The Markets

Traveling a bumpy road.

Early in the third quarter, markets moved ahead enthusiastically. However, the road got rougher later in the quarter as investors pondered inflation, oil prices, interest rates, and other economic concerns. Here's a brief recap:

AI-related stocks drove stock markets higher.

For the last three years, artificial intelligence (AI)-related stocks have helped propel markets to new heights. That continued during the third quarter, reported Sarah Hansen of Morningstar, although momentum slowed as "a growing chorus of AI executives and researchers sounded the alarm on safety concerns for the rapidly advancing technology."

Companies in many other sectors performed less well over the quarter. "Market breadth has narrowed once again, with two tech-heavy sectors, alongside energy, pacing overall gains for the past month. Everything else, including summer stalwarts such as healthcare, financials, and consumer staples, having been trading in the red," reported Martin Baccardax of Barron's in late September.

The bond market shifted gears.

Yields on U.S. Treasuries rose to the highest levels in decades, reflecting persistent inflation, rising government debt levels, and a surge of corporate debt issued to support the buildout of AI. Jack Denton of Barron's reported:

"The benchmark 10-year U.S. Treasury yield rose at the fastest pace this century in the third quarter, with much of the advance coming in late August and through September. The note's yield popped from around the 4.6 percent mark to above 5.3 percent, the highest level in 24 years, sitting at 5.23 percent on Friday… Corporate bond yields have also followed benchmark Treasury yields higher."

The Federal Reserve lifted rates.

In September, the Federal Open Market Committee (FOMC), which is the Federal Reserve's rate-setting committee, lifted the federal funds rate to cool inflation. After the meeting, Fed Chair Warsh stated:

"Our decision comes at a time when the American economy appears to be strengthening. New hiring, private-sector earnings, business capital investment — each of these markers has improved in recent months and is pointing in a good direction… Consider the geopolitical landscape of shocks and uncertainty, and you begin to appreciate the resilience of the U.S. economy… Yet, for more than five years, inflation has been running above target. The plain fact is that inflation is too high and has been for too long."

Last Monday, the probability of another rate increase in October was above 70 percent according to the CME FedWatch tool. Then September's better-than-expected inflation report and a worse-than-expected jobs report caused expectations to change dramatically. The chance that the FOMC will hold rates steady rose significantly.

The change gave markets a boost early on Friday, reported Connor Smith of Barron's. For the week, though, only the Nasdaq Composite Index showed a gain. Yields on the longest maturities of Treasuries rose over the week.

Markets at a glance

Data as of 10/2/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	-0.3%	12.8%	15.0%	21.7%	12.4%	13.6%
Dow Jones Global ex-U.S. Index	-1.5%	11.0%	14.9%	17.5%	6.5%	6.5%
10-year Treasury Note (yield only)	5.3%	N/A	4.1%	4.7%	1.5%	1.6%
S&P GSCI Gold Index	-3.7%	-4.1%	7.6%	31.1%	18.7%	12.2%
Bloomberg Commodity Index	-2.0%	29.0%	35.0%	10.9%	6.8%	5.2%

Achievements So Surprising They Make People Laugh, Then Think

The Ig Nobel Prizes were organized by the magazine, The Annals of Improbable Research, and recognize funny and thought-provoking scientific research. The 36th First Annual Ig Nobel Prize ceremony took place in Zurich, Switzerland, where the honorees received their awards from actual Nobel Prize recipients. (Only one scientist has ever won both an Ig Nobel and a Nobel prize.) This year's Igs included the:

• Physics Prize rewarded an investigation into fluid dynamics that led to the development of a splash-free urinal. "Splash-free Urinals for Global Sustainability and Accessibility: Design Through Physics and Differential Equations" was published in PNAS Nexus.
• Technology Prize was awarded to a study that broke new ground exploring whether mosquito proboscises could effectively be used as high-resolution printing nozzles. "3D Necroprinting: Leveraging Biotic Material as the Nozzle for 3D Printing" was published in Science Advances.
• Peace Prize recognized researchers who discovered that people value friends who behave viciously toward people they don't like. "Sometimes We Want Vicious Friends: People Have Nuanced Preferences for How They Want Their Friends to Behave Toward Them Versus Others" was published in Evolution and Human Behavior.
• Chemistry Prize rewarded research that determined a single crystal of cockroach milk protein contains more than three times the energy of an equivalent mass of cow milk protein. "Structure of a Heterogeneous, Glycosylated, Lipid-Bound, in Vivo-Grown Protein Crystal at Atomic Resolution from the Viviparous Cockroach Diploptera Punctata" was published in the International Union of Crystallography Journal.
• Biology Prize went to innovators who "gently stepping on various parts of various venomous snakes — repeatedly, at various temperatures at various times of day — to try to learn what does and what does not induce a venomous snake to bite a human." "Study of Defensive Behavior of a Venomous Snake as a New Approach to Understand Snakebite" was published in Scientific Reports and later retracted on concerns about the treatment of the snakes. The researchers confirmed they had been gentle with the snakes.

"All winners received a statuette (this year, a slab of blue cheese topped by a foot erupting with toadstools in honor of this year's broader theme of 'fungi') and 10 trillion Zimbabwean dollars. But that currency cratered years ago, so it isn't actually worth anything," reported Ari Daniel of All Things Considered.

Weekly Focus — Think About It

"Logic will get you from A to B. Imagination will take you everywhere."
— Albert Einstein, Physicist

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The Markets

Keep your eye on your long-term goals.

Batters have one of the most difficult jobs in baseball: keeping their eyes on the ball. It seems straightforward, but there are always distractions, from a pitcher's pacing to the fans' heckling. As Crash Davis points out in Bull Durham, "Know what the difference between hitting .250 and .300 is? It's 25 hits — 25 hits in 500 at-bats is 50 points."

An investor's job is difficult, too, especially during election season. For investors, the challenge is to stay calm and focus on their long-term goals. It isn't easy amid the chaos of political noise when emotions are running high. It can help to remember that stocks have trended higher historically regardless of which party is in power or how the government is configured.

While you cannot invest directly in an index, the Standard & Poor's 500 Index illustrates the point well. In January 1945, the Index was trading at 13.50. Last Friday, it finished at 7,743.40. There were a lot of ups and downs in between those years, but stocks trended higher overall.

Historical stock market performance doesn't mean politics is irrelevant.

The United States government sets policies and appoints officials that affect Americans' lives every day. For the 2026 midterms, economic issues are top of mind for many voters, according to Pew Research. The economic issues Americans are thinking about include:

• The cost of living. Most participants in a Pew Research survey said they were very concerned about the cost of healthcare, food, consumer goods, housing, gasoline, and electricity. They also were focused on the role of artificial intelligence in the economy and the difficulty many people are having finding work. "By a wide margin, voters most want candidates running for Congress to talk about economic issues — with many specifically mentioning prices and affordability," reported Andrew Daniller, Andy Cerda, Hannah Hartig and J. Baxter Oliphant of Pew.
• Social Security funding. "A near-unanimous 97 percent of voters nationwide agree candidates should explain their plans to prevent automatic benefit cuts…this is an intergenerational issue: while current retirees will be impacted immediately by automatic cuts, current workers are paying into a system that will pay them less," according to a survey conducted by the nonpartisan Peter G. Peterson Foundation. Currently, payroll taxes collected to fund Social Security benefits do not cover the amount paid out each year. The difference is taken from the Old-Age, Survivors Insurance (OASI) Trust Fund. Projections suggest the trust fund will be depleted in 2032. Unless Congress acts soon, all program beneficiaries will see benefits cut by 22 percent, according to the 2026 Annual Trustees Report. The Committee for a Responsible Federal Budget puts the cut at about $16,900 per year for the average couple.

Americans also are concerned about non-economic issues, including government and leadership, immigration, and war in the Middle East, according to a September Gallup poll.

Just as hitters can be enticed into swinging at the wrong pitches, investors can be tempted to make portfolio changes at the wrong times. During this election season, remember to keep your eye on your long-term goals. If you have questions about your portfolio or feel a change may be warranted, please get in touch.

Last week, "was a rollercoaster of a week on Wall Street, but stocks closed Friday's session higher and managed to climb for the week despite the bond yields rising to multi-year highs," reported Naomi Buchanan of Barron's. The yield on the 30-year U.S. Treasury bond ended the week at 5.49 percent.

Markets at a glance

Data as of 9/25/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	1.2%	13.1%	17.2%	21.3%	11.8%	13.7%
Dow Jones Global ex-U.S. Index	0.4%	12.8%	18.8%	17.6%	6.2%	6.6%
10-year Treasury Note (yield only)	5.2%	N/A	4.2%	4.5%	1.5%	1.6%
S&P GSCI Gold Index	-2.3%	-0.5%	14.6%	30.7%	19.8%	12.4%
Bloomberg Commodity Index	-0.8%	31.6%	38.2%	10.9%	7.4%	5.5%

What Do Salt, Cattle, Coins, and a Smartphone Have in Common?

At one time, each played a part in a payment system. In the ancient world, salt and cattle were forms of currency. Today, the wallet app on your phone can pay for your morning coffee. Find out what you know about the history of money by taking this brief quiz.

From salt and cattle to cardboard cards and contactless payments, the way we pay has changed dramatically over time. Who knows what will be in our wallets, or on our phones, a generation from now?

Weekly Focus — Think About It

"Money is, in some respects, like fire. It is a very excellent servant, but a terrible master."
— P.T. Barnum, Entertainment Entrepreneur

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The Markets

Interest rates rose, and markets reacted.

With inflation running well above the target rate, the Federal Reserve (Fed) chose to raise the federal funds rate last week. Interest rates are one of the primary tools the Fed relies on to influence the economy. Generally, rate hikes are blunt tools that can help slow demand and ease price increases.

The rate hike echoed across financial markets.

In the bond market, Treasury rates rose as investors anticipated additional Fed hikes, reported Elizabeth Stanton of Bloomberg. By the end of the week, the rate on two-year U.S. Treasury notes was 4.76 percent, and the rate for 10-year Treasuries was at 5.01 percent.

Coupon rates are also higher in the tax-exempt market where high-quality, long-term municipal bonds yield more than 5 percent, according to Andrew Bary of Barron's. He reported:

"Tax-equivalent yields on long-term munis with 30-year maturities are 8 percent to 10 percent, depending on the tax rates in states where investors reside."

Rising interest rates can affect stock markets, too. Higher borrowing costs may cause companies to delay projects, spend less on research and development, cancel acquisitions, or take other steps that may affect earnings and future growth.

The relationship between inflation, interest rates, bonds, and stocks is not always straightforward. Markets are constantly adjusting to new information, and the direction of one market can influence another, sometimes in ways investors do not anticipate. For now, inflation is a key influence. If price pressures continue, the Fed may keep rates higher for longer.

Last week, the Dow Jones Industrial Average and Standard & Poor's 500 Index finished lower, while the Nasdaq Composite Index gained. The yield on the 30-year U.S. Treasury bond ended the week at 5.34 percent.

Markets at a glance

Data as of 9/18/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	-0.1%	11.8%	15.4%	19.8%	11.9%	13.6%
Dow Jones Global ex-U.S. Index	-1.1%	12.4%	17.3%	16.3%	6.3%	6.7%
10-year Treasury Note (yield only)	5.0%	N/A	4.1%	4.3%	1.3%	1.7%
S&P GSCI Gold Index	0.4%	1.9%	20.3%	31.3%	20.2%	12.9%
Bloomberg Commodity Index	0.2%	32.6%	40.7%	10.6%	8.7%	5.7%

Coupons and Yields and Interest Rates, Oh My!

In the old days, when investors agreed to lend their money to the U.S. government or a state government or a company, they received a paper certificate. The value of the bond was printed on the certificate and known as the bond's "face value."

The Rothschild Bank Archive explained:

"The bonds themselves were often beautiful examples of iconography and engraving. Each bond was printed with a sheet of coupons and every six months the bondholder would cut out the next coupon and present it to the Bank or paying agent in exchange for the designated dividend payment. The coupon number would be recorded in a ledger, the coupon cancelled…"

After the last coupon was cashed, the bond matured, and the bondholder's original investment was expected to be returned.

What is a coupon rate?

A bond's coupon rate is the annual payment expressed as a percentage of the bond's face value. While the practice of clipping coupons is long gone, the term "coupon rate" is still used to describe the amount of interest a bond provides relative to its price when issued. For example, a bond with a $1,000 face value and a $50 annual coupon has a coupon rate of 5 percent.

What is yield?

A bond's yield is the amount of income it pays relative to the current market price. If the coupon rate offered on new bonds rises from 5 percent to 6 percent, the market price for a bond with a 5 percent coupon rate falls. Investors generally won't pay as much for a bond that offers less income than comparable new bonds.

As a result, a bond's price may fall until its yield becomes competitive. It works the other way, too. When the coupon rate offered on new bonds falls to 4 percent, the market price for a bond with a 5 percent coupon rate rises.

Ideally, a bond buyer wants a "yield" that equals the coupon rate on new bonds. For example, if the new rate is 6 percent, an investor might pay about $833 for a bond with a 5 percent coupon rate. At that price, the bond's current yield would be about 6 percent.

What are interest rates?

Interest rates reflect the cost of borrowing. The Federal Reserve, which is the central bank of the United States, sets the federal funds rate. That's the interest rate banks charge to borrow from each other in overnight loans.

When the Fed raises the federal funds rate, the cost of borrowing often increases, and the interest rate charged by credit cards and various types of loans may increase. The interest rate paid on bank accounts also increases. When the Fed lowers the federal funds rate, the cost of borrowing tends to decrease, reported Jessica Dickler of CNBC.

Bonds are loans. Generally speaking, when the federal funds rate rises and the cost of borrowing increases, new bonds offer higher coupon rates to attract investors. When the federal funds rate falls and the cost of borrowing declines, new bonds tend to offer lower coupon rates.

If you have questions about coupons, yields or interest rates, please get in touch.

Weekly Focus — Think About It

"Since 2000 net government debt in America and Britain has tripled as a share of GDP. In France and Japan, it has doubled. The pile keeps growing: seldom outside wartime or recessions have rich-world deficits been higher than they are today…

In October 2025, The Economist calculated that if America and Britain had to immediately refinance all their debts at prevailing five-year bond yields, they would each need higher taxes or spending cuts worth 2.3 percent of GDP just to stop debt from rising as a share of the economy. Today, with yields higher, the number in America has more than doubled, to 4.7 percent."
— The Economist, September 17, 2026

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The Markets

The influence of supply and demand.

Last week offered a lesson in supply and demand, along with a reminder that financial markets are always looking to the future. As disruptions in the Middle East squeezed oil supplies, rising fuel prices and August inflation data seemed to set the stage for higher interest rates and lower stock prices. Then, Friday's news that demand for oil may be weakening changed the outlook, and stock markets found a bit of relief.

Here are some highlights from last week:

• There was an oil supply shock. Conflict in the Middle East expanded, further reducing the availability of oil. "For Middle Eastern oil producers, there are fewer and fewer places to hide from Iranian violence. And because of that, oil prices are almost certain to stay high," reported Avi Salzman of Barron's.
• Falling supply pushed fuel prices higher, pressuring inflation. Diesel fuel reached an all-time high of $6.00 a gallon, up from $3.70 a year ago. Diesel is required for "around 70 percent of the movements of freight, rail, agriculture, and construction equipment, and is a key component of domestic inflation when prices rise," reported Callum Keown and Martin Baccardax of Barron's.
• Higher inflation changed the interest rate outlook. Consumer and Producer Price readings for August arrived last week, showing inflation remained high. As investors considered the possible impact of higher oil prices, the chance of a Fed rate hike in September climbed above 85 percent, according to CME FedWatch. In response, the 10-year Treasury yield approached 5 percent.
• The forecast for oil demand changed. On Friday, the International Energy Agency (IEA) Oil Market Report forecast that global demand for oil will fall more sharply than expected in the latter half of 2026 because of higher prices and economic disruptions.

Markets welcomed the possibility that weaker demand for oil could eventually ease oil prices and inflation pressures. After four days of declines, stock markets rallied on Friday.

The supply problem, however, has not gone away. The IEA expects oil supply to fall even faster than demand, while global inventories are being rapidly depleted. In other words, Friday's rally did not indicate the oil shock is over. It reflected a change in the outlook, and a reminder that markets care about where prices are today, and where they may be headed tomorrow.

Last week, major U.S. stock indexes finished the week lower, despite advancing on Friday. Yields on U.S. Treasuries moved higher across the yield curve.

Markets at a glance

Data as of 9/11/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	-0.8%	11.9%	16.2%	19.5%	11.4%	13.5%
Dow Jones Global ex-U.S. Index	-1.2%	13.7%	19.7%	16.9%	5.9%	6.8%
10-year Treasury Note (yield only)	4.98%	N/A	4.0%	4.3%	1.3%	1.7%
S&P GSCI Gold Index	-1.5%	1.6%	20.0%	31.3%	19.7%	12.8%
Bloomberg Commodity Index	1.6%	32.4%	40.9%	10.8%	8.3%	5.6%

Here's How a Bond Works

A bond is a loan. When investors buy U.S. Treasury bonds, they agree to lend their money to the government for a specific period of time. In return, the government agrees to pay interest for that period and return the amount borrowed when the bond matures. In the interim, Treasury bond rates may move higher or lower. The market value of the Treasury, which is the value an investor receives if they sell the bond before maturity, will change to reflect current rates.

How do rates affect bond prices?

There is a question about this on FINRA's financial literacy quiz that stumps a lot of people every year. It asks: If interest rates rise, what will typically happen to bond prices?

1. They rise.
2. They fall.
3. They stay the same.
4. Nothing. There is no relationship between interest rates and bond prices.

The correct answer is that bond prices fall when rates rise.

There is an inverse relationship between bond prices and interest rates.

Imagine that a fictional investor, Chris, buys a 10-year U.S. Treasury for $1,000. It pays 4 percent interest. After a few months, interest rates rise. Newly issued 10-year Treasuries offer 5 percent interest. Chris can hold the bond to maturity (and continue to receive 4 percent interest) or sell it. If Chris sells, the bond will be worth less than the amount originally paid because new bonds have higher rates.

When rates rise	Bond pays	Bond price	Bond yield
Chris's original bond	$40	$1,000	4%
Newly issued bonds	$50	$1,000	5%
Chris's bond repriced for higher rate	$40	$800	5%

It works the other way, too. Imagine that after Chris buys the bond, interest rates fall, 10-year U.S. Treasuries now pay 3 percent interest. Chris can hold the bond (and receive 4 percent interest until maturity) or can sell the bond. It will be worth more than Chris paid because new bonds have lower rates.

When rates fall	Bond pays	Bond price	Bond yield
Chris's original bond	$40	$1,000	4%
Newly issued bonds	$30	$1,000	3%
Chris's repriced bond with rate fall	$40	$1,330	3%

It may help to think of bonds as a seesaw. At one end are bond prices, at the other are interest rates. As one falls, the other rises. If you have questions about bonds, please get in touch.

Weekly Focus — Think About It

"Where there is great love, there are always miracles."
— Willa Cather, Author

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The Markets

Artificial intelligence (AI) is driving the market and the economy.

Last week, markets experienced a burst of AI enthusiasm after a leading chip manufacturer's earnings report exceeded expectations. The company anticipates revenue will grow by 70 percent over the coming year. Its shares advanced, as did shares of other AI-related stocks.

"The S&P 500 Index ended the session 0.7 percent higher…Meanwhile, the equal-weight version of the benchmark declined 0.3 percent, a reflection of the number of stocks falling despite tech's strength," reported Geoffrey Morgan of Bloomberg.

While investors cheered AI growth expectations, the Federal Reserve (Fed) considered what it means for inflation. Prices continue to increase faster than the Fed's two percent per year target. Strong economic growth could make it harder to bring prices under control. In a speech last week, Fed Chair Warsh stated:

"Business capital expenditures — the seed corn of future economic growth — are rising rapidly… For firms in the S&P 500, profits have grown by more than 20 percent over the past year… But on the price-stability side of our mandate, the numbers are more concerning. The Fed's preferred measure of inflation, the 12-month change in the PCE price index, stands at 3.7 percent, while the six-month change is 4.1 percent… Inflation is running above our 2 percent target. So the Fed's predominant focus right now should be on prices."

That commitment complicates the outlook for interest rates. AI is contributing to a surge in business investment, fueling economic growth. Faster growth is good for the economy overall, but it can make the Fed's job of keeping prices stable more difficult. To bring inflation lower, the Fed may have to raise the federal funds rate. "As a rule of thumb, interest rates often need to be high enough to limit borrowing and spending to cool inflation," reported Christopher Rugaber of the AP.

Last week, major U.S. stock indexes finished higher, although they gave back some gains late in the week. Yields on shorter maturities of U.S. Treasuries rose "in anticipation of rate increases as soon as next month," reported Reuters. In contrast, yields on longer maturities moved lower.

Markets at a glance

Data as of 8/28/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	0.5%	12.7%	18.6%	20.3%	11.2%	13.5%
Dow Jones Global ex-U.S. Index	0.2%	15.1%	23.4%	17.6%	6.4%	7.0%
10-year Treasury Note (yield only)	4.7%	N/A	4.2%	4.2%	1.3%	1.6%
S&P GSCI Gold Index	-3.2%	4.4%	30.4%	32.5%	20.1%	13.1%
Bloomberg Commodity Index	-0.2%	27.8%	37.5%	9.9%	7.8%	5.2%

How Far Will Your Retirement Savings Take You?

All vehicles are not created equal. A tank of gas will take a fuel-efficient or hybrid vehicle a lot further than it will take a gas guzzler. Retirement savings work in a similar way. Two people can retire with identical amounts of savings, yet the income they generate (and how long that income lasts) may be quite different.

A key issue is taxes.

"Millions of Americans spend decades saving for retirement only to trip over tax bills at the finish line. The shift from earning a paycheck to living off savings creates a new problem: figuring out how to turn assets into income without handing more than necessary to the IRS," reported Suzanne Woolley of Bloomberg.

Fortunately, there are strategies that can help improve your tax efficiency. (Tax efficiency is making financial decisions that minimize your taxes.) Here are some points to consider:

• Your retirement income strategy should reflect you. Your strategy should be tailored to you. It will depend on the amount of savings you've accumulated, the types of accounts you have (taxable, tax-deferred, and tax-free), and the amount of income you need each year in retirement.
• Different types of accounts have different tax consequences. Your retirement savings may be in traditional retirement accounts (401(k)s and IRAs), Roth accounts, and taxable investment accounts. The tax consequences of withdrawals vary by account type, so retirees' decisions about where to take income directly affect the amount of tax owed. Making thoughtful decisions about withdrawals can help reduce the amount of taxes paid in retirement.
• Roth accounts deliver tax-free income. Retirees may want to consider converting traditional retirement accounts to Roth IRAs. Income from Roth accounts is typically tax-free, as long as certain conditions are met. In contrast, income from traditional 401(k) and IRA accounts is usually taxable. In addition, when assets are in a Roth IRA, any future growth may be tax-free. If an account owner moves money from a traditional account to a Roth IRA, the amount converted is generally taxed as ordinary income. Consequently, it's important to consider whether the amount will push the taxpayer into a higher tax bracket. In general, Roth conversions are most beneficial during years when account owners are in lower tax brackets.
• Withdrawals from retirement accounts are required in your 70s. At age 73, the IRS requires Americans to begin taking required minimum distributions (RMDs) from traditional retirement accounts. (The age is 75 if you were born in 1960 or later.) In some cases, RMDs exceed the amount retirees need for income during the year. When that happens, these distributions can be invested or donated to a qualified charity. The amount donated counts toward the RMD, but it isn't included in taxable income.

The goal of retirement income planning is to have your savings provide income for as long as you may need it. If you have any questions, please get in touch.

Weekly Focus — Think About It

"Old age is like everything else. To make a success of it, you've got to start young."
— Theodore Roosevelt, 26th President of the United States

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The Markets

Investors may have a rosier view of the future than consumers do.

In 2026, markets have been volatile with major U.S. stock indexes posting new highs and new lows. "The S&P [Standard & Poor's] 500 posted 30 new highs and one new low; the Nasdaq recorded 155 new highs and 85 new lows," reported Noel Randewich and Avinash P. of Reuters in mid-August.

The ups and downs of the market reflect investor enthusiasm and uncertainty. In general, investors make decisions about what they believe will happen in the future. They weigh the possible effects of geopolitics, artificial intelligence (AI), and other factors on companies and the economy and act on their view.

While investors ponder the future, consumers (people who buy goods and services) think about the here and now. For months, consumer sentiment has hovered near all-time lows. In April 2026, anxiety about the war in Iran left Americans in the worst economic mood in the 50-year history of the University of Michigan's Index of Consumer Sentiment, according to Matt Grossman of the Wall Street Journal.

The mood declined further in May, falling to an all-time low of 44.8, before improving in June and July. In August, sentiment fell again. Since 1952, the historic average for the survey has been 84.5.

2026	August	July	June	May	April
Index of Consumer Sentiment	51.0	55.2	49.5	44.8	49.8
Current Economic Conditions	51.8	54.8	47.7	45.8	52.5
Index of Consumer Expectations	50.6	55.4	50.7	44.1	48.1

The last drop in sentiment was driven by the Index for Consumer Expectations. It is a relatively small component of the entire survey that measures how consumers view prospects for:

• Their own financial situation
• The economy over the near term
• The economy over the long term

"Across all consumers, only 8 percent [of survey participants] expect their income growth to exceed inflation in the year ahead, down from 18 percent in December 2024, a reflection of the belief that high prices will continue to be burdensome," wrote Surveys of Consumers Director Joanne Hsu.

Consumers are worried about their standard of living and whether wages will keep pace with inflation, while investors are focused on what companies and the economy may deliver in the future.

Last week, major U.S. stock indexes finished lower as investors pondered higher bond yields and the government's efforts to bring them lower.

"The problem is none of these actions are targeting the root problem: the $40 trillion U.S. national debt. Bessent is temporarily stemming the momentum, but not changing the fundamentals. The other problem is that the economy is strong and is expected to keep humming along — until the Federal Reserve hikes interest rates," reported Karishma Vanjani of Barron's.

The yield on the 30-year U.S. Treasury bond ended the week at 5.27 percent.

Markets at a glance

Data as of 8/21/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	-1.4%	12.1%	20.5%	20.4%	11.4%	13.4%
Dow Jones Global ex-U.S. Index	-0.1%	14.9%	23.6%	18.0%	6.8%	6.8%
10-year Treasury Note (yield only)	4.7%	N/A	4.3%	4.3%	1.3%	1.5%
S&P GSCI Gold Index	5.5%	7.8%	38.4%	34.5%	21.0%	13.3%
Bloomberg Commodity Index	3.8%	28.1%	39.1%	10.5%	8.6%	5.1%

Does the Stock Market Reflect the World Around Us?

Often, the answer is no.

"The stock market aims to capture investors' best collective guess at tomorrow's equity reality. It mirrors today's only when the future is likely to look much like the present," explained The Economist.

Markets don't expect the future to look like the present. In part, that's because of AI. No one is certain what an AI future looks like. "At one extreme is the utopian view that AI will cause runaway economic growth, accelerate scientific research and perhaps make humans immortal. At the other extreme is the dystopian view that AI will cause abrupt, widespread job losses and economic disruption, and perhaps go rogue and wipe out humanity," reported The Economist.

There is a middle ground view, as well, but it "is less dramatic than predictions of an imminent 'fast take-off' or apocalypse, so tends not to receive much attention."

AI stocks have an outsized effect on stock markets right now.

Investors are confident AI will have a significant impact on the world economy, even if they don't know what it will be. As a result, a few AI-related stocks are dominating performance in some stock indexes. The Economist explained:

"The S&P 500 and the world's other benchmark indices are no longer the real stock market, either. Rather than mirroring the universe of domestic equities, they increasingly reflect the fortunes of a few corporate giants, which in turn mostly rise and fall with the unstable outlook for the artificial-intelligence revolution. This is making many benchmarks — and, by extension, the stock portfolios and pension pots of investors everywhere — considerably more volatile."

Investors are looking beyond today's economy and trying to put a value on what they believe tomorrow's economy could become. It's an important distinction. A strong stock market does not necessarily mean the economy is thriving, just as a weak stock market does not necessarily mean the economy is struggling. Stock prices reflect expectations — and expectations can change, sometimes quickly.

Weekly Focus — Think About It

"Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair."
— Sam Ewing, Writer and Humorist

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The Markets

The rally continues.

A lot of factors influence the United States stock market, including economic trends, market sentiment, and government and Federal Reserve (Fed) policies. However, many investors consider earnings, which reveal how profitable a company is after paying expenses, one of the most important indicators of company and market health.

Companies have been more profitable than analysts expected.

In 2026, most companies in the Standard & Poor's (S&P) 500 Index have delivered higher-than-expected profits. John Butters of FactSet reported:

• From January through March 2026, overall S&P 500 earnings grew 28.6 percent year over year, and 85 percent of companies in the Index reported higher-than-expected earnings.
• From April through June 2026, overall earnings grew 50.4 percent year over year. Much of that resulted from unusually large earnings at two of the largest companies in the Index. When they're excluded, growth was still 32 percent year over year.

Analysts expect profits to keep growing in 2026.

The pace of hiring and wage growth has slowed.

The availability of jobs and the size of paychecks shape how Americans feel and how they spend. That's important because consumer spending is a primary driver of economic growth in the United States.

• The number of new jobs needed to maintain full employment is uncertain because it depends on immigration numbers. Last year, Alexander Bick of the Federal Reserve Bank of St. Louis explained that immigration "is a significant source of labor for the U.S. economy." He estimated that much lower immigration projections had cut the optimal number of jobs from more than 150,000 a month to a range of 32,000 to 82,000. His newest estimate is 15,000 to 87,000. Last week, the Bureau of Labor Statistics (BLS) reported that unemployment remains low by historical standards, even though job growth remains modest. Employers cut 23,000 jobs in July and just 34,000 jobs a month were added, on average, over the last year. That pace falls within Bick's breakeven range, which helps explain why unemployment has stayed low even as hiring slowed.
• The report also showed average hourly pay rose 3.2 percent over the year through July 2026. Inflation eased some over that period, slowing to 3.5 percent in June from 4.2 percent a month earlier. Even so, wages have not kept pace with prices.

For now, strong earnings are carrying the market, hiring is slowing without stalling, and inflation is cooling even if paychecks have yet to catch up.

Last week, major U.S. stock indexes gained. Yields on longer maturities of U.S. Treasuries moved lower after the weaker-than-expected employment report raised "fresh concerns about the labor market while dimming the immediate outlook for higher Fed interest rates," reported Yun Lee, Sean Conlon, and Hugh Leask of CNBC.

Markets at a glance

Data as of 8/7/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	3.6%	13.3%	22.4%	19.7%	11.9%	13.5%
Dow Jones Global ex-U.S. Index	1.8%	13.6%	24.1%	15.9%	6.2%	6.9%
10-year Treasury Note (yield only)	4.7%	N/A	4.2%	4.1%	1.3%	1.6%
S&P GSCI Gold Index	7.1%	1.4%	27.4%	30.7%	20.6%	12.6%
Bloomberg Commodity Index	-0.2%	20.1%	30.8%	7.6%	7.2%	4.6%

What Do You Know About Back-to-School Time?

The shock of an early alarm after sleeping in all summer, the smell of old textbooks, and that fluttery mix of dread and excitement about who you'd sit next to in homeroom. Whether your first day of the new school year involved a chalkboard, an overhead projector, or a smartboard, one thing united many of us: the sensory overload of a crowded school hallway as everyone caught up after a few weeks off. With the school buses rolling out again, it is the perfect time for a pop quiz. This quiz won't be graded, there's no permanent record, and you absolutely do not need a calculator.

Whether you aced every question or found a few to be challenging, we hope this quiz brought a smile to your day. Any time you have questions about financial matters, please get in touch.

Weekly Focus — Think About It

"An investment in knowledge pays the best interest."
— Benjamin Franklin, Founding Father, Scientist, and Inventor

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The Markets

Federal Reserve (Fed) Chair Warsh shakes the market's confidence.

Former Fed Chair Ben Bernanke has said that "monetary policy is 98 percent talk and only 2 percent action." He meant that public statements are powerful tools that can shape the market's expectations around future Fed actions. That proved true last week, when the Fed appeared to lose credibility during a relatively brief press conference held by its new Chair Kevin Warsh.

The Fed did what markets expected, but the new Chair did not.

The Federal Open Market Committee (FOMC) met last week to determine a path for interest rates. In its post-meeting statement, the committee confirmed:

• Inflation remains high.
• The Fed is committed to bringing it lower.
• Most voting members were not ready to raise the federal funds rate yet.

That was exactly what Wall Street expected, and stocks experienced a brief relief rally, reported Connor Smith of Barron's. Then, during the press conference, "Federal Reserve Chairman Kevin Warsh explained his decision to keep rates steady with a series of contradictory, confounding, and supremely confident answers to reporters' questions," reported Alex Rosenberg of Barron's.

Bond markets pushed Treasury rates higher.

After Chair Warsh's comments, the bond market expressed its opinion. Yields on longer U.S. Treasuries moved sharply higher.

"Benchmark 30-year Treasury bond yields, the market's best representation of long-term inflation risks and expanding government deficits, are trading at the highest levels since 2007," reported Martin Baccardax of Barron's.

Higher interest rates can help slow the rate of inflation by making borrowing more expensive and reducing demand for goods and services. Often, the FOMC increases the federal funds rate to accomplish this. In this case, it was the work of bond vigilantes — investors who think inflation risks are greater than the rest of the market assumes, and who act on that belief, reported Baccardax.

Higher rates mean higher interest payments on the national debt.

Since the U.S. government borrows to fund the national debt by issuing Treasuries, higher rates also will increase the amount of interest the U.S. government pays to finance the debt. The Peter G. Peterson Foundation reported:

"As the national debt grows and interest rates rise, the United States will spend more of its budget on the cost of servicing that debt — crowding out opportunities to invest in the economy. Interest costs are set to become the fastest-growing part of the federal budget and will total $16.2 trillion in the next 10 years alone, according to the CBO [Congressional Budget Office]."

It was a tumultuous week for U.S. stocks, too. Major indexes moved lower during the week before rebounding to finish the week higher.

Markets at a glance

Data as of 7/31/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	1.1%	9.4%	18.2%	17.7%	11.3%	13.2%
Dow Jones Global ex-U.S. Index	1.8%	11.6%	24.2%	14.4%	5.8%	6.7%
10-year Treasury Note (yield only)	4.8%	N/A	4.4%	4.0%	1.2%	1.5%
S&P GSCI Gold Index	-0.6%	-5.4%	22.7%	26.9%	17.7%	11.7%
Bloomberg Commodity Index	-2.1%	20.4%	30.5%	7.2%	6.6%	4.8%

The Retirement Balancing Act

The amount of income you receive in retirement will depend on a lot more than your Social Security benefits and distributions from your retirement savings accounts. The rules governing Medicare, Social Security, and taxation are complex and can have unexpected effects on retirement income for those who are unfamiliar with how they work together.

Some Medicare costs are deducted from Social Security benefits.

While most of the changes to Medicare and Social Security for 2026 and 2027 are relatively modest, they illustrate how one program can affect another. Take Social Security. The average monthly retirement benefit is projected to increase by about $75 in 2027 if the projected 3.6 percent cost-of-living adjustment (COLA) holds, according to Deirdre Shesgreen of AARP. The purpose of the annual COLA is to help benefits keep pace with inflation over time.

Medicare costs also are expected to increase in 2027. The Medicare Trustees Report projects that the standard Medicare Part B premium will increase by $6.60 a month in 2027. In addition, many beneficiaries will pay higher deductibles, prescription drug premiums, and out-of-pocket costs. Since the Social Security Administration can automatically deduct Part B and Part D premiums from your monthly benefits, those increases take a bite out of the larger Social Security check.

Taxes add another layer of complexity.

The amount of taxable income you receive as a retiree will affect the taxability of your Social Security benefits and the cost of your Medicare benefits. Here's how it works:

• Almost 50 percent of retirees pay taxes on Social Security benefits. Over the past few decades, the number of retirees whose Social Security benefits are taxable has risen significantly because the income levels that determine benefit taxability have not changed for decades. As a result, today, a single taxpayer with taxable income of $25,000 or more, and joint filers with taxable income of $34,000 or more, usually owes taxes on a portion of their Social Security benefits.
• Higher-income Medicare enrollees pay surcharges. If you fall into the higher-income category for Medicare, you may pay Income-Related Monthly Adjustment Amount (IRMAA) surcharges on Medicare Part B and Part D premiums. Because IRMAA is based on your most recent federal income tax return, a large withdrawal from a traditional IRA, a sizeable required minimum distribution (RMD), or other taxable income distributions can increase both federal income taxes and future Medicare premiums.

Retirement income planning requires a thorough understanding of the rules and changes that affect Social Security benefits, Medicare costs, and taxation. Knowing how one change influences another can help retirees make informed decisions and gain a clearer understanding of how to maximize retirement income. The timing and source of retirement income can be just as important as the amount received.

There are strategies that can help retirees effectively manage retirement income. They may spread withdrawals over multiple years or transform taxable income into tax-free income by converting traditional IRAs to Roth IRAs during lower-income years. The strategy that's right for you will depend on your personal financial circumstances. If you would like to learn more, please get in touch.

Weekly Focus — Think About It

"Words have no power to impress the mind without the exquisite horror of their reality."
— Edgar Allan Poe, Author

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The Markets

Sometimes, the road is rough.

In the early 1900s, riding in new-fangled automobiles was a bone-jarring and physically exhausting experience. Roads were unpaved and rutted, jolting passengers relentlessly. Shock absorbers changed that. Working in tandem with the spring suspension, they made the ride a lot smoother.

A two-part system smooths the ride for investors, too. It includes asset allocation and diversification.

Asset allocation can help smooth portfolio volatility.

In recent years, stock markets have experienced significant volatility because of "systematic risks," which include events that affect the economy and financial markets. Systematic risks can be changes in market sentiment, inflation, government policies, and geopolitics.

Market- and economy-wide events are felt broadly, although they often have a bigger impact on some assets than others. As a result, one way to manage systematic risk, particularly market risk, is through asset allocation. Dividing investments among asset classes that may respond differently to changes in the economy or market can help reduce the impact of those changes on a portfolio.

Diversification can make the ride more comfortable, too.

Diversification helps investors manage "unsystematic risk," which is the chance that a company or industry will be affected by poor performance, regulation, new competition, innovation, or something else that affects its potential growth.

A well-diversified portfolio typically includes more than one type of investment within an asset class. For example, an investor might diversify by owning small, mid-sized, and large company stocks across diverse industries inside of the United States and in other countries. If an investor owns 30 stocks and three perform poorly, the impact of the weaker performers on the overall portfolio return is reduced by the stronger performers.

It's important to remember that a car's suspension system smooths the ride without altering the road. Asset allocation and diversification are similar. They're essential aspects of the investment process that help investors manage risk. However, neither asset allocation nor diversification will prevent a market downturn or eliminate losses.

Last week, major U.S. stock indexes moved lower, and U.S. Treasuries moved higher.

"Real risk-free bond yields haven't been this high in years. Real five-to-10-year yields hadn't reached current levels since 2023–24. As for 30-year maturities, you would have to go back to the 2008–09 financial crisis to encounter real yields of nearly 3 percent. Real interest rates are what you earn after the bite taken by inflation," reported Randall Forsyth of Barron's.

Markets at a glance

Data as of 7/24/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	-0.6%	8.3%	16.5%	17.6%	10.9%	13.1%
Dow Jones Global ex-U.S. Index	0.3%	9.6%	18.4%	13.8%	5.7%	6.7%
10-year Treasury Note (yield only)	4.7%	N/A	4.4%	3.9%	1.3%	1.6%
S&P GSCI Gold Index	1.3%	-4.9%	20.4%	27.3%	18.0%	12.0%
Bloomberg Commodity Index	2.7%	23.0%	29.5%	7.8%	6.9%	4.9%

Baby Boomers Have About $93 Trillion — But It Won't All Go to Their Heirs

In the United States, some in younger generations perceive baby boomers as the generation that caught every financial break. They believe boomers benefitted from more affordable housing, lower tuition costs, and rising stock markets. When baby boomers look back, many recall facing significant economic headwinds during their working years, including double-digit mortgage rates, high inflation, and recessions.

Regardless of the circumstances, baby boomers have accumulated a lot of wealth. When compared to previous generations, baby boomers have more wealth than older generations did at the same age, according to Richard Fry of Pew Research.

Household wealth by generation (Median wealth of U.S. households headed by 58- to 76-year-olds, in 2024 dollars)	Median Wealth
Baby boomers in 2022	$432,200
Silent generation in 2001	$335,900
Greatest generation in 1983	$185,300

In total, boomers have about $93 trillion saved and invested, according to 2026 research from a digital payments firm. That's about three times the U.S. gross domestic product, or GDP, which is the value of all goods and services our country produced last year. The amount that is passed on to heirs will be far less for several reasons:

• $5 trillion in debt. Many baby boomers are still paying mortgages on their homes in retirement. Beyond housing, many also have credit card debt and auto, personal, or business loans that will be repaid from their assets.
• Wealth is not distributed evenly. Of the $88 trillion remaining after debts are paid, about 33 percent is held by the top one percent of households. When this group is left out of the calculations, the remaining baby boomers have about $60 trillion. "…while excluding the top 1 percent makes the wealth estimate more realistic, it does not make the transfer democratic…most remaining wealth ($44 trillion) is still held by affluent boomers in the top 90 to 99 percent of households. In contrast, the bottom 90 percent of boomer households hold just $16 trillion," according to the digital payments firm.
• Retirement is expensive. A significant share of many households' savings will be spent during retirement. In total, the researchers estimated that "$36 trillion will pass to younger generations over the next 20 years, equivalent to roughly $515,000 per inheriting household."

Estate planning is important for many reasons. It ensures your assets are distributed as you want them to be. In addition, an estate plan can directly affect the amount heirs receive by minimizing taxes, avoiding probate, and reducing the likelihood of inheritance disputes. If you don't have an estate plan or you haven't reviewed your plan recently, get in touch. We can help.

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The Markets

Rethinking expectations for inflation and artificial intelligence (AI).

It was a rough week for Wall Street. The Standard & Poor's 500 Index (S&P 500) fell about 1.5 percent, the Nasdaq Composite dropped 2.8 percent, and the Dow posted its weakest weekly performance since late March, reported Naomi Buchanan of Barron's. Here's what happened:

• Price increases slowed. The week started with encouraging news. Price pressures eased in June, in part because of lower energy costs, according to the Consumer Price Index report released by the Bureau of Labor Statistics. Inflation was up just 3.5 percent year over year in June, which was significantly lower than May's 4.2 percent. Investors welcomed the news because lower inflation made it less likely the Federal Reserve will raise rates to bring prices lower, reported Jeff Cox of CNBC.
• The U.S.–Iran conflict resumed. Inflation relief was short-lived as hostilities between the United States and Iran ramped up, causing oil prices to rise significantly last week. "The average price of diesel fuel in the U.S. has increased again to more than $5 a gallon, according to the AAA, and the average price of gas is almost $4, returning to their highs before the June memorandum of understanding between the U.S. and Iran," reported Aram Roston of The Guardian.
• Investors reassessed AI. Last week, a Chinese start-up company introduced a new AI open-weight model that was said to outperform even the most advanced models offered by American companies and do the work at a lower cost. That led investors to re-evaluate the outlook for AI. Nate Wolf of Barron's explained, "Enterprises have increasingly used cheap open-weight models for simple tasks to save on token prices. But if [the Chinese AI model] can mimic advanced U.S. models at a fraction of the cost per token, it begs questions about the sustainability of the entire AI investment boom…"

While many investors have been laser-focused on all things related to AI, other sectors of the market have been performing well. You don't see it in the performance of the capitalization-weighted S&P 500 Index because technology stocks are very large and have an outsized impact on the Index. However, you can see it in the performance of the equal-weighted S&P 500 Index, which assigns an equal weight to every company. Joel Leon of Bloomberg reported:

"Even as chip stocks dragged the S&P 500 lower on Thursday, a majority of stocks in the benchmark rose, signaling healthy market breadth. The S&P 500 Equal Weighted Index finished at an all-time high on Thursday."

It's a reminder of the value of diversification.

Last week, major U.S. stock indexes finished lower, and U.S. Treasuries gained value as yields declined. The yield on the 30-year Treasury bond moved lower to end the week at 5.06 percent.

Markets at a glance

Data as of 7/17/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	-1.6%	8.9%	18.4%	18.1%	11.9%	13.2%
Dow Jones Global ex-U.S. Index	-1.8%	9.3%	21.2%	13.9%	5.9%	6.7%
10-year Treasury Note (yield only)	4.5%	N/A	4.5%	3.8%	1.2%	1.6%
S&P GSCI Gold Index	-1.8%	-6.1%	19.8%	26.9%	17.6%	11.8%
Bloomberg Commodity Index	3.6%	19.8%	25.8%	8.2%	7.4%	4.3%

Blue Ribbons, Butter Sculptures, and Big Money

State fairs are famous for giant pumpkins, prize-winning livestock, and all kinds of deep-fried food on a stick. They're also big business, drawing millions of visitors, supporting local economies, and celebrating American agriculture. See what you know about state fairs by taking this brief quiz.

State fairs may be known for funnel cakes and Ferris wheels, but they also showcase people, products, and traditions that shape local communities. What's your favorite part of your state's fair?

Weekly Focus — Think About It

"Farming looks mighty easy when your plow is a pencil, and you're a thousand miles from the corn field."
— Dwight D. Eisenhower, Former U.S. President

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The Markets

America's wealth looks different than it did just a couple of generations ago.

A lot has changed since 1989. Back then, there were no smartphones or streaming services. There wasn't an app for anything. The first digital camera arrived the previous year, and the first handheld global positioning system (GPS) became available in 1989. While technology began reshaping everyday life, another change began unfolding, too.

Between 1989 and 2022, after adjusting for inflation, the wealth held by families in the United States almost quadrupled. It rose from $52 trillion (in 2022 dollars) to $199 trillion, according to data from the Congressional Budget Office (CBO). The composition of that wealth changed, too.

• Wall Street has become Main Street. More household wealth is invested in stocks than ever before. "Some 34 [percent] of US household wealth is now in stocks — the highest proportion on record," reported Tracy Alloway and Joe Weisenthal of Bloomberg. "These are obviously aggregate figures, and equity ownership is skewed towards higher-income households. Nevertheless, this is a sea change in the composition of America's total wealth, which was dominated for years (even after the bursting of the housing bubble in 2008) by real estate."
• Retirement plans help grow household wealth. Years ago, a family's wealth was largely tied to its home and, perhaps, a pension that would be paid by a company after retirement. Today, an increasing share of household wealth is in 401(k)s, IRAs, and brokerage accounts. Even people who have never thought of buying an individual stock may own thousands of companies through their workplace retirement plans. "In 2022, retirement assets and accrued Social Security benefits made up about 40 percent of [household] wealth," reported the CBO.
• Diversification matters more than ever. With stocks comprising a bigger share of household wealth, managing risk is essential. One of the best ways to do that is through diversification, which means owning different types of investments that respond differently to changing market conditions. The idea is that one asset may increase in value when another is losing value. While diversification does not ensure a profit or protect against loss, it plays an important role in long-term investment strategies.

Last week, the Standard & Poor's 500 and Nasdaq Composite Indexes finished higher. The Dow Jones Industrial Average lost ground, largely due to the collapse of the U.S.–Iran ceasefire, according to Teresa Rivas of Barron's. Yields on mid- and longer-term U.S. Treasuries moved higher over the week.

Markets at a glance

Data as of 7/10/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	1.2%	10.7%	20.6%	19.8%	11.6%	13.5%
Dow Jones Global ex-U.S. Index	-1.4%	11.3%	22.9%	16.1%	5.7%	7.1%
10-year Treasury Note (yield only)	4.6%	N/A	4.4%	4.0%	1.4%	1.4%
S&P GSCI Gold Index	0.6%	-4.4%	23.5%	28.9%	18.1%	11.8%
Bloomberg Commodity Index	3.1%	15.6%	23.0%	7.5%	6.2%	4.0%

The World Cup Has Produced Some Eye-Popping Numbers

…and we're not talking about the scoreboard. For example:

• $713,000. The World Cup trophy is gilded with almost 11 pounds of 18-karat gold. In April of this year, the value of the gold would have been roughly $713,000, reported Phil Haunhorst via Yahoo Finance. The champions receive a gold-plated replica, while the original trophy stays with FIFA, the international governing body for soccer.
• 6 million. That's how many spectators have packed into stadiums throughout the United States, Canada, and Mexico to watch the beautiful game, according to FIFA.
• $12.5 million. The country of every team playing in the tournament receives $12.5 million in qualification and preparation money, reported Maggie MacKenzie of Sports Illustrated.
• $16 million. The U.S. men's national team won $16 million for making it to the round of 16. Since the U.S. men's and women's teams split all World Cup winnings, "The prize money will be split evenly between the 26 men on the U.S. roster and the 26 women who make next year's U.S. roster for the 2027 Women's World Cup, should the Americans qualify," reported Jeff Kassouf of ESPN.
• 33 million. Last week, more than 33 million viewers tuned in to watch the U.S. men's national team play Belgium, making it the "most-watched soccer telecast in U.S. history," reported Michael Schneider of Variety.
• $50 million. The prize for the team that lifts the World Cup trophy is $50 million. The winnings don't go to the players, although they receive a share. The award goes to the winning nation's soccer federation, which is the sport's governing body in the country.
• $13 billion. This is the amount of revenue that "FIFA expects to have generated across the four-year cycle ending with this World Cup," reported Brett Knight of Forbes. "Of that total, almost $9 billion would be from 2026, including $3.9 billion from broadcasting rights and more than $3 billion in hospitality rights and ticket sales, according to projections in the organization's 2024 annual report."

The World Cup offers some unforgettable moments. It also offers some pretty impressive trivia.

Weekly Focus — Think About It

"We didn't underestimate them, but they were a lot better than we thought."
— Bobby Robson, Former Professional Soccer Coach and Player

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The Markets

The market spent the first half of 2026 floating like a butterfly.

The market slipped every punch during the first six months of 2026, and there were a lot of them: the Iran War, gyrating oil prices, rising inflation, changed interest rate expectations, employment concerns, and mounting national debt. Each issue stepped into the ring swinging and, while the market staggered occasionally, it recovered every time.

"Bolstered by double-digit earnings growth, 2Q was the best quarter for the S&P 500 since the second quarter of 2020, and [we saw] the best first half of a year for the index since 2021," reported Teresa Rivas of Barron's.

Here are some issues investors are watching as we head into the second half of the year.

• Winning on points. The United States economy had some mixed data rounds, but it appears to be solid. "Higher energy prices, stubborn inflation and widening inequality all pose risks that could erode the country's current advantage," reported Michelle Fleury of BBC. "Even so, compared with many other advanced economies, the U.S. continues to look robust. Its combination of flexible markets, rapid investment, abundant energy, and tolerance for risk has helped it weather shocks that have strained its peers."
• AI prospects. Artificial-intelligence stocks have a shiny record, but will they prove out? Enthusiasm for AI and strong earnings lifted stocks to new highs, but the industry has been rocked by uncertainty. One issue is cost. The LLM Token Expenditure Index measures token price and usage. It doubled from December to May and is now down 20 percent from its May high, according to Jan-Patrick Barnert and Michael Msika as reported by Charles Riley of Bloomberg. The move can be interpreted in different ways. "One explanation for the recent decline is that AI companies are losing pricing power with increasingly cost-sensitive customers, and that expectations for an eventual AI bonanza could prove misplaced," according to Barnert and Msika. "Another read is that total spend has roughly doubled since last year and cheaper tokens have expanded the market. This means that an index pause is simply digestion, while demand is real and [capital expenditure] is money well spent."
• A hostile crowd. An additional issue for AI companies is opposition to data center expansion. Over the first three months of 2026, more than 75 data-center projects valued at $130 billion were blocked or delayed because of grassroots protests. Many Americans dislike the energy demands and environmental impacts of the enormous installations. "Public pushback is becoming a risk factor for AI companies and their shares," reported Joe Light of Barron's.
• Fresh legs in the ring. A market rotation has begun. As June came to a close, technology stocks fell out of favor, and investors began to find value in other market sectors, including healthcare, industrials, and financials, reported Barron's. In addition, "nervousness about AI valuations has seen investors turning away from U.S. stocks at the fastest pace since March…Investors turned to some international stocks instead, with Japanese equities seeing their biggest inflows in seven weeks…," according to sources cited by Andre Janse Van Vuuren of Bloomberg.

Last week, major U.S. stock indexes rose, and yields on mid- and longer-term U.S. Treasuries moved higher.

Markets at a glance

Data as of 7/2/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	1.8%	9.3%	20.2%	18.9%	11.5%	13.5%
Dow Jones Global ex-U.S. Index	2.1%	12.9%	25.0%	16.1%	6.0%	7.2%
10-year Treasury Note (yield only)	4.5%	N/A	4.3%	3.9%	1.4%	1.4%
S&P GSCI Gold Index	0.7%	-5.0%	22.8%	28.8%	18.3%	11.8%
Bloomberg Commodity Index	0.1%	12.2%	18.7%	6.7%	5.3%	3.5%

What Do You Know About Route 66?

The United States turns 250 this year. It's a remarkable milestone and one worth celebrating. Since the history of the United States is broad and varied, we focused this quiz on one iconic American highway: Route 66. The Economist described it like this:

"Though it began as a motley stitching of state and local roads…it quickly became the main route west, passing through eight states. Farmhands used it to flee the Dust Bowl; so did workers, many of them African-Americans from Texas and Oklahoma, who flocked to California's booming industrial base after the second world war; merry holidaymakers traveled along it to Los Angeles…Services for drivers flourished, including [gas] stations, diners and motels, as did the small towns through which the route passed."

See what you know about the "Mother Road" by taking this brief quiz.

Route 66 turns 100 this year, a noteworthy celebration that aligns with America's 250th birthday. The iconic highway paved the way for modern Americans to answer Horace Greeley's historic call to "Go West and grow up with the country." And they did.

Weekly Focus — Think About It

"The social, and especially the political institutions of the United States, have, for the whole of the current century, been the subject in Europe, not merely of curious speculation, but of the deepest interest. We have been regarded as engaged in trying a great experiment, involving not merely the future fate and welfare of this Western continent, but the hopes and prospects of the whole human race. Is it possible for a Government to be permanently maintained without privileged classes, without a standing army, and without either hereditary or self-appointed rulers? Is the democratic principle of equal rights, general suffrage, and government by a majority, capable of being carried into practical operation, and that, too, over a large extent of country?"
— The New York Daily News, 1860

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The Markets

Lowering inflation may prove to be a challenge.

Last week, inflation was on the minds of investors after one of the Federal Reserve (Fed)'s favorite inflation gauges showed inflation at a three-year high. Both headline and core inflation were well above the Fed's two percent target.

Personal Consumption Expenditures (PCE) Index	May 2026 Price Increase (Year over Year)
Headline inflation	+4.1%
Core inflation (excludes volatile food and energy prices)	+3.4%

This was the third consecutive month of accelerating price increases, reported Megan Leonhardt of Barron's. Prices have been rising, in part, due to the energy shock created by the Iran conflict, but inflation is not just an energy story anymore. Other factors are creating price pressures, including:

• Inflation expectations are changing. When consumers believe that prices will keep rising, they ask for higher wages and spend sooner, pushing prices higher still. The Fed likes to keep expectations anchored with its 2 percent inflation goal. Right now, that anchor is less secure than the Fed would like. Americans who participated in the most recent University of Michigan Consumer Sentiment survey expect inflation to average 4.6 percent over the next year.
• AI is making devices more expensive. The AI build-out requires a lot of advanced memory chips, the same chips inside your phone, laptop, and car. Demand has been outpacing supply, pressuring prices. Last week two major tech companies raised prices on consumer electronics and software. Industry leaders warn chip shortages could persist beyond 2028, reported Don Forbes of Dow Jones Newswires.
• Tariff effects are rippling through. Import taxes don't hit prices immediately. The effects are realized over months as inventories turn over and companies reset prices. Ron Mau and Tucker Smith of the Dallas Fed found that core inflation in March 2026 (3.2 percent) would have been lower (2.3 percent) if there were no tariffs.

Another complication in the Fed's inflation fight is the national debt, which stands at about $39.3 trillion. This year, the annual interest payment on the debt is expected to exceed $1 trillion. Some economists are concerned that deficit-driven spending will make it more difficult for the Fed to fight inflation because higher rates will increase the interest owed, reported Maria Eloisa Capurro of Bloomberg.

Last week, the Dow Jones Industrial Average eked out a gain, while the Standard & Poor's 500 and Nasdaq Composite Indexes fell. Yields on U.S. Treasuries generally moved lower over the week.

Markets at a glance

Data as of 6/26/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	-2.0%	7.4%	19.8%	19.3%	11.4%	13.9%
Dow Jones Global ex-U.S. Index	-2.3%	10.6%	23.5%	15.8%	5.4%	7.6%
10-year Treasury Note (yield only)	4.4%	N/A	4.3%	3.7%	1.5%	1.5%
S&P GSCI Gold Index	-3.5%	-5.6%	22.4%	28.4%	18.1%	12.0%
Bloomberg Commodity Index	-3.1%	12.1%	19.9%	6.7%	5.7%	3.6%

Will Artificial Intelligence (AI) Make Us More Productive?

There is a broad belief that AI will deliver a productivity boom, reinvigorating economic growth in countries around the world, but the path to productivity remains uncertain.

While AI is unquestionably changing the way many people work, not everyone uses it in the same way. Jue Wang, Anne Hoecker, Ann Bosche, Tamara Lewis, and Peter Bowen of Bain & Company wrote, "A small percentage of people at every level have had the visceral 'this is it moment'…The rest (i.e., most) are still at 'I tried Copilot a few months ago; it didn't work well.'"

There are many different theories about where AI will lead us. Here are some possibilities:

AI increases productivity.

According to a 2026 Deloitte report tracking the adoption and impact of AI in companies, two-thirds of participating organizations reported productivity and efficiency gains. Deloitte's U.S. head of AI Jim Rowan stated, "The organizations succeeding with AI aren't just investing in automation and algorithms, they're investing in their people. As AI continues to spark new ways of working, this dual focus — advancing both the capabilities of their talent and AI tools — empowers teams to embrace reimagined business models and sets the foundation for competitive advantage."

AI increases costs.

AI subscription and token costs have been increasing. (Tokens are units of data that determine how much companies pay for AI compute power.) "[AI] Agents consume significant tokens on multistep reasoning, error correction, and context loading, which add up fast on complex workflows…Net-net: The models get less expensive per token, the usage gets heavier per task, and the bill stays stubbornly high," reported Bain.

AI increases efficiency.

Tracy Alloway of Bloomberg recently wrote about the Bank of Korea's study exploring the effect of AI on productivity and output. Korea's central bank discovered a productivity disconnect. AI reduced the time required to accomplish tasks, but the extra time was not used to do more high-value work. The technology improved efficiency but not productivity.

AI increases administrative work.

There is also the possibility that AI will increase administrative burdens rather than relieve them, according to Alloway. "In the U.S., for instance, you hear stories now of insurance companies using AI to reject claims. At the same time, there are startups dedicated to using AI to fight back against insurance claim rejections…You can imagine a future where AI doesn't lead to productivity gains but instead generates an endless stream of bots interacting with bots."

Whether AI delivers productivity gains will depend on how the technology develops and how organizations deploy it.

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The Markets

Americans hope for a peace dividend — lower prices.

Last week, President Trump signed a memorandum of understanding between the United States and Iran. Stock and bond markets welcomed the news.

"Investors are hopeful the 14-point framework will lead to the Strait of Hormuz reopening, which could drag down oil prices and help tame inflation," reported George Glover of Barron's.

It will take time for shipping through the Strait of Hormuz to resume and inflation to ease. Some of the challenges include:

• Building confidence the peace will hold
• Clearing mines from shipping lanes
• Restarting production and refining in Gulf countries

In addition, Iran has said it will charge fees for transit through the Strait. That could raise shipping costs and affect the volume of traffic in through the Gulf.

"For energy markets, the end of the war does not mean the end of uncertainty," reported The Economist.

The Federal Reserve prioritized inflation.

The Federal Open Market Committee (FOMC) met last week. The FOMC is the group within the Fed that decides how to manage interest rates. In its very brief statement, FOMC members confirmed that:

• The U.S. economy is showing solid growth
• Productivity and business investment remain strong
• The labor market is holding steady
• Inflation is well above the Fed's two percent target

Fighting inflation is now the Fed's top priority. The Fed often fights inflation by raising the federal funds rate, an action that can push other interest rates higher and make borrowing more expensive. Among the 18 Fed policymakers who offered rate forecasts for 2026, nine anticipated the federal funds rate will be higher by the end of this year, eight expect rates will remain unchanged, and one thinks rates will be lower.

Over the holiday-shortened week, major U.S. stock indexes moved higher. Yields on U.S. Treasuries with shorter maturities generally rose over the week, while yields on the longest maturities fell.

Markets at a glance

Data as of 6/19/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	0.9%	9.6%	25.7%	19.6%	12.2%	13.7%
Dow Jones Global ex-U.S. Index	1.6%	13.2%	29.9%	15.6%	6.1%	7.2%
10-year Treasury Note (yield only)	4.5%	N/A	4.4%	3.7%	1.5%	1.7%
S&P GSCI Gold Index	0.2%	-2.2%	25.4%	29.7%	19.0%	12.6%
Bloomberg Commodity Index	-1.9%	15.7%	18.9%	7.0%	6.8%	3.6%

Burgers, Wages, and Other Ways People Keep Score

In the United States and elsewhere, people have developed a variety of unofficial ways to track the economy. You don't usually find these measures in government economic data, but that doesn't mean they're not useful. See what you know about America's unofficial economic measures by taking this brief quiz.

Economists have the Consumer Price Index and the Personal Consumption Expenditures Index. The rest of us have less-formal approaches that provide valuable information. There is more than one way to track economic progress.

Weekly Focus — Think About It

"The work of the world is common as mud.
Botched, it smears the hands, crumbles to dust.
But the thing worth doing well done
has a shape that satisfies, clean and evident."
— Marge Piercy, Poet and Novelist

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The Markets

Markets rarely move in a straight line.

Investors had a lot to consider last week. Rising inflation, interest rate uncertainty, and ongoing conflict in the Middle East weighed on markets. Yet stocks finished the week higher amid hopes for peace, enthusiasm for a stock launch, and improved consumer sentiment. Here's a recap:

• Consumer prices rose. The Consumer Price Index showed inflation accelerating to its fastest annual pace in more than three years. Inflation was up 4.2 percent year over year in May. Rising prices remain a challenge for households and continue to complicate the Federal Reserve's (Fed's) efforts to bring inflation back to its two percent target.
• Rate uncertainty persisted. Higher inflation raised fresh questions about how long interest rates will remain at or above current levels. "The high inflation reading has scuttled any plans to lower interest rates in June. The question is whether interest rate cuts are off the table for the foreseeable future," reported Kyle Campbell of American Banker.
• The technology sector oscillated. Technology stocks regained ground after the previous week's selloff, but volatility is likely to persist. "Conviction in technology megacaps, the market's most reliable bets for most of the spring, has deteriorated, forcing the group to flip-flop between losses and gains…the back-and-forth rotation is likely here to stay…as investors weigh signs of a solid economy against rising prospects of restrictive monetary policy," reported Joel Leon of Bloomberg.
• Investor enthusiasm soared. The tech sector also benefited from extreme investor excitement about the launch of a rocketry company's stock. The new stock had high valuations even though the company has an unconventional governance structure. Elon Musk retains "more than 80 [percent] of the voting rights, while also making him chief executive and chief technical officer, as well as chair of the board. He is in effect the only person who can remove himself as CEO," reported Frances Schwartzkopff of Bloomberg.
• The Iran War continued. U.S. stocks fell, then rebounded as the Iran War rollercoaster delivered another drop and climb last week. Major U.S. stock indexes fell after military action escalated in the Middle East, reported The Wall Street Journal. Stock markets rebounded the next day "after President Trump said he canceled plans to strike Iran…and suggested renewed peace talks were happening," reported Connor Smith of Barron's.
• Consumer sentiment improved. The University of Michigan's Consumer Sentiment Index showed consumers were feeling more optimistic. In early June, "consumer sentiment ticked up…with consumers experiencing some relief due to the early-month easing in gasoline prices. This measured improvement in sentiment was widespread, seen across age, education, and political party," reported Surveys of Consumers Director Joanne Hsu.

Major U.S. stock indexes finished the week higher. Yields on most maturities of U.S. Treasuries moved lower last week.

Markets at a glance

Data as of 6/12/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	0.7%	8.6%	22.9%	19.7%	11.8%	13.6%
Dow Jones Global ex-U.S. Index	0.5%	11.4%	24.8%	15.3%	5.3%	7.2%
10-year Treasury Note (yield only)	4.5%	N/A	4.4%	3.8%	1.5%	1.6%
S&P GSCI Gold Index	-2.9%	-2.4%	24.6%	29.1%	17.8%	12.7%
Bloomberg Commodity Index	-2.4%	18.0%	25.3%	9.0%	6.5%	3.8%

What Do You Know About the World Cup?

The FIFA World Cup is finally here. For the next month or so, billions of fans around the globe will be glued to their screens, sleep will be sacrificed, and watercooler talk will debate refs, red cards, and rivalries. Whether you call it soccer, football, fútbol, futebol, calcio, or something else entirely, the World Cup has a way of turning casual observers into enthusiastic fans. See what you know about the beautiful game by taking this brief quiz.

What is your favorite piece of World Cup trivia?

Weekly Focus — Think About It

"I am constantly being asked about individuals. The only way to win is as a team. Football is not about one or two or three star players."
— Pelé, Professional Footballer

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The Markets

There was some good news and some bad news last week.

The good news: Employment gains exceeded expectations last month.

Employers in the United States added 172,000 new jobs in May, similar to April's 179,000 new jobs. The unemployment rate remained steady at 4.3 percent, the average work-week length was about 34 hours, and wages rose.

"The strong payroll growth, steady unemployment rate, and broad-based job gains are unambiguously good news, but Friday's data did show the labor market still has some weak spots…Those who are out of work are also still finding it difficult to get a job. The share of unemployed workers who have been out of work for 27 weeks or more rose to 27.5 [percent] in May, up from 25.3 [percent] in April and 20.4 [percent] a year ago," reported Megan Leonhardt of Barron's.

The bad news: The Federal Reserve probably won't lower the federal funds rate this year. It might raise the rate.

(The fed funds rate is the interest rate at which banks lend money to each other. Other interest rates often move in the direction the fed funds rate moves, increasing or lowering borrowing costs.)

The Fed's two main jobs are to keep employment high and inflation low. Employment is healthy. The long-term average unemployment rate in the U.S. is about 5.7 percent, and the current rate is at 4.3 percent. Inflation, on the other hand, is rising faster than the Fed would like and, in recent months, has accelerated. As a result, the Fed is less concerned about supporting employment and more focused on reducing inflation.

One way for the Fed to fight inflation is to raise the federal funds rate. The move typically pushes other interest rates higher, increasing the cost of borrowing. Higher borrowing costs can slow consumer spending. In addition, higher borrowing costs can reduce company profits. When financial analysts anticipate lower corporate profits, they reassess stock valuations, and stock prices sometimes move lower.

While strong employment numbers are good news for people looking for work, they signal to the Fed that the economy doesn't need the support lower rates might provide. Instead, inflation becomes the Fed's primary focus. Historically, higher rates are a tool the Fed has used to bring prices down.

The possibility of higher rates hit financial markets hard last week.

"Wall Street's historic weekly run came to a halt, with stocks hit by a tech selloff and higher bond yields after a solid jobs report added to bets the Federal Reserve's next interest-rate move will be a hike. That repricing of the Fed outlook coincided with a swoon in the artificial-intelligence shares that had led a surge from this year's lows," reported Rita Nazareth of Bloomberg.

By the end of the day on Friday, major U.S. stock indexes were lower, and yields on all but the shortest maturities of U.S. Treasuries were higher.

Markets at a glance

Data as of 6/5/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	-2.6%	7.9%	24.3%	20.0%	11.8%	13.4%
Dow Jones Global ex-U.S. Index	-1.7%	10.9%	25.5%	15.9%	5.2%	6.8%
10-year Treasury Note (yield only)	4.5%	N/A	4.4%	3.7%	1.6%	1.7%
S&P GSCI Gold Index	-5.0%	0.6%	29.3%	30.3%	18.1%	13.3%
Bloomberg Commodity Index	-1.8%	20.9%	29.0%	9.9%	7.1%	4.2%

Searching for a Social Security Solution

In 2025, the trustees of the Social Security trust fund reported that the fund "will be able to pay 100 percent of total scheduled benefits until 2033…At that time, the fund's reserves will become depleted and continuing program income will be sufficient to pay 77 percent of total scheduled benefits."

As a result, policymakers, researchers, and advocacy groups have been discussing ways to strengthen the program's long-term finances. While there is broad agreement that Social Security's finances should be addressed, there is much less agreement about the best way to address it. As a result, a variety of proposals have emerged, each designed to approach the challenge from a different angle. For example, lawmakers could:

Increase program funding.

Increasing the amount of money flowing into the program could help preserve scheduled benefits and improve Social Security's long-term finances. The Peter G. Peterson Foundation highlighted two ways this could be accomplished, including:

• Increasing the payroll tax rate.
• Raising or eliminating the cap on earnings subject to Social Security taxes to include income above $176,100.

Slow the growth of program costs.

Another approach is to slow the growth of future program costs. Rather than bringing more money into the system, these proposals seek to reduce future obligations. Among the ideas that have been discussed are:

• Gradually increasing the full retirement age for future retirees.
• Reducing benefits for higher-income retirees or taxing benefits received by higher-income households.

Consider different investment approaches.

A third option is to invest the trust funds differently. One recently discussed proposal would create a fund that invests a portion of Social Security's assets in a diversified portfolio of stocks. The idea is that a diversified investment portfolio could generate higher long-term returns than government bonds alone, potentially strengthening the program's finances over time.

At this point, most experts are not focusing on a single solution. Instead, they are evaluating which combinations of solutions might work because a series of modest changes may be easier to implement than one large change. While there is no consensus yet, a solution that combines various ideas could strengthen Social Security's long-term financial health.

Weekly Focus — Think About It

"A nation's greatness lies in its possibility of achievement in the present, and nothing helps it more than the consciousness of achievement in the past."
— Theodore Roosevelt, Former U.S. President

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The Markets

Feeling the pinch of rising prices.

The cost of living is increasing in many places around the world.

"The war has sent oil prices soaring and led to shortages of products like jet fuel. Coal prices have also risen as some power companies switch to coal from natural gas to generate electricity. Countries that depend on other fuel sources — from renewables to nuclear power — have been spared some of the economic hardship so far," reported Avi Salzman of Barron's.

In April, prices in the United States rose at an annual rate of 3.8 percent, with energy prices up 17.9 percent year over year. That was a significant increase from the prior month when prices rose at an annual rate of 3.3 percent, with energy prices rising at a 12.5 percent pace.

For Americans, higher prices have been especially noticeable at the gas pump.

Last Saturday, the average price for regular gasoline was $4.53 per gallon in the United States, and the price of diesel (used by long-haul trucks moving goods across the U.S.) was $5.63 per gallon, according to AAA. Overall, estimates suggest that Americans have spent an extra $20 billion on gasoline due to the war with Iran, reported Enda Curran, Mark Schroers, Ye Xie, and Jorgelina Do Rosario of Bloomberg.

Americans are not feeling optimistic.

When economists want to know how people feel about their personal financial situations and the economy in general, they look at consumer sentiment. In May, the University of Michigan's Index of Consumer Sentiment dropped, reflecting continued concerns about the economy and what may happen over the next year.

Consumer Sentiment Index (May 2026)	Month-to-Month Change	Year-to-Year Change
Current economic conditions	-12.8%	-22.2%
Consumer expectations (next 12 months)	-8.3%	-7.9%

"Sentiment is now just below the previous historical trough seen in June 2022. The cost of living continues to be a first-order concern, with 57 [percent] of consumers spontaneously mentioning that high prices were eroding their personal finances, up from 50 [percent] last month," wrote Surveys of Consumers Director Joanne Hsu.

Last week, solid company earnings and signs of progress toward an agreement with Iran pushed major U.S. stock indexes higher for the eighth week in a row, reported Karishma Vanjani of Barron's. Yields on U.S. Treasuries eased a bit last week.

Markets at a glance

Data as of 5/22/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	0.9%	9.2%	27.9%	21.3%	12.2%	13.8%
Dow Jones Global ex-U.S. Index	1.6%	10.7%	27.9%	15.4%	5.7%	7.2%
10-year Treasury Note (yield only)	4.6%	N/A	4.6%	3.7%	1.6%	1.8%
S&P GSCI Gold Index	-0.9%	5.0%	37.1%	31.7%	19.3%	13.8%
Bloomberg Commodity Index	-1.6%	26.4%	36.1%	11.2%	8.7%	5.1%

What Do You Know About America's Money Mood?

While U.S. consumer sentiment is lower overall, not every American household experiences the economy the same way. Some families are stretching to cover basic expenses, while others are buoyed by strong investment returns. Test your knowledge by taking this brief quiz.

Weekly Focus — Think About It

"In the history of art there are periods when bread seems so beautiful that it nearly gets into museums."
— Janet Flanner, Journalist

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The Markets

The bond market was not happy last week.

The bond market typically doesn't get as much attention as the stock market does, but it is a powerful force in the financial world. When a government, company, or other type of organization needs financing, it may issue a bond. In return for borrowing money, the bond issuer promises to pay a set amount of interest for a certain period and then return the lender's money.

The United States government issues a lot of bonds. It sells U.S. Treasury bills (very short loans), notes (generally 2- to 10-year loans), and bonds (longer-term loans) to investors.

U.S. Treasuries help fund our country's yearly deficit, and national debt. The U.S. deficit is the difference between how much the government spends and how much it receives through taxes and other revenue sources. The national debt is all of the deficits added together minus any surpluses.

"Investors' willingness to buy government bonds, and the price they are willing to pay, depends largely on how risky they consider the bonds and whether they can make more money elsewhere," explained Drew DeSilver of Pew Research.

Some of the factors that investors consider when deciding how much interest is enough interest include economic strength, inflation, outstanding debt, and spending habits. Investors also consider the return potential of other types of investments.

Bond yields moved higher last week as prices fell.

Last week, interest rates on U.S. Treasuries rose sharply as a combination of issues caused bond investors to reassess the amount of interest they wanted to make a loan to the U.S. government. The issues included:

• A lack of progress toward peace in the Middle East. "Oil climbed above $105 a barrel after a Trump-Xi summit in Beijing produced no breakthrough over the Strait of Hormuz standoff," reported Denitsa Tsekova and Isabelle Lee of Bloomberg.
• Concerns about higher prices. In the U.S., wholesale prices rose 6 percent year over year in April and consumer prices increased 3.8 percent year over year.
• The possibility of central bank rate hikes in 2026. "Government bond markets tumbled around the world, sending yields surging from Japan to the US on intensifying fears that the war-driven price shock will force central banks to raise interest rates to contain the impact," reported Burgess and MacKenzie.

By the end of the week, the yield on the 30-year U.S. Treasury bond was 5.13 percent, a level last seen almost two decades ago, according to Karishma Vanjani of Barron's.

"Higher benchmark yields could…present headwinds for U.S. stock prices, as companies and consumers will face higher borrowing costs. This can also weigh on economic growth and corporate profits, while possibly making bond returns more competitive with stocks," reported Amanda Cooper, Karen Brettell, Laura Matthews and Gertrude Chavez-Dreyfuss of Reuters.

Last week, the Standard & Poor's 500 Index eked out a gain despite losing ground on Friday. The Nasdaq Composite Index and Dow Jones Industrial Index both declined for the week, as yields on many maturities of U.S. Treasuries moved higher.

Markets at a glance

Data as of 5/15/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	0.1%	8.2%	25.2%	21.4%	12.2%	13.6%
Dow Jones Global ex-U.S. Index	-1.9%	9.0%	26.6%	14.9%	5.7%	6.9%
10-year Treasury Note (yield only)	4.6%	N/A	4.5%	3.5%	1.6%	1.8%
S&P GSCI Gold Index	-3.2%	5.9%	41.2%	31.0%	19.7%	13.7%
Bloomberg Commodity Index	1.8%	28.5%	38.6%	11.3%	8.6%	5.2%

Artificial Intelligence (AI) Has Become an Infrastructure Story

The United States has experienced several periods of tremendous transformation. Each one required enormous infrastructure investment and reshaped both the United States economy and everyday life.

• In the early 1800s, railroads made transportation cheaper and faster.
• From the 1800s into the 1900s, electric power transmission lit homes and businesses.
• In the mid-1900s, America's new interstate highway system changed transportation and fostered significant economic growth.
• Throughout the 1900s, telecommunications advances supported telephones, radio, television, the internet, streaming, and other innovations.

AI systems require massive amounts of electricity and water infrastructure.

AI is widely understood to be technology that helps companies and individuals automate tasks and improve productivity. However, it has rapidly become an energy infrastructure story, something Americans living near large data centers are experiencing firsthand.

Recently, the power company that supplies energy to Lake Tahoe residents and businesses told the regional utility that it will stop providing power after May 2027. It plans to redirect the power it generates to data centers in northern Nevada, reported Catherina Gioino of Fortune. The regional utility is searching for an alternative power provider.

What is happening in Lake Tahoe illustrates the infrastructure challenges that AI's rapid expansion is creating. The massive data centers that support cloud computing, streaming services, online search, and AI systems require extraordinary amounts of electrical power and cooling capacity. In some cases, a single hyperscale facility can consume as much power as a city, reported Lars Paulsson, Kari Lundgren, and Kati Pohjanpalo of Bloomberg.

Is America's energy grid ready for AI?

A key challenge for AI is that the United States' electrical infrastructure is not ready for a rapid expansion of energy-intensive computing. In 2025, America's energy infrastructure received a grade of D+ from the American Society of Civil Engineers (ASCE), down from a C- in 2021.

"As Americans increasingly depend on electrification in their daily lives, energy demand is experiencing its highest growth in two decades. An increase in electric vehicles (EVs) and a rise in data centers will demand 35 gigawatts (GW) of electricity by 2030 alone, up from 17 GW in 2022," according to the ASCE.

Just as railroads required steel and bridges and the internet requires fiber optics and wireless towers, AI will require a new generation of energy generation, transmission, cooling, and industrial infrastructure.

For investors, the scale of this build-out represents one of the most significant capital deployment cycles in a generation. Amid enthusiasm about the future, it's important to remember that transformational change is accompanied by significant uncertainty. As a result, it's important to hold a well-diversified portfolio that reflects your financial goals.

Weekly Focus — Think About It

"…people respond to incentives. If the price of a good goes up, people demand less of it, the companies that make it figure out how to make more of it, and everyone tries to figure out how to produce substitutes for it. Add to that the march of technological innovation…The end result: markets figure out how to deal with problems of supply and demand."
— Steven D. Levitt, Economist

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The Markets

Looking beneath the surface of the rally.

Stock markets in the United States moved higher last week on enthusiasm for artificial intelligence (AI), strong corporate earnings, and signs of resilience in the U.S. economy, reported Connor Smith of Barron's and Michael Msika of Bloomberg.

What makes this rally interesting is not just its momentum, but also how unusual it is from a historic perspective. It's rare for the Standard & Poor's (S&P) 500 Index to deliver four consecutive years of double-digit gains.

"For stocks, such prolonged…advances only played out in World War II, the period of peace that followed a few years after that conflict and in the bubble of 1995-1999," according to sources cited by Msika.

Much of the market's recent rise has been propelled by a relatively small group of large technology and AI-related companies, while other stocks across the broader market have lagged.

"Through [last] Monday, four out of five closing records for the S&P 500 happened with more stocks declining on those days than gaining. During the April rally, only 23% of S&P 500 members beat the index," explained Edward Harrison of Bloomberg.

A team of strategists cited by Msika says there are signs the rally may be widening. In particular, smaller company stocks and emerging markets stocks may be entering a period of stronger performance after many years of lagging behind.

The current environment is a reminder that stock markets rarely move in predictable patterns. Historically, they've tended to have periods of strength and weakness. Today, market momentum remains powerful, and earnings growth remains strong.

Last week, 89 percent of companies in the S&P 500 had shared performance for the first three months of 2026. "Ten of the eleven sectors are reporting year-over-year earnings growth. Seven of these ten sectors are reporting double-digit earnings growth, led by the Information Technology, Communication Services, Materials, and Consumer Discretionary sectors," reported John Butters of FactSet. Overall profits were up 27.7 percent for the quarter.

Last week, major U.S. stock markets finished higher. U.S. Treasuries rallied, too. Yields on most maturities of U.S. Treasuries moved lower over the week.

Markets at a glance

Data as of 5/8/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	2.3%	8.1%	30.6%	21.4%	12.1%	13.7%
Dow Jones Global ex-U.S. Index	2.7%	11.1%	31.6%	15.3%	5.6%	7.1%
10-year Treasury Note (yield only)	4.4%	N/A	4.4%	3.5%	1.6%	1.8%
S&P GSCI Gold Index	2.2%	9.3%	43.0%	32.5%	20.9%	14.1%
Bloomberg Commodity Index	-1.3%	26.2%	36.2%	10.1%	8.2%	5.4%

Wait, What?

This has been a crazy year, marked by rising inflation, geopolitical turbulence, and a stock market that can't seem to make up its mind. Amid the challenges and uncertainty, people are making the old new again. Here are brief recaps of three stories that recently caught our attention:

Pikachu was worth about $16 million.

If you have a pristine trading card featuring the big-eared, red-cheeked mouse with a lightning bolt tail, you may be holding something surprisingly valuable. A few of those iconic trading cards from the '80s and '90s have become sought-after alternative assets, similar to art and other types of collectibles. Recently, a single rare card sold for more than $16 million. Brandon Gomez of CNBC reported:

"During key periods like the pandemic boom and another surge in 2025, trading card indexes…posted gains that far exceeded the S&P 500′s long-term average annual return of 10% to 12%, according to a trading card valuation tool…The comparison isn't perfect — stock data spans decades, while trends in trading card values are shorter and more volatile — but the outperformance in certain windows is still striking."

The landline is having a moment.

The humble landline is making a comeback. Parents are discovering that corded phones are a surprisingly practical tool, one that helps protect kids from smartphone addiction, social media bullying, and other difficult issues, reported Rheanna Murray of The Atlantic. Landlines also are valuable in emergencies. Ian Sherr of CNET News reported:

"…landlines were once a staple in every home. While they may seem like ancient technology, they still might have a role to play today in your home — especially during a major mobile network outage."

If your smartphone can't make calls, you may be cut off from normal lines of communication.

Barter is back.

In the past, when money was less available, people would exchange goods and services to get what they needed. The practice started making a comeback in 2018, reported Gillian Tett of the Financial Times. In part, that's because technology has made it easier to swap things online. Here's a remarkable example:

Recently, an investment banker offered to exchange his multi-million-dollar estate in Mill Valley, California for privately held shares of a prominent San Francisco startup in the artificial intelligence space, reported Kiri Blakeley of Realtor.com. The 13-acre property "comes with an infinity-edge pool, a spa, a putting green, and sweeping sightlines toward San Francisco Bay, Mount Tamalpais, and the city skyline," reported Cris Tolomia of Quartz. Even better, it's just a 20-minute commute from the AI company's San Francisco office.

Human ingenuity is probably one of the most valuable assets in the world.

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The Markets

The stock market rally continued.

April ended with the Standard & Poor's 500 (S&P 500) and Nasdaq Composite Indexes at record-high levels, having delivered their best monthly returns since 2020, reported Connor Smith of Barron's. In April, investors:

• Leaned into optimism, remaining hopeful for progress in the Middle East. Paul R. LaMonica of Barron's reported, "Markets are looking beyond the Iran war to a year of healthy profits and stock gains. Investors in our latest Big Money poll share that sentiment. Despite the Middle East conflict and other hurdles facing the economy, more than 54% of Big Money participants said they had a bullish outlook for the next 12 months, up from 47% in our survey in October."
• Embraced "pick-and-shovel" companies. During the gold rush, some of the most profitable businesses provided the tools gold miners needed. Today, pick-and-shovel companies provide semiconductor chips and other datacenter necessities. So, while concerns persist about the enormous amounts being spent on artificial intelligence, investors have enthusiastically embraced the beneficiaries of that spending, reported Smith.
• Focused on corporate earnings. Strong overall corporate earnings also drove stock prices higher. At the end of last week, 63 percent of S&P 500 companies had reported first quarter earnings. The blended net profit margin for the Index was 14.7 percent. If profits remain at this level, it will be the highest net profit margin reported since FactSet began tracking it in 2009, reported John Butters of FactSet.

Last week, major U.S. stock markets finished the week higher. Yields on many maturities of U.S. Treasuries moved higher over the week, as well.

Markets at a glance

Data as of 5/1/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	0.9%	5.6%	29.0%	20.2%	11.5%	13.3%
Dow Jones Global ex-U.S. Index	0.5%	8.2%	30.2%	14.6%	5.4%	6.5%
10-year Treasury Note (yield only)	4.4%	N/A	4.2%	3.6%	1.6%	1.9%
S&P GSCI Gold Index	-2.0%	7.0%	44.1%	32.6%	21.0%	13.6%
Bloomberg Commodity Index	3.0%	27.8%	39.1%	10.6%	9.0%	5.2%

The Bond Market Was Less Optimistic Than the Stock Market

While stock markets rallied to new highs last week, the bond market moved in the other direction. In the United States, yields on Treasuries rose while prices fell. Jared Blikre of Yahoo! Finance reported:

"The U.S. 30-year Treasury yield…is back near the danger zone that has sent stocks tumbling before. That zone is roughly 5%…But this is not just a U.S. story. Global bonds have been under pressure, with yields rising across major markets as investors reassess inflation, central bank policy, and government debt supply."

In the United States, inflation, central bank policy, and government spending were top of mind last week.

Inflation moved in the wrong direction, rising to a two-year high.

In March, Americans spent significantly more on gasoline and energy, health care, cars and parts, and insurance. The personal consumption expenditures price (PCE) index, which is one of the Federal Reserve's preferred measures of inflation, showed:

• Headline inflation rose to 3.5 percent annualized in March (from 2.8 percent annualized in February).
• Core inflation, which excludes volatile food and energy prices, rose to 3.2 percent annualized in March (from 3.0 percent annualized in February).

The Fed left rates unchanged.

The Federal Open Market Committee (FOMC), which is the Federal Reserve's (Fed's) rate-setting body, kept the range for the federal funds rate at 3.5 percent to 3.75 percent. The accompanying statement confirmed that:

• Economic growth is steady,
• Employment gains have remained low, on average,
• Inflation remains above the Fed's 2 percent target, and
• Conflict in the Middle East has created a high level of economic uncertainty.

There was dissent among committee members. "Four officials voted against the decision, including three who objected to language in their post-meeting statement that suggested the central bank would eventually resume cutting rates," reported Catarina Saraiva of Bloomberg. The possibility of a rate hike surprised markets, and yields on shorter-term Treasuries increased.

Government spending lifted economic growth.

Usually, consumer spending is the primary driver of economic growth in the United States. Last quarter, consumer spending cooled and economic growth was driven by business investment and government spending.

While improving economic growth is wonderful, higher government spending is less so. Last week, Fitch Ratings warned that the U.S. deficit and debt are far larger than those of other countries with an AA rating. Fitch reported, "The fiscal position [of the United States] will deteriorate in 2026 due to tax cuts in the One Big Beautiful Bill Act (OBBBA), although tariff revenues will offset half the OBBBA's fiscal impact."

Taken together, last week's data painted a complex picture for investors. Rising stock markets, higher inflation, a divided Fed, and a cautious bond market serve as important reminders to stay diversified and maintain a long-term perspective in uncertain times.

Weekly Focus — Think About It

"He that can have patience can have what he will."
— Benjamin Franklin, Poor Richard's Almanack

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The Markets

It's all about how you slice the index pie.

Last week, the Standard & Poor's 500 Index (S&P 500) closed at a new record high even though 329 of its 500 stocks lost value, reported Connor Smith of Barron's.

How is that possible? The S&P 500 is a capitalization-weighted index.

Imagine the S&P 500 as a pie. Each stock in the index is one slice of that pie, and all of the slices are different sizes. The size of each company's slice is determined by its market capitalization. (Market capitalization is a stock's share price times the number of shares outstanding). For example, if:

• Company A has a stock price of $50 and 100 shares outstanding, then it has a capitalization of $5,000.
• Company B has a stock price of $100 and 1,000 shares outstanding, then it has a capitalization of $100,000.

If both companies were in the S&P 500, Company B would be a bigger slice in the index pie.

One of the companies with the largest slices of S&P 500 pie is a chipmaker with a share price of about $200 and more than 20 billion shares outstanding. Its capitalization was recently more than $5 trillion.

A company of this size is called a mega-cap company because it's so large. When mega-cap company stocks gain value, they can pull the entire S&P 500 up, even when smaller companies are flagging, reported Adam Hayes of Investopedia.

In contrast, if the S&P 500 was equal-weighted, every company's slice would be the same size. As a result, every stock would have equal influence, so the index's performance would reflect the performance of all of the companies. If most stocks were falling, then an equal-weighted index would probably move lower.

From a practical perspective, when a capitalization-weighted index is rising, and most of its stocks are falling, then a handful of sizeable companies are performing exceptionally well. Last week, a small group of companies in the S&P 500 did exceptionally well.

It's still early in earnings season, which is the time when companies let investors know how they performed in the previous quarter. With 28 percent of S&P 500 companies reporting actual results so far, the index is on track to report its highest net profit margin (+13.4 percent) in more than 15 years. The Information Technology sector is leading the way with profits for the companies that have reported so far up 29.1 percent in the first quarter of 2026 compared to up 25.4 percent in the first quarter of last year, according to John Butters of FactSet.

"Semiconductor stocks are in the midst of a historic run, a winning streak that is every bit as impressive as Joe DiMaggio's famous stretch of 56 straight games with a hit," reported Paul R. La Monica of Barron's.

Last week, the S&P 500 and Nasdaq Composite finished the week higher, while the Dow Jones Industrial Average lost value. In addition, yields on longer maturities of U.S. Treasuries moved higher over the week.

Markets at a glance

Data as of 4/24/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	0.6%	4.7%	30.6%	20.1%	11.3%	13.1%
Dow Jones Global ex-U.S. Index	-1.6%	7.7%	31.1%	14.2%	5.1%	6.4%
10-year Treasury Note (yield only)	4.3%	N/A	4.3%	3.5%	1.6%	1.9%
S&P GSCI Gold Index	-2.8%	9.2%	41.6%	33.3%	21.6%	14.4%
Bloomberg Commodity Index	3.5%	24.1%	32.3%	8.7%	8.7%	5.1%

Retirement Confidence Falls

Stock markets have been climbing higher, but many Americans are feeling less optimistic about retirement. In fact, retirement confidence in the United States dropped significantly in 2026 on worries about Social Security, Medicare and inflation, according to the 2026 Retirement Confidence Survey conducted by the Employee Benefits Research Institute and Greenwald Research.

In 2026, American workers are less confident than they were in 2025 that they'll have enough money to pay for basic expenses in retirement. Just 58 percent of workers and 71 percent of retirees are confident they will have enough money to keep up with inflation and cost of living in retirement. People who participated in the Retirement Confidence Survey were:

Survey Question	Working Americans		Retired Americans
	2026	2025	2026	2025
At least somewhat confident I'll have enough money to live comfortably in retirement.	61%	67%	73%	78%
Concerned the U.S. government will make significant changes to the American retirement system.	78%	79%	69%	71%
Confident Social Security will provide similar benefits in the future.	50%	51%	60%	65%
Confident Medicare will provide similar benefits in the future.	52%	53%	62%	70%

Alicia Munnell and Gal Wettstein of the Center for Retirement Research at Boston College reported on a survey that found Americans across the wealth spectrum have become more concerned about the impacts of potential changes to Social Security and Medicare on their retirement plans. The concerns have led some to begin saving more for emergencies, delaying retirement, and/or investing more conservatively.

Decisions like these should not be made lightly. For example, investing more conservatively may be a sound choice or it could a choice that makes it more difficult to reach a comfortable retirement. It depends on individual circumstances and goals. Investing conservatively can reduce short-term ups and downs, but it also can limit long-term growth potential and the benefits of compounding.

If you have questions about retirement, please get in touch. We're happy to review your plan or help you build one.

Weekly Focus — Think About It

"Plans are nothing; planning is everything."
— Dwight D. Eisenhower, Former U.S. President

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