Key Takeaways
1. S&P 500 Sets New All-Time High
January. The move completed an 11-session V-shaped recovery from the late-March market bottom, erasing a nearly -10% drawdown. The Nasdaq has logged 11 consecutive daily advances, its longest winning streak since 2020. Monday was the week's test: oil prices surged above $100 overnight following the U.S. Navy's blockade of Iranian ports, sending stock futures lower. Markets recovered after confirmation that non-Iranian shipping would be unaffected.
Why it matters: The past six weeks offered a lesson in the cost of reactive positioning. Investors who held through the correction were rewarded as markets reclaimed their highs, a reminder that trying to time geopolitical events can be difficult and costly.
2. Market Risk Premiums Continue to Fade as Geopolitical Tensions Ease
Beyond the new market high, the geopolitical risk premium has faded as tensions have eased. The VIX, a measure of equity market volatility, spiked above 30 at the height of the conflict in late March and has since fallen below 20, approaching pre-conflict levels. Credit markets tell a similar story, with the extra yield corporate bonds pay over comparable Treasuries tightening steadily in recent weeks. The improvement is broad-based, with equity volatility, credit conditions, and interest rate volatility all moving in the same direction.
Why it matters: Multiple weeks of easing risk premiums reinforce the market's shift toward a more constructive outlook. With the Strait of Hormuz still effectively closed and no official ceasefire in place, the market will be monitoring those risk metrics closely.
3. Growth & Technology Stocks Outperform After Slow Start to 2026
Growth and technology stocks have led the market's recovery from its late-March low. Their outperformance closes a gap from earlier this year, when value and non-technology sectors had been leading. For most of the first quarter, smaller companies, value stocks, and international markets were outpacing the large technology names that drove the market's gains in recent years. That dynamic reversed sharply off the market bottom, with growth stocks outperforming value by more than +11% over recent weeks. As a result, the year-to-date performance gap between growth and value has nearly closed.
Why it matters: This year has already cycled through two distinct market environments: a broadening, value-led stretch to start the year, followed by a sharp growth-led recovery off the market bottom. The back-and-forth underscores the value of maintaining diversified exposure across different parts of the market.
4. Manufacturing Activity Contracted in March, But April Survey Data Signals Recovery
Industrial production contracted in March after expanding in recent months. The decline coincided with oil price volatility and geopolitical uncertainty, a period when energy costs surged and supply chain disruptions affected manufacturing. The data paints a cautious picture of the real economy beneath the equity market's record highs. More recent data tells a different story: the April Philadelphia Fed Manufacturing Index came in above expectations, suggesting activity has improved as tensions eased and energy prices fell.
Why it matters: The March weakness appears consistent with a disruption tied to the conflict rather than a broader deterioration in economic conditions. The question is whether manufacturing regains momentum in the coming months.
5. Earnings Season Kicks Off With Strong Bank Earnings
Major Wall Street banks reported strong first-quarter earnings, driven by market volatility and elevated capital markets activity. Consumer credit quality remained healthy, and deal-making and advisory revenue increased as activity picked up.
Why it matters: The group's solid results were an encouraging start to earnings season. However, several banks did flag the increasingly complex backdrop as a development worth monitoring going forward.
