Market Update

Here is our latest Market Update.
As always, if you’d like to discuss this—or anything regarding current market conditions or your portfolio—please feel free to contact us at any time. 

Presented by Andrew Harris, Michael Kolb, CFP®, James Dinsmore, CFP®, Ed Barone, Todd Rishel, CFP® & Martin Wildy, CFA

Executive Summary

• Equity markets rallied throughout April, looking past geopolitical issues and inflation concerns, as many equity indexes closed the month near all-time highs.
• Positive corporate earnings and announcements of record artificial intelligence (AI) infrastructure spending helped fuel robust equity market returns for the month.
• The Federal Reserve held interest rates steady in its April meeting, as expected; however, the meeting will be remembered as the last in which Jerome Powell served as Chairman (Kevin Warsh is set to take over in mid-May).
• Warsh will be inheriting the chair at a precarious moment, as markets wrestle with higher inflation, somewhat softer employment, and higher levels of uncertainty created by the Iran conflict and rapid AI growth.

Markets Rally Through April

April delivered the strongest month for U.S. equities since the aftermath of the pandemic in 2020. The S&P 500 rose 10%, the Nasdaq Composite climbed 15%, and the Dow Jones Industrial Average gained 7%, with all three domestic stock indexes finishing at or near record highs. Investors looked through the ongoing conflict in the Middle East, continuing high oil and gas prices, and the Federal Reserve at an inflection point, choosing instead to focus on first-quarter corporate earnings and continued spending on artificial intelligence infrastructure.

Beneath the index returns, dispersion was notable, however. Alphabet surged in April, posting a 34% monthly gain and the largest one-day market-cap increase in its history on April 30, ending the session valued at $4.65 trillion. Outside of large tech, Caterpillar rose to a record close on AI-fueled demand for its power-generation equipment, a signal that the AI build-out is pulling industrial and utility names alongside the chip and cloud names. In contrast, mega-cap tech companies Meta and Microsoft have been under pressure as investors pressed for evidence that AI capex is translating into earnings.

Emerging markets equities also rallied through April, led by a handful of technology companies, much as domestic stocks did. The MSCI Emerging Markets index gained approximately 15% for the month and closed near all-time highs, fully recovering its early Iran-war losses. AI beneficiaries Taiwan Semiconductor, Samsung Electronics, and SK Hynix generated almost half of the index’s monthly return and now account for nearly a quarter of the benchmark. [4]

Aside from stocks, other asset classes produced mixed results in April. As the Strait of Hormuz remained effectively closed, Brent crude traded above $100 a barrel for most of the month and U.S. retail gasoline remains elevated, as well. With inflation concerns still front of mind, the Bloomberg Commodity Index advanced about 4% for the month, bringing its year-to-date return to approximately 29% through April 30. [5]

The 10-year Treasury yield closed April at approximately 4.4%, holding near its post-cease-fire highs as investors trimmed expectations for Fed rate cuts and wrestle with the growth of our national debt (US public debt recently exceeded GDP for the first time since

1946). That resulted in bonds being essentially flat for the month, as the Bloomberg US Aggregate Bond index was up 0.11%. The dollar gave back much of its early-war safe-haven bid; the ICE US Dollar Index fell about 1.7% on the month, providing a tailwind for non-U.S. earnings. Gold slumped about 1% for April (see S&P GSCI Gold index above), as investors continue to search for a narrative for the precious metal.

AI Powers Economic Growth

AI Powers Economic Growth

The U.S. economy grew at a 2% annualized pace in the first quarter, a step up from the prior period (which had been weighed down by the longest federal government shutdown on record).Consumer spending decelerated to 1.6%, but stayed positive, helped by tax refunds and limited layoffs even as households absorbed higher fuel and food costs. The bigger contributor to growth was business investment, which advanced 10.4%, the fastest pace in nearly three years, with information processing equipment and software both posting outsized gains. [7]

The four largest hyperscalers (Alphabet, Amazon, Meta, and Microsoft) lifted their combined 2026 AI infrastructure budget to a record $725 billion, roughly 77% above last year’s record. That capital is flowing through the economy as data center construction, server and chip purchases, and grid and power-generation orders.

Inflation Pressures & Transition at the Fed

Serving as a counterbalance to AI enthusiasm, inflation continues to tick higher due to the conflict in Iran. Headline PCE rose 0.7% in March, the largest monthly print since 2022, lifted by oil and gas costs tied to the war. With retail gasoline near $4 a gallon, the highest level since 2022, consumer expectations for inflation over the next year jumped to 4.7% from 3.8% the prior month, while the five-year measure rose to 3.5%. Higher prices helped to push a consumer sentiment survey to an all-time low, and the personal savings rate slipped to its lowest level since late 2022 as the cost of living absorbed more of disposable income. [8]

The labor market remains relatively resilient by contrast. Nonfarm payrolls added 178,000 jobs in
March, the unemployment rate edged down to 4.3%, and weekly jobless claims fell to levels last
seen in the late 1960s. While the data remain solid, several large employers cited AI in announcing
planned workforce reductions, which may also be weighing on consumer sentiment.

Lastly, the Federal Reserve is in the middle of a leadership handoff. Chair Jerome Powell’s term is
wrapping up (although he intends to stay on as governor, only the second former Chair to do so
since World War II), and Kevin Warsh, a Fed Governor from 2006 to 2011, moves into the
leadership role at a delicate moment. Warsh’s public record over the past decade has emphasized
inflation discipline, Fed independence, a leaner balance sheet, and less reliance on forward guidance
than the Powell consensus, though investors will need to see his early actions and comments to
calibrate that view. Markets have already adjusted: rate-cut expectations for 2026 have been
pared, the upper-bound fed funds target sits at 3.75%, and the 2-year Treasury yield has been
trading above that at approximately 3.9%. [9] [10]

The Path Forward

Despite an onslaught of negative headlines throughout April (Iran conflict, rising inflation, falling
consumer sentiment), equities rebounded with several parts of the market providing double-digit
gains. It was yet another example of how difficult it is to predict near-term market movements and
why we choose instead to focus on long-term objectives.

In our opinion, one of the biggest drivers of uncertainty today remains artificial intelligence. The
technology has the potential to both dramatically enhance business productivity and economic
growth, and to raise unemployment if it replaces employees. As we often state, the range of
outcomes and time frames related to AI appears to us to be incredibly wide.

For example, please see “The Radiologist Paradox” chart from Apollo below. One of AI’s strengths is
pattern recognition, which was on display as far back as 2016, when Google DeepMind’s AlphaGo
program defeated renowned Go champion Lee Sedol. Fast forward ten years, and you’d be
forgiven for thinking that jobs like radiologists, which require high pattern recognition skills, would
be in decline as AI improves. However, you’d be mistaken.

As Apollo’s Chief Economist, Torsten Slok, states, “A decade ago, AI was supposed to replace
radiologists. Today, radiologists earn more than $500,000 per year, and their employment continues
to grow (see chart below). Reading scans is a task, not a job, and when the task gets cheaper,
demand for the job grows.” [12]

The example above illustrates why we think diversification is as important as ever. You can be right
about the power of a technology such as AI and still draw the wrong conclusions. As Yogi Berra
famously quipped, “It’s tough to make predictions, especially about the future.” [13]

Rather, we suggest investing in diversified portfolios in an effort to achieve your financial goals
without tying success to any one trend or prediction. We appreciate your continued trust and
welcome the opportunity to speak with you in greater detail regarding your specific situation.

Sources

[1]Source: YCharts, February 28, 2026
[2]Source: CNN, “AI nerves are fraying. Anthropic keeps doubling down,” February 25, 2026. https://edition.cnn.com/2026/02/24/tech/anthropicclaude-plugins-office-jobs
[3]Source: Forbes, “IBM Shares Plummet 13%,” February 23, 2026. https://www.forbes.com/sites/tylerroush/2026/02/23/ibm-shares-plummet-13-worst-day-since-2000-after-anthropic-launches-programming-ai-tool/
[4]Source: CNBC, “Software stocks rebound as Anthropic announces new partnerships,” February 24, 2026.
https://www.cnbc.com/2026/02/24/software-stocks-anthropic-ai.html
[5]Source: YCharts, February 28, 2026
[6]Source: Tax Foundation, “Supreme Court Trump Tariffs Ruling: Analysis,” February 20, 2026. https://taxfoundation.org/blog/supreme court-trumptariffs-ruling/
[7]Source: CNBC, “Fourth-quarter U.S. GDP up just 1.4%, badly missing estimate; inflation firms at 3%,” February 20, 2026.
https://www.cnbc.com/2026/02/20/pce-inflation-december-2025.html
[8]Source: Bloomberg, “Iran War Ripples Across Region as Trump Vows ‘Whatever It Takes,’” March 3, 2026.
https://www.bloomberg.com/news/articles/2026-03-03/trump-pledges-whatever-it-takes-on-iran-as-war-widens
[9]Source: Bloomberg, Anthropic Sees Support From Other Tech Workers in Feud With Pentagon,” February 27, 2026.
https://www.bloomberg.com/news/articles/2026-02-27/anthropic-s-feud-with-pentagon-mushrooms-into-broader-battle

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