April showed us just how sensitive markets can be to a small number of powerful forces: energy prices, inflation and geopolitical risk. The conflict in the Middle East dominated headlines, with a ceasefire helping steady markets even as energy prices remained elevated.
The stage could be set for further gains if disruptions to key shipping routes are ultimately resolved. Consumers have remained resilient and labor markets stable despite the global uncertainty. In part due to elevated energy prices, inflation remains a thorn in the side of the economy, but it has yet to meaningfully destabilize growth as Federal Reserve (Fed) policymakers stay on the sidelines for now and keep a close eye on supply pressures.
A positive highlight despite these challenges was equity markets, with the S&P 500 posting one of its strongest months since the depths of the pandemic, led by the tech sector back to record highs. The NASDAQ climbed 15.3%, the S&P 500 10.4% and the Dow Jones Industrial Average 7.1%. Propelled by tech strength in Korea and Taiwan, the MSCI Emerging Markets index reached a record high.
US Treasury yields are within two basis points of last month’s close across the board from 3-month to 30-year. These elevated rates kept fixed income opportunities viable despite the tight spreads on corporate and municipal bonds. Sustained high yield levels continue to benefit fixed-income investors.
We’ll dive into more details below, but first, let’s look at how the month of April wrapped up.
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*Performance reflects index values as of market close on April 30, 2026.
A HISTORIC RALLY AMID GLOBAL CONFLICT
The S&P 500 underwent a 13-day rally to close at a new all-time high on April 24, advancing sharply by over 12% thanks to news of progress between the US and Iran. While transits through the Strait of Hormuz are still extremely low and geopolitical risks aren’t going anywhere overnight, market performance despite the conflict signaled that investors are willing to look past oil price risk in the short term. However, with crude still well over $90 a barrel, the stage is still set for volatility.
JOBS GROWTH PERSISTS AMID DECLINING CONSUMER SENTIMENT
While new data is expected to be released soon, private sector employment growth was stronger than expected in March, with hiring by small businesses being particularly robust. Personal income also came in higher than expected, even as prices continued to rise. Meanwhile, first-quarter GDP accelerated to 2.0%, reflecting underlying economic resilience. Despite these indicators, consumer sentiment in April fell 6.7% to its lowest level since 1952.
NEW FED CHAIR ON THE WAY
Kevin Warsh, a known proponent of lower interest rates, is expected to be confirmed soon as the new chair of the Federal Reserve. But as only one member of the Federal Open Market Committee (FOMC), his influence is not absolute. The overall FOMC stance is hawkish, with fighting inflation a top priority over fostering economic growth in the short term.
CONGRESS SIGNALS TOUGHER STANCE ON CHINA
In Washington, the advancement of several AI and semiconductor export control bills demonstrated bipartisan concerns that the current administration has eased its stance too far on allowing foreign access to advanced AI chips. But even with these bills advancing out of committee, they are unlikely to pass in their current forms given President Trump’s desire to solidify a trade framework with China ahead of his May 14–15 meeting with China’s President Xi.
US FUEL PRICES SUBJECT TO GLOBAL OIL MARKET DYNAMICS
Despite the US being self-sufficient when it comes to oil production, Americans are still paying more than $4 a gallon at the pump. While it may seem that domestic gasoline prices should be more or less unaffected, the reality is that oil is an easily transportable commodity, so prices reflect an equilibrium between global supply and demand, regardless of any individual country’s domestic supply.
BROAD RANGE OF EXPOSURE IN ASIA
On the international front, China and Japan are positioned to weather the global oil crisis quite differently than their neighbors in the region. China’s dependence on oil is relatively low despite being the world’s number one oil importer thanks to its widespread use of coal, and Japan’s government capped gas prices to curb inflation in the short term. Elsewhere throughout Asia, however, where as much as 90% of the energy transiting the Strait of Hormuz is bound, there are acute vulnerabilities to continued stalemate in the Middle East.
THE BOTTOM LINE
While the world held its breath hoping for the ceasefire between the US and Iran to hold, markets pushed forward. The market’s optimism, however, is likely contingent on more durable progress being made, and this uncertainty is expected to be a source of volatility in the near term. For now, steady and diversified investors remain well positioned.
- As we move further into 2026, we continue to expect a slowing of economic growth in the United States, but not a recession.
- We will continue to review and update our thesis as the Federal Reserve's interest rate policy is revealed.
- We expect U.S. equities to be volatile for much of 2026, though returns should be positive and more in line with historical averages.
- Cash is king for safety and stability in 2026.
- In 2026, we recommend investors continue to consider an overweight of alternative investments, including both private equity and credit.
- Gold has reached our current target of $5,000.00 per ounce, and we expect it to consolidate between $4,500.00 and $5,500.00 per ounce for the time being.
- We expect continued volatility for cryptocurrencies in 2026.
- Depending on your timeframe, current investment strategies should be based on what’s happening "Now", "Next", and "Later".
- Don’t panic. Be patient. Look to profit.
Sincerely,
Your Investment Team at Great Lakes Wealth
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