Markets Stabilizing as Tailwinds Build Beneath the Surface

1. De-Escalation Supporting Markets and Reinforcing the Fundamental Backdrop Recent geopolitical developments have provided a measure of relief to markets, with Iran’s foreign minister indicating that the Strait of Hormuz has reopened in accordance with the ceasefire with Lebanon. This easing in tensions helped drive the recent pullback in oil prices and has reinforced the view that the conflict may prove shorter in duration than initially feared.

Throughout this period, the broader economic backdrop has remained resilient. While growth has moderated, much of the slowdown has been tied to geopolitical uncertainty, and a quicker resolution could allow underlying momentum to reaccelerate. Corporate commentary from the banks last week continues to support this view, highlighting a healthy consumer, improving credit quality, declining loan loss provisions, and stronger-than-expected loan growth.

At the same time, earnings expectations have continued to move higher, with growth now projected around 17%, while valuation multiples have compressed to roughly 20x forward earnings on the S&P 500.¹ Markets have responded accordingly, with a strong rebound from the March 30 lows, as the S&P 500, Nasdaq, and Dow Jones Industrial Average have risen 12.4%, 17.7%, and 9.4%, respectively.² Taken together, the combination of improving earnings, stabilizing macro conditions, and easing geopolitical risk makes it increasingly difficult to take a negative view, while reinforcing the importance of identifying opportunities as the earnings outlook continues to strengthen.

2. Consumer Tailwinds and Select Opportunities in Technology An underappreciated near-term tailwind for the economy is the strength in tax refunds, which are running approximately 11% higher year-over-year.³ Historically, these refunds tend to be spent rather than saved, and when combined with the recent decline in oil prices, they provide a meaningful boost to consumer purchasing power. This dynamic could begin to show up more clearly in retail sales over the coming months, supporting broader economic activity even as sentiment remains cautious. Despite this favorable setup, parts of the consumer and retail landscape have yet to fully reflect these tailwinds, creating a more selective opportunity set for investors.

At the same time, recent market dislocations have created attractive entry points within technology, particularly across software and semiconductors. Many quality, mission-critical software companies have been disproportionately impacted by concerns around AI disruption, leading to significant drawdowns from prior highs. While there will inevitably be winners and losers as AI evolves, companies that provide essential infrastructure and services remain well-positioned over the long term. The recent pullback has allowed investors to gain exposure to these businesses at more reasonable valuations, reinforcing the importance of focusing on durability and competitive positioning rather than short-term market narratives.

3. Industrial Metals Signal Underlying Economic Strength One of the more telling developments beneath the surface has been the outperformance of industrial metals relative to precious metals. Strength in commodities like copper and aluminum, which are typically more sensitive to economic activity, suggests that global growth remains intact despite elevated geopolitical uncertainty.

What makes this trend particularly notable is that copper demand remains strong even in the absence of a traditional housing-driven cycle, pointing instead to structural drivers such as electrification, infrastructure investment, and the buildout of AI-related data centers. At the same time, supply constraints are becoming more pronounced, with the market facing a meaningful deficit this year amid ongoing production challenges, including disruptions at key facilities like Freeport-McMoRan’s Grasberg mine in Indonesia.

Taken together, this dynamic serves as an important cross-check on the broader macro narrative. While economic data can be volatile and subject to revision, signals from corporate commentary and commodity markets continue to point toward resilience. Combined with an ongoing positive earnings revision cycle, these trends reinforce a more constructive outlook for equities once geopolitical uncertainty begins to ease.

4. Fixed Income U.S. Treasury yields declined across the curve last week as geopolitical developments surrounding Iran continued. Sentiment improved modestly after Iran announced the Strait of Hormuz was open for all commercial vessels for the period of the ceasefire, contributing to the decline in yields. By Friday’s close, the 2-, 10-, and 30-year yields fell by 14, 11, and 6 basis points, respectively.⁴

Credit markets strengthened last week with tightening evident across both the investment-grade and high-yield sectors. Investment-grade spreads narrowed 7 basis points to +116, while high-yield spreads tightened 17 basis points to +329. Notably, both markets are now trading at levels tighter than those observed prior to the onset of the Iran conflict. In the municipal market, tax-exempt yields followed Treasuries lower, albeit at a slower pace, decreasing 1-5 basis points across the curve.⁵

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Return for Selected Indices⁶

Sources:

1. Bloomberg: As of April 19, 2026 ↩︎
2. Bloomberg: As of April 19, 2026 ↩︎
3. CNBC: As of April 10, 2026 ↩︎
4. Bloomberg: As of April 19, 2026 ↩︎
5. Bloomberg: As of April 19, 2026 ↩︎
6. Bloomberg. As of April 19, 2026 ↩︎

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