Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / How Growth Stocks Are Finding New Momentum in May 2026
Transcript
- Lucas: So the Nasdaq Composite is sitting at 26,344 as of this morning, and the Russell 2000 just put up a 3.4 percent weekly gain. Both are telling us something about where the market's momentum is right now. Luna: That Russell number especially caught my eye. Small caps have been leading for weeks, but the Nasdaq hitting new highs alongside them feels like a shift. Lucas: Exactly. And it's not just the indexes—look at individual names. CrowdStrike up over 7 percent in the past five days. Cloudflare up 7.1 percent. Datadog up 6.5 percent. These are growth stocks that had been under pressure earlier this year, and they're suddenly back in favor. Luna: Right. And we should note that this isn't a narrow ai driven rally anymore. It's broadening out. Lucas: If our money conversations have helped you think about a decision differently—whether it's rebalancing a portfolio or just understanding why a stock is moving—we'd love it if you considered supporting the show. We deliberately keep it ad-free. The link is buy me a coffee dot com slash fexingo. Luna: Yeah, listener support is what makes that possible. And it keeps the focus on the analysis, not on selling you something. Lucas: So back to the rotation—one thing I'm watching is the Fed's rate posture. The effective fed funds rate has been flat at 3.64 percent since April. No change expected soon. That stability is giving growth stocks room to run. Luna: Especially when you pair it with GDP growth. Real GDP just came in at 2 percent annualized for Q1 2026, up from 0.5 percent the prior quarter. That's a pretty solid backdrop for risk assets. Lucas: Right. And here's where it gets interesting—the market is pricing in that growth without inflation spiking. So you've got this sweet spot where companies with high earnings growth potential get rewarded. That's CrowdStrike's wheelhouse. Luna: But isn't there a risk that this rally is too concentrated in mega-cap tech? Even with the broadening, the Nasdaq is still heavily weighted toward a handful of names. Lucas: It's a fair concern. But look at the Russell 2000's 3.4 percent weekly gain versus the S&P 500's 1 percent. Small caps are participating in a big way. That suggests the rally has legs beyond just the largest companies. Luna: So you're saying this is more than just a bounce? That it's a genuine shift in market leadership? Lucas: I think so. The data from the past couple weeks shows a clear pattern: investors are rotating into names that have strong fundamentals but had been beaten down. Cloudflare's revenue growth is still north of 25 percent year-over-year. Datadog's is similar. These aren't speculative stories—they're real businesses. Luna: And the market is rewarding them with double-digit moves in a week. That's a pretty strong signal that risk appetite is back. Lucas: One thing I'd flag, though—the VIX is still around 14. Not exactly complacent, but not fearful either. So this rally is happening in a calm volatility environment, which historically can sustain itself for a while. Luna: But what about the macro headwinds? The U.S.-China trade situation still seems unsettled. APEC didn't produce any major breakthroughs. Lucas: True, but the market seems to be looking past that for now. Huawei's new chip announcement actually boosted sentiment for semiconductor plays. And the government stake trade we talked about last episode is still alive—traders are speculating on which company might be next. Luna: So the narrative is shifting away from protectionism and toward innovation spending. Lucas: Exactly. And that's why you're seeing names like Palantir, which is up 1.3 percent this week, continue to grind higher. Government contracts plus AI deployment is a powerful combination. Luna: But Palantir's valuation is still stretched. Its price to earnings ratio is well above the sector average. How much of that is already priced in? Lucas: That's the million-dollar question. The bull case is that earnings growth will catch up to the multiple. The bear case is that any slowdown in government spending could hit them hard. I lean toward the bull case given the current momentum, but it's a risk to watch. Luna: What about Shopify? It's only up 0.6 percent this week. Seems like it's lagging behind other growth names. Lucas: Shopify is a bit of an outlier. Its business is tied more to consumer spending, which has been steady but not accelerating. Compare that to CrowdStrike, which benefits from an enterprise cybersecurity spending cycle that's still in full swing. Luna: So sector allocation matters even within growth. You can't just buy the whole growth ETF and expect uniform returns. Lucas: Right. The iShares S&P 100 Growth ETF, ticker IWF, is up only 0.7 percent this week. That masks the dispersion underneath. Cloud and cybersecurity names are crushing it, while e-commerce and some consumer tech are more muted. Luna: And that's actually a healthy sign for the bull market. Leadership rotating within growth rather than just one group taking off. Lucas: Exactly. If you're an active investor, this is the kind of environment where stock picking really matters. The tide is lifting many boats, but some are rising a lot faster than others. Luna: So what's your takeaway for listeners who are trying to position themselves right now? Lucas: I'd say look for companies with accelerating revenue growth and reasonable valuations relative to their own histories. CrowdStrike at 663 dollars isn't cheap, but its growth rate justifies a premium. And don't ignore small caps—the Russell 2000 is showing real leadership that could persist. Luna: And keep an eye on the Fed. If the rate environment changes, growth stocks could be the first to feel it. Lucas: Always. But for now, the data says this rally has momentum, it's broadening, and it's being driven by fundamentals. That's a pretty solid recipe for the next few months. Luna: Yeah, I think that's right. And it's a good reminder that bull markets don't always look the same. This one has its own character. Lucas: It sure does. And we'll keep watching to see how it evolves.