From the desks of Stanley Katz & Lauren Madera
WISHING OUR FURRY FRIENDS AND THEIR PARENTS A VERY HAPPY NATIONAL DOG PARENT APPRECIATION DAY!
U.S. stocks posted strong gains for a third consecutive week (DJIA: +3.20%, S&P 500: +4.53%, Nasdaq: +6.84%), with several major indexes notching record highs. The S&P 500 closed above 7,100 for the first time ever, and all three major indexes turned positive for the year (DJIA: +2.88%, S&P 500: +4.10%, Nasdaq: +5.28%) — a meaningful reversal from last week, when all three were still in negative territory year-to-date. Geopolitical developments remained a key focus. The ongoing U.S.-Iran ceasefire and optimism around continued negotiations was further reinforced on Friday after Iranian Foreign Minister Abbas Araghchi declared the Strait of Hormuz completely open for commercial vessels following an Israel-Lebanon ceasefire agreement. Oil prices plummeted and equities surged in reaction to the news. In addition, the first wave of first-quarter earnings reports from several major U.S. banks appeared to be well received. Commentary around current economic conditions was generally upbeat, particularly around consumer spending. On the inflation front, producer prices rose at a slower-than-expected pace in March, with core PPI rising just 0.1%, well below the 0.5% estimate. As the fog of the past several weeks begins to lift, first-quarter earnings season has stepped into the spotlight, offering the first real read on how corporate America has weathered the storm.
With geopolitical headwinds easing, attention is now shifting to first-quarter earnings season. The Charles Schwab team has a timely perspective on why it matters beyond just stock prices. Schwab’s Liz Ann Sonders and Collin Martin, in their latest “On Investing” podcast, note that broader corporate profit data from the Bureau of Economic Analysis showed a very strong fourth quarter reading, with pre-tax corporate profits rising to $4.35 trillion — the largest quarterly increase since the second quarter of 2022. That kind of fundamental strength, they argue, may help keep the labor market more resilient than many fear. On the fixed income side, Martin observes that borrowing costs are up modestly this year, driven primarily by rising Treasury yields rather than a widening of credit spreads, which means the picture for most investment-grade borrowers remains manageable. The more concerning signal is at the lower end of the credit spectrum, where the weakest-rated companies have been earning less than they owe in interest payments for roughly two years. Sonders adds an interesting observation on equity market dynamics: quality and profitability have made a sharp comeback in 2026, with profitable stocks meaningfully outperforming their unprofitable counterparts after a year in which the reverse was true. As earnings season unfolds, both analysts will be watching closely for signs that the war’s impact is beginning to filter into corporate guidance.
Zooming out from the earnings picture, Goldman Sachs published its latest Global Economics Wrap-Up this week, offering a concise but consequential update to its forecasts in the wake of the Iran war. With its baseline now assuming that energy flows normalize in the coming weeks, Goldman estimates that higher energy prices will add approximately 0.8 percentage points to global headline inflation and subtract 0.5% from global GDP over the next year. For the U.S. specifically, the firm has raised its December 2026 headline PCE (Personal Consumption Expenditures, the Federal Reserve’s preferred inflation measure) forecast by 1 percentage point to 3.1% since the war began, while lowering its 2026 GDP growth forecast by 0.5 percentage points to 2.0%. Goldman expects the unemployment rate to reach 4.6% later this year as weaker growth translates to softer hiring. Notably, Goldman does not expect the Fed to hike. Instead, the firm anticipates two cuts — in September and December — as rising unemployment and limited progress on core inflation eventually make the case for easing. The reopening of the Strait of Hormuz on Friday, Goldman notes, reduces the risk of the more adverse scenario and represents a meaningful step in the right direction. Goldman’s baseline assumes the positive developments hold. As the past several weeks have demonstrated, however, the situation can shift quickly.
Below are links to a number of third-party research reports that we have read and analyzed over the past week. We hope you will find the information interesting, useful, and worthwhile.
Schwab:
Goldman Sachs:
Capital Group:
Argus:
J.P. Morgan Asset Management:
Stanley Katz & Lauren Madera, Financial Advisors
ClientFirst Financial Strategies, Inc.
937-293-5500
Source for weekly stock market returns: Barron’s.
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