TL;DR not at the top of the page? Skip to it below. This is an educational market update, not investment advice.

TL;DR

  • US cash equities reopen Tuesday May 26 after Memorial Day. The S&P 500 finished Friday at 7,473.47 with an eighth straight weekly gain, the longest streak since December 2023.
  • Three tape-moving items hit Tuesday: AutoZone (AZO) reports before the bell, Zscaler (ZS) reports after the close, and the Conference Board Consumer Confidence print lands at 10:00 a.m. ET.
  • Stephen Warsh, sworn in Friday as Federal Reserve Chair, faces his first full US trading session against a tape that already prices in faster cuts and a softer Iran outcome.
  • The setup favors active traders who plan reactions in advance: rally-extension if earnings cooperate, mean-reversion risk if Confidence misses meaningfully or a single megacap disappoints.

Where US stocks ended the holiday weekend

Friday's tape closed a quiet pre-holiday session with another grind higher. The Dow Jones Industrial Average added 0.56% to a fresh record near 50,288, the S&P 500 ticked up 0.16% to 7,473.47, and the Nasdaq Composite rose 0.09% to 26,296.18, according to Reuters wire data syndicated by LiveMint. Bloomberg flagged the S&P's eight-week run as the longest unbroken weekly streak since 2023, with the index now roughly 18% above the war-fueled lows that followed the spring Iran escalation (Bloomberg).

That backdrop matters because Tuesday is not a flush-and-restart day. Traders are stepping back into a tape that has already absorbed a Warsh-led dovish pivot, an unwind in oil from the Hormuz scare, and broad index repricing. New catalysts now have to do more than "not disappoint" to keep the rally extended.

AutoZone earnings: the consumer-discretionary tell

AutoZone (NYSE: AZO) reports fiscal Q3 2026 results before the open on Tuesday. The 22-analyst consensus tracked by Alphastreet calls for earnings of $36.13 per share on revenue of about $4.86 billion, with an EPS range of $34.92 to $38.05 (Alphastreet preview). Zacks pegs the full-year line at $148.93 EPS on $20.53 billion of revenue, which implies high single-digit revenue growth into a softening consumer.

For active traders, AZO is less a single-name story and more a coincident indicator. Two readouts matter:

  • Domestic same-store sales as a proxy for whether middle-income households are still deferring new-car purchases and instead extending vehicle life. Strong comps tend to coincide with cautious consumer behavior, which Fed watchers read as disinflationary.
  • Commercial revenue growth, which signals small-business activity in auto repair shops. A clean print here tends to support a benign read on the broader services economy.

AZO does not move the S&P by itself, but in our internal logs we have seen traders use AZO mornings as a confirm or fade signal for the broader retail tape ahead of Thursday's PCE.

Zscaler earnings: a clean read on enterprise cyber spend

Zscaler (NASDAQ: ZS) is scheduled to release fiscal Q3 2026 results after the close on Tuesday. Company guidance set total revenue at $834 million to $836 million, and the Street consensus tracked by Google Finance puts EPS near $1.01 (Yahoo Finance via Zacks).

The tape will focus on three lines:

  • Calculated billings, the leading indicator for cybersecurity demand. Soft billings would reopen the "cyber spend slowing" narrative that hurt the group last year.
  • Net new ARR, especially the contribution from emerging products outside the core Zero Trust Exchange.
  • Guidance for Q4 and the full year, where any tightening could rotate flows from ZS into CrowdStrike or Palo Alto Networks as relative-strength leaders.

Because ZS trades after hours, its impact lands on Wednesday's open, but the read-through for software factor exposure starts the moment the print hits.

Consumer Confidence: the macro hinge

The Conference Board's Consumer Confidence Index for May lands at 10:00 a.m. ET on Tuesday. April's reading already showed visible damage from the Iran war shock and gasoline spike, and the University of Michigan's preliminary May print flagged long-run inflation expectations climbing to 3.9%, the highest reading in this cycle (Surveys of Consumers, University of Michigan).

What active traders should watch:

  • Headline index level relative to the prior reading. A sharper drop would put cyclicals (financials, discretionary, industrials) on the defensive into PCE.
  • Expectations sub-index, which the Conference Board itself watches as a recession early-warning signal.
  • One-year inflation expectations. A jump alongside soft confidence would tee up a stagflation narrative right before Thursday's PCE.

Potential positives vs negatives for US stocks

What could keep the rally extended:

  • AZO in-line or better, with stable commercial comps, supporting the soft-landing case.
  • Consumer Confidence stabilizing rather than collapsing, which would suggest the Iran-shock psychology peaked.
  • ZS guidance reaffirming enterprise cyber demand, lifting the broader software complex into Wednesday.
  • A first day under Chair Warsh that does not deliver fresh hawkish messaging, leaving market-implied cut expectations intact.

What could break the streak:

  • A clear miss or negative guide from AZO that triggers a consumer-discretionary repricing.
  • Consumer Confidence undershooting consensus by a wide margin, validating the "household stress" tape that has been ignored during the Iran-relief rally.
  • ZS guiding billings lower, which would weaken the AI-plus-cyber narrative that has carried megacap software.
  • A renewed Iran headline (sanctions snapback, naval incident, or stalled Doha-track talks) that revives the oil bid traders dialed back over the weekend.

What could happen from here

Three scenarios are tradeable into Wednesday's close.

Base case (40%): grind higher into PCE. AZO meets, Consumer Confidence is mixed but not catastrophic, ZS prints in line. The S&P 500 holds above 7,420 and traders position for a clean PCE on Thursday. Confirmation: VIX stays under 18, ES futures spend most of Tuesday's session in the upper half of the previous day's range, and breadth indicators stay constructive.

Upside case (30%): an extension squeeze. AZO beats with strong commercial growth, Consumer Confidence surprises higher, and ZS guides up. The S&P 500 prints a new closing high and the Dow extends its record. Confirmation: equal-weight S&P outperforms cap-weight, small caps catch a bid, and rates fall on the dovish read-through to PCE.

Downside case (30%): a holiday gap that does not hold. Consumer Confidence misses badly or AZO guides cautious on the consumer, and Wednesday's reaction to ZS adds pressure. The S&P 500 fails to hold 7,420 and tests 7,360 support. Invalidation for the base case: a daily close below the 20-day moving average with breadth deterioration across discretionary and software.

What traders should watch next

  • Tuesday 6:55 a.m. ET: AZO results and any updated commercial outlook.
  • Tuesday 10:00 a.m. ET: Conference Board Consumer Confidence (May), and the New Home Sales print at the same time.
  • Tuesday after the close: ZS results, billings, and full-year guide.
  • Wednesday into Thursday: Setup into the PCE inflation release on Thursday. Our PCE Inflation Preview covers the Warsh Fed angle in detail.
  • Weekly map: The Week Ahead post tracks Iran-deal milestones and cross-asset catalysts through Friday.

Sources

Build real skills, not bad habits

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Header image source: AutoZone store in Murphy, North Carolina, by Harrison Keely, licensed CC BY 4.0 via Wikimedia Commons.