus that there once was on those news items, and the belief in the market right now is probably still directionally that we’re looking at some sort of deal, and so if we didn’t get anything, I think the markets would be disappointed, but there’s a lot of uncertainty on what that deal would look like.
LINDSAY: Yeah, it’s hard to know at this point, as you say, because it sounds as though we’ve been close to a deal before and then it didn’t happen. So we’ll have to wait and see on that front. But when it comes to tech, it seems investors are showing some enthusiasm over AI, aerospace and other emerging tech. What are your thoughts on the tech sector right now? Is that a good place to be?
YUNG-YU: We do think it’s a good place to be. We think this cycle, this investment cycle, capex cycle, has a long way to go. You talked about the consumer retail sales. We think those are set to soften because of inflation and higher gas prices in the coming months, but this strength has a lot of deep pockets behind it. It has a lot of corporate cash behind it to make these capex investments. It has a lot of operating cash flow, it has a lot of private equity money, has a lot of debt capital sourcing. So we do think this is likely to continue, even though we’re going to see some softness probably in the consumer in the coming months. We like tech and continue to want to lean into these themes that have done well over the past several quarters.
LINDSAY: Just to ask you about the numbers that came out this morning, because you mentioned them, were you surprised to see them ticking up?
YUNG-YU: Well, in terms of retail sales you’re talking about specifically?
LINDSAY: Yes.
YUNG-YU: You know, I think we’re going to see softness going forward. I’m not too anchored on the current numbers, and that applies to the U.S. as well, because there’s some overhang or momentum from some of the strength that there was previously in the year, but I think that’s going to wane in the coming months. So I think when we’re looking at what’s likely to happen next month, next quarter, I think there’s going to be a drag, and I think we’re seeing that in some of the dispersion in the market. We’re seeing some major retailers in the U.S. and staples companies talk about the challenging environment for consumers and talk about cutting prices amid a time when inflation and the underlying cost pressures are actually going up. So I think that’s a sign that they’re seeing a lot of incipient pressure there at the consumer level.
LINDSAY: Yeah, and it has been interesting when you’re seeing some of these retailers reporting earnings talking about high-income shoppers compared to low-income shoppers. There’s quite a gap there, quite a discrepancy. I wonder what that tells you about the economy as you say moving forward, maybe a little gloomier.
YUNG-YU: Well, I think it’s going to continue and probably get worse because, of course, higher-income households are less subject to, or have less pressure from, the higher energy prices. It’s just a much smaller share of their wallet and discretionary spending that gets used up. So I think we’re going to continue to see that. I think it’s probably going to get more extreme in the coming months and quarters, that dispersion among consumers. So you see some companies that are seeing gains or benefits from higher-end consumers and higher-end purchases actually doing reasonably well, whereas those that are more reliant on middle-income and below are seeing signs of pressure. I think we’re seeing that in company narratives as well coming out.
LINDSAY: For sure. Okay, I want to go back to the markets and certain sectors as well, because we were talking about AI and tech. Are there other themes emerging in this year’s markets that you’re watching for that you find interesting?
YUNG-YU: Well, there are some adjacent areas to that that we think are going to be quite durable as well. So if you think about some implications of the tech buildout, or what helps benefit or sustain that, we do think that clean energy and energy security globally are going to be important themes. The infrastructure to support that, those are going to be important themes as well. Once we start looking a bit deeper, a lot of sectors had negative earnings revisions in the U.S. after their quarterly reporting, and we think that sign of dispersion is showing that it’s not a uniform rising tide lifting all ships, especially when we see these cost pressures. I think if we want to look at more areas of opportunity, you have to get a little bit more targeted. I do think there are some areas of opportunity. You heard the airlines in the U.S. talk, for instance, about how bookings have been very strong, but you’re starting to get into a little bit more niche areas rather than very broad sectors.
LINDSAY: Any areas then that you are maybe thinking to avoid right now? Is retail one of them?
YUNG-YU: I think consumer staples. So you had two very large companies, Kroger and Walmart, come out and talk about cutting prices to try to gain market share from some of the other strong players in either the discretionary or staples sector. I think in terms of profitability, you don’t like to see the beginnings of what might look like a price war, especially when cost pressures are rising. You like to see some pricing power if you’re thinking about the bottom lines for these companies. So I think it’s going to take some time to work through these cost pressures and for consumers to digest these higher prices that they’re seeing at the pump and at the grocery store and other places. So I think those areas you want to be cautious on over the next couple of months here.
LINDSAY: Okay, we will leave it there. Yung-Yu Ma, chief investment strategist at PNC Financial Services Group. Always good to have you. Thanks so much.
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This BNN Bloomberg summary and transcript of the May 22, 2026 interview with Yung-Yu Ma are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
