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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