Fed Won’t Blink

Fed officials remain open to further rate hikes if inflation stays elevated.

Author

Ankit Sinha
May 21, 2026

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The Relief Rally Found a Plug

Wednesday was not too complicated. Oil backed off. Yields backed off. Buyers came back. That was the whole trick.

After three straight down days, the market did not need a miracle. It needed Brent to stop sprinting, and the 10-year-old to stop climbing. It got both. The S&P 500 rose 1.1%, the Nasdaq gained 1.5%, and the Dow closed back above 50,000.

The real relief came from crude. Brent settled at $105.02, and WTI at $98.26 after President Trump said negotiations with Iran were in the “final stages,” while still warning that more attacks were possible if a deal does not come through. Not exactly a signed peace accord, but that was enough “good news” for the market to pre-celebrate.

Lower oil mattered because this rally has been running with two ankle weights: inflation and rates. 

  • When crude spikes, inflation expectations get jumpy.

  • When inflation expectations get jumpy, yields rise.

  • When yields rise, long-duration growth stocks get reminded that valuation math is not a suggestion.

On Wednesday, the sudden fall in the 10-year yield reminded everyone they liked risk again.

But let's not pretend this was some wholesome, across-the-board, everyone-hold-hands rally. The SOX index rose 4.5%, Astera Labs and Arm went vertical, and Nvidia gained during the regular session ahead of the most important earnings print of the week. At 3:59 p.m., half of Wall Street was pretending to be diversified. At 4:00 p.m., everyone was refreshing the same Nvidia headline.

The Fed, meanwhile, served as adult supervision. Minutes from the April meeting showed a majority of officials were open to raising rates if inflation stays too hot, and policymakers generally thought rates would need to stay steady longer than previously expected. The Fed is not promising hikes tomorrow, but is absolutely done leaving rate-cut candy on the counter.

So yes, Wednesday was bullish. The rally was real. Small caps participated, airlines surged, chips led the move, and the indexes bounced, suggesting the market still had momentum. But the conditions behind the rally are becoming clearer: stocks need oil prices to stay contained, Treasury yields to remain stable, and AI earnings to keep supporting valuations that are carrying the market higher.

Peel Take: Wednesday was a relief rally, not a rescue mission. The market did not suddenly solve inflation, the Fed, or Iran. It just got one clean session where the worst inputs stopped getting worse. That was enough. The Russell 2000 ripping 2.6% shows us lower yields helped the parts of the market that actually feel borrowing costs, not just the trillion-dollar stocks with balance sheets bigger than small countries.

What's Ripe

Astera Labs (ALAB) 17.7%

  • Astera ripped another 17% as investors piled into the AI-connectivity trade ahead of Nvidia, stacking on Tuesday's gain and building momentum around its Scorpio X fabric switches.

  • This is the part of AI that sounds boring until the numbers get obscene. Everyone gets GPUs. Fewer people think about the pipes connecting them, or the latency problems that make very expensive chips sit around like interns waiting for Slack access.

  • Astera attacks that bottleneck. The Scorpio X-Series is a 320-lane AI fabric switch built for large-scale clusters, already shipping to hyperscalers and ramping into production in H2 2026. Translation: traffic control for AI cities where every intersection costs millions.

  • Peel Take: Astera is not the celebrity in the AI trade. It is the person making sure the celebrity’s microphone works, the lights turn on, and the arena doesn’t catch fire. That can be a way better business than it sounds. As AI moves from “train a giant model” to “run a giant model constantly,” the bottleneck shifts from raw compute to everything that keeps compute productive. Astera’s stock is now being treated like it owns a tollbooth on that road.

United Airlines (UAL) 10.0%

  • United jumped as airline stocks ripped on the oil selloff. Painfully simple logic: fuel is one of the biggest airline costs, and WTI back below $100 makes every airline model look less ugly.

  • But there is a reason airlines move harder than other oil-sensitive sectors. Their cost structure is almost entirely fixed… planes are financed, gates are paid for, pilots and crew are scheduled weeks out. When fuel drops, the savings do not get absorbed by other expenses creeping up. They fall straight to operating income.

  • Peel Take: United didn’t rally because flying got more pleasant. Let’s keep reality involved. It rallied because oil stopped punching P&L in the mouth. Airlines are always one fuel spike away from asking investors to “look through” the quarter, which is finance-speak for “please don’t read page 8.” Wednesday gave the sector the opposite: a sudden margin tailwind with the consumer still traveling.

What's Rotten

Hasbro Inc (HAS) 8.8%

  • Hasbro fell 8.83% after beating Q1. Revenue: $1B vs. $964M expected. Adjusted EPS: $1.47 vs. $1.13. Normally, that earns a polite standing ovation. Wednesday gave it a trapdoor.

  • The problem was guidance. Hasbro reaffirmed, rather than raised, citing a tougher macro, ~$30M in oil-related freight/resin/packaging costs, and lingering noise from a cyber incident. Digital gaming was strong (+26%, thanks to Magic: The Gathering), but investors wanted more than “we beat, now please remain calm.”

  • Peel Take: Hasbro had the funniest possible bad day: the company sold more Magic, then failed to cast “Raise Guidance.” The quarter itself was fine. The reaction was about confidence. Oil costs, cyber cleanup, and traditional-toy softness all gave management a reason to keep the forecast button untouched. Hasbro still has real momentum in gaming, but Wednesday was a reminder that Wall Street doesn't grade on nostalgia. Your childhood Monopoly board is not a moat.

Analog Devices (ADI) 3.9%

  • ADI dropped after a record fiscal Q2. Revenue +37% YoY to $3.62B. Adjusted EPS: $3.09. Guide: ~$3.9B revenue and ~$3.30 EPS next quarter. ADI also announced a $1.5B cash deal for Empower Semiconductor, adding power-delivery tech for AI workloads.

  • So why did it drop? Because when a stock has already run hard into earnings, “very good” can still land like “already priced.” Investors had been treating ADI as a quieter AI power winner. The report confirmed the story… but confirmation isn’t a catalyst when everyone bought it last week.

  • Peel Take: ADI brought a beat, a strong guide, and a $1.5B AI-power deal. The market shrugged like a professor who had already read the paper. Good news has to arrive before investors expect it, not after. ADI is the “how do we stop the data center from melting?” trade. Useful? Extremely. Sexy? Only if your idea of romance is voltage regulation. The stock may be fine. The surprise was gone.

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