Market Pulse

April 2026: Q1 recap

Authored by: Melissa Santos Peterson

Following strong gains last year, global markets experienced a volatile and generally negative start to 2026. Investor concerns over geopolitical tensions, rising interest rates and persistent inflation weighed on both equity and bond markets. Markets experienced an uneasy environment in March, concluding a challenging but more balanced first quarter for investors. While geopolitical tensions—most notably the escalation of the Iran conflict—along with persistent inflation concerns created uncertainty, areas of the market demonstrated resilience and underscored the benefits of diversification.

Equities

U.S. equities faced headwinds overall, with the S&P 500 declining 4.3% for the quarter, largely due to weakness in technology and software sectors. However, beneath the surface, market leadership broadened meaningfully. Value stocks significantly outperformed growth across all capitalizations, including a notable 11.9% outperformance in large caps and strong relative gains in mid- and small-cap segments. This shift reflects a healthier, more balanced market environment compared to the narrow leadership seen in prior periods.

International equities also provided relative strength, outperforming U.S. markets for the quarter despite a narrowing performance gap later in the period. While global markets faced pressure from higher energy prices and a stronger U.S. dollar, the ability of international equities to lead highlights the importance of global diversification. Emerging markets, though slightly negative, remained relatively resilient given heightened geopolitical risks.

Bonds

Fixed income markets were challenged by rising yields, resulting in modestly negative returns for core bonds, with the Bloomberg U.S. Aggregate Bond Index declining 0.1% for the quarter. Despite this, credit-oriented sectors delivered more constructive results. High yield bonds generated positive returns of 3.3%, supported by income generation and stable credit conditions, demonstrating the continued role of active management and sector diversification within fixed income portfolios.

Alternatives

Alternative investments were a bright spot, further reinforcing diversification benefits. Gold continued its strong upward trend, rising 8.6% during the quarter amid ongoing inflation concerns and strong central bank demand. Real estate investment trusts (REITs) also posted positive returns, contributing to overall portfolio resilience.

The Federal Reserve maintained a “pause-and-assess” stance, holding interest rates steady while signaling a patient, data-dependent approach. This measured policy response provides some stability as markets navigate an evolving economic backdrop shaped by inflation dynamics and geopolitical developments.

Summary

Looking ahead, while volatility may persist, there are encouraging signs beneath the surface. Broader market participation, resilient corporate fundamentals and strength across select asset classes provide a constructive foundation. As conditions evolve, we believe diversified portfolios remain essential—not only for managing risk, but also for capturing opportunities across a wider range of market segments. As always, we remain focused on managing risk, and identifying opportunities aligned with your long-term financial goals.

Source: Morningstar Direct

March 2026

Authored by: Jeremy Robert

Markets delivered mixed results in February as investors began to rotate away from mega-cap technology stocks toward smaller companies and defensive sectors. The S&P 500 declined 0.5% for the month, reflecting continued weakness in technology companies. The Nasdaq fell by roughly 2.3%, marking one of its weakest months in the past year as investors began to question elevated capital expenditures by companies focused on artificial intelligence (AI).

In contrast, small cap equities delivered a modest positive return of 0.7%. International markets continued to outperform with developed markets (MSCI EAFE Index) gaining 1.5% while emerging markets (MSCI Emerging Markets Index) rose 1.2%, reflecting stronger performance in many Asian and European markets. Fixed income (Bloomberg U.S. Aggregate Bond Index) increased 1.6%, as Treasury yields declined amid moderating inflation expectations and equity volatility drove investor demand for high quality bonds.

U.S. inflation remained steady with February headline consumer price index (CPI) rising 2.4% from a year earlier, according to the Bureau of Labor Statistics. The annual inflation rate was unchanged from January and was in line with expectations. Key drivers included food prices, which increased 0.4% month over month and 3.1% year over year, while energy saw a 0.5% increase for the 12 months ending in February. Core inflation, which eliminates volatile food and energy rose 0.3% for the month and 2.5% year over year, confirming stubborn prices pressures. Shelter prices have stabilized but remain the largest driver of the monthly increase in core CPI, rising by 0.2% since January and rising 3% since this time last year. It’s important to note that these figures were released prior to the conflict in Iran which has caused energy prices to spike and will inevitably have an impact on short term inflation. Inflation remains above the Federal Reserve’s 2% target, and the Iran conflict is a headwind for lower prices, while the labor market has shown signs of significant cooling, putting the Fed in an unfavorable situation with the two sides of their mandate (stable prices and full employment) at odds with each other. The market currently expects the Fed to remain on pause for at least the first half of the year.

Corporations continued to produce strong earnings results for Q4 2025. For the quarter, the S&P 500 reported growth of earnings of 14%, which marks the fifth straight quarter of double-digit growth according to FactSet. Earnings strength was broad, with 73% of S&P 500 companies beating earnings per share (EPS) estimates and 73% delivering positive revenue surprises. The information technology sector continued to show strength, reporting the highest earnings growth of all sectors, growing 33%. Guidance for Q1 2026 was mixed, 57 companies issued positive or raised EPS guidance while 46 companies guided below EPS expectations. The market is pricing in 12.7% earnings growth for Q1 2026 with nine sectors expected to report lower earnings today (compared to December 31) due to lowering EPS expectations. The environment remains uncertain for executives navigating elevated input prices, slowing consumers and escalating conflicts across the globe. Valuations remain above historical averages but less extreme as the 12-month forward price-to-earnings (P/E) ratio sits at 20.0, above the 5-year average (20.0) and 10-year average (18.9).

The Iran conflict will likely result in increased volatility, presenting headwind for markets and the economy. The duration of the conflict is the biggest variable as elevated energy prices will directly impact inflation and consumer confidence. Furthermore, economic data continues to moderate with GDP growth slowing (government shutdown had significant impact) and the labor market conditions softening. It is a fool’s errand, attempting to time the market or the resolution of the conflict, so instead, we believe investors should set aside short/intermediate cash needs while remaining diversified in their longer-term portfolios. A resolution in the conflict could drive a sharp rise in equity prices, and missing the market’s best days may significantly hinder long-term success.

Source: Earnings Insight, FactSet, March 12, 2026

February 2026

Authored by: Jeremy Robert

The market started the year off strong, supported by continued artificial intelligence optimism, broadening leadership and solid earnings, despite increased volatility late in the month. The S&P 500 rose by 1.5% in January while the technology focused Nasdaq was higher by 1.2%. Small cap stocks (Russell 2000) outperformed, climbing 5.5%, boosted by investors rotating out of mega cap technology stocks. International stocks continued to draw investor attention due to attractive valuations and structural reforms, causing them to outperform U.S. stocks. International markets (MSCI ACWI Ex U.S.) were higher by 5.4% in January and the space continues to experience inflows after strong relative and absolute performance in 2026. Fixed income produced minor gains in January. Yields were stable for the month resulting in the U.S. Aggregate Bond Index rising by 0.25%.

Inflation cooled for a second straight month in December with the consumer price index (CPI) showing a rise of 0.3% for the month, and 2.7% year over year. Both were in line with Dow Jones consensus estimate. Core CPI, which strips out volatile food and energy, showed a seasonally adjusted monthly gain of 0.2% and 2.6% on an annual basis. Both figures remain above the Federal Reserve’s inflation target of 2% but reflect that the pace of price increases is heading in the right direction. Shelter prices continued to be sticky, rising by 0.4% and were the largest contributor to the rise in CPI. Shelter represents more than one-third of the CPI weighting and was up 3.2% on an annual basis. Food prices continue to show persistent inflation, jumping 0.7% for the month while energy also rose 0.3% on the month. Moreover, the labor market is frozen, reflecting a low hire and low fire environment as companies look to right size their labor force which boomed post pandemic. Payroll employment grew by 50,000 in December while the unemployment rate stood at 4.4%. Against this backdrop, the Federal Reserve is likely to take a cautious approach to cutting interest rates unless we see a steeper deterioration of the labor market.

Investors were optimistic, heading into the Q4 earnings, with expectations high after strong earnings results in 2026. For Q4 2025, 59% of companies have reported results and 76% of S&P 500 companies reported a positive earnings per share (EPS) surprise and 73% reported a positive revenue surprise according to FactSet. The year over year earnings growth thus far is 13.0% which would mark the 5th consecutive quarter of double-digit earnings growth for the index. Though we have seen strong results on the index level, companies that have not beaten analyst expectations have seen sharp declines in their stock prices as valuations remain elevated. A big focus of the market was the increase in

capital expenditure forecasted by the mega cap technology stocks which were higher than expected and leading many of these companies to tap the debt market. This has led to investor concerns regarding the uncertain timing and size of return on the AI buildout. Earnings guidance has been mixed for the S&P 500 companies, with 23 issuing negative EPS guidance and 28 issuing positive EPS guidance.

Artificial intelligence has dominated the headlines and presents a significant opportunity for investors to receive outsized returns. However, investors are also looking beyond mega cap tech stock to other sectors and capitalizations for beneficiaries of the productivity enhancements produced by artificial intelligence. Diversification is back after years of the technology sector’s dominance, with international markets outperforming the U.S. markets and small/mid cap stocks starting to show strength. Valuations remain stretched relative to historical metrics so we believe investors should focus on asset allocation across regions, sectors and capitalizations while staying true to their investment strategy and avoid trying to time the market.

Source: Earnings Insight, FactSet, Feb. 6, 2026

January 2026: Q4 recap

Authored by: Melissa Santas Peterson

The year finished strong, with both equities and bonds rallying across the board. 2025 was the first year since the pandemic where all major asset classes finished in the green. Investor optimism was driven by resilient economic data, an increasingly accommodative Federal Reserve and continued AI growth momentum. Despite lingering economic concerns like sticky inflation and a cooling labor market, volatility remained subdued. Strong corporate earnings and healthy consumer spending propped up stocks as the S&P 500 returned 2.7% for the quarter and 18% for the year, while the Nasdaq achieved a third consecutive year of notching over 20% gains. International markets dominated throughout the year, a trend not seen in well over a decade. This was a reminder to investors why diversification across sectors, regions and capitalization can be advantageous. International developed and emerging markets notched impressive gains, up over 4% in Q4 and over 30% for the year. Monetary tailwinds supported bonds as the Fed initiated another 25bps cut with the anticipation of more cuts on the horizon. Corporate bonds were up over 9% while municipal bonds were up almost 6% for the year.

Equities:

U.S. equities posted steady gains in Q4; however, unlike prior quarters dominated by mega-cap tech, performance broadened as value stocks outpaced growth, supported by defensive sectors like healthcare. MSCI ACWI, which represents predominantly large- and mid-cap global stocks, was up 3.9% in the second quarter and 22.3% for the year. Value outperformed growth for the quarter. Within small-caps, value outperformed small-cap growth by 2% for the quarter, but underperformed growth by a narrow margin for the year. Large-cap value outperformed large-cap growth by 2.7% for the quarter and underperformed growth by a similar margin for the year. Mid-cap value outperformed mid-cap growth by 5.1% in Q4 and by 2.4% for the year. International growth outperformed international value by 6.2% for the quarter and by 21.7% for the year. International stocks outperformed U.S. for the quarter due to their attractive valuations, and more supportive fiscal and monetary backdrop. Emerging markets were up 4.7% for the quarter, and 33.6% for the year due to a combination of macroeconomic trends, regional policy shifts and investor behavior.

Bonds:

Bonds performed well in Q4 2025 primarily due to lower interest rates, tight credit spreads and investor demand for income. Actively managing duration, credit exposure and asset class mix is key to adding value in fixed income. Bond markets posted positive performance. The Bloomberg Barclays Aggregate Bond Index, which is comprised mostly of government credit and U.S. Treasuries, was up 1.1% in Q4 and 7.3% for the year. Investment-grade corporates were up 1.2% for the quarter and 9.5% in 2025.High yield bonds were up 3.3% in Q4 and 6% for the year, while bank loans were up 1.2% and 5.9% for the year. Credit-sensitive securities benefited from stable fundamentals, yield curve steepening and tightening spreads.

Alternatives:

Alternatives, which provide benefits like income generation and relative value, posted strong results. Strategic income funds play an important role in enhancing diversification and income generation within a portfolio. By investing across multiple fixed-income sectors, they help reduce concentration risk, smooth volatility and capture opportunities for higher yields, all while maintaining a disciplined focus on risk-adjusted returns. Gold continued to rally due to a weaker U.S. dollar, persistent geopolitical concerns and strong central bank demand. Rising 12.5% in Q4, the commodity was up 64.4% for the year.

Summary

As we look ahead, the investment landscape offers a constructive backdrop for diversified portfolios. Global growth is expected to remain modest, inflation should continue to trend lower, albeit slightly above target and the Federal Reserve is anticipated to cut rates easing financial conditions and supporting both risk assets and income opportunities. However, significant risks remain that keep us grounded —among them a softening labor market, elevated equity valuations and ongoing geopolitical tensions. In this environment we believe flexibility, income generation and global diversification are key. Our focus remains on delivering strong risk-adjusted returns through disciplined positioning and proactive management.

December 2025

Authored by Jeremy Robert

Markets were choppy for much of November due to investor unease related to a cooling labor market and declining consumer confidence. A prolonged government shutdown added to market uncertainty resulting in the delayed release of key economic data metrics. Against this backdrop, the S&P 500 finished the month up only 0.3%, ending more than 5% off from its October high. There was notable rotation out of high-flying technology stocks into previously underperforming, more defensive sectors like healthcare, which was the standout sector, up 9.3%. Although the technology-heavy Nasdaq fell by 1.5%, technology companies remain in focus as investors eagerly wait for a return on the massive AI investment, of which the timing remains uncertain. Meanwhile small-cap stocks (Russell 2000) were higher by 1%, and international stocks (MSCI ACWI Ex US) were up a modest 0.12% for the month. Fixed income continued to perform well, as rates fell modestly across the curve resulting in the U.S. Aggregate Bond Index rising by 0.62% and the yield on 10-year treasuries declining to 4%.

We continue to have limited insight as it relates to economic data, given the government shutdown delay. The Federal Reserve emphasizes its need to balance their dual mandate of price stability and full employment. Inflation is moderating but seems to have stalled out at an annual rate of 3%, well above the Fed’s 2% target. The labor market is experiencing a slowdown, characterized by weak hiring, increased layoffs and a general “slow hiring, slow firing” environment. Total nonfarm payrolls for September edged up by 119,000 (last data point), a slower pace of growth that has shown little change since April. The official unemployment rate for September 2025 was 4.4%, an increase from 4.3% in August with expectations for the rate to continue to rise. The market is currently pricing in a more than 90% chance the Federal Reserve cuts on Dec. 10 by 25bps, but the path forward is less certain. Investors will be listening closely to the Federal Reserve’s language to gain clues about the rate cutting cycle going forward, as some Federal Reserve participants have begun to dissent with some believing we need more cuts and some who believe we should be patient.

Q3 earnings season continued to show strong performance from companies in the S&P 500, delivering an earnings growth rate of 13.1% year-over-year. This was significantly higher than initial analyst estimates of 7.9% and marked the fourth consecutive quarter of double-digit earnings growth. Strong performance can be attributed to the technology sector, driven by continued capital expenditures focused on artificial intelligence and solid numbers by financials. We did see strong earnings across the board with 82% of the S&P 500 companies beating consensus earnings per share (EPS) estimates, while 81.6% surpassed revenue forecasts. Despite the strong results, market reactions were often cautious, with less price appreciation for beats and greater punishment for misses than historically typical. Looking ahead, earnings guidance has been mixed for Q4 2025 as 52 S&P 500 companies have issued negative EPS guidance, while 48 have issued positive EPS guidance. For Q4 2025, the estimated year-over-year earnings growth rate for the S&P 500 is 7.7%, which would mark the lowest earnings growth for the index since Q1 2024. Valuations remain rich relative to history but have compressed a bit with the forward 12-month price earnings (P/E) ratio for the S&P 500 at 22.4, above the five-year average (20.0) and 10-year average (18.7).

Volatility is necessary for a healthy market, and November brought a broadening out of market participation beyond technology stocks. Markets have been strong for both U.S. and international stocks this year while fixed income has delivered mid-to-high single-digit returns for investors. The economic outlook remains uncertain, so it is prudent to understand your portfolio holdings, be aware of the potential risks and stick to a disciplined investment strategy.

Source: Earnings Insight, FactSet, Dec. 5, 2025

Authored by Jeremy Robert

Equities and fixed income posted positive returns in October, supported by the continued momentum and asset flows into artificial intelligence (AI)-related stocks. U.S. economic data began to reflect moderating growth and labor market weakness prior to an unprecedented data blackout due to the government shutdown. At the October meeting, the Federal Reserve delivered a widely expected quarter rate cut and announced plans to end its balance sheet drawdown on December 1. However, Federal Reserve Chairman Powell reiterated that future rate cuts were not certain, especially the anticipated rate cut in December. The Fed continues to try to balance inflation, sticky at 3% with a cooling labor market. There was a promising geopolitical development as President Trump struck a deal with President Xi to lower tariffs on China in exchange for Beijing suspending rare earth export restrictions. Investors have been rewarded for buying into market volatility, with the S&P 500 gaining 2.4% in October, while the technology heavy Nasdaq rose by 4.2%. Small-cap stocks (Russell 200) gained 1.8%, lagging large-cap stocks after months of outperformance. International stocks (ACWI ex U.S.) only delivered 1.7% but remain well ahead of U.S. stocks in 2025. Fixed income (Bloomberg U.S. Aggregate Bond Index) was up 0.62%.

Inflation has received less attention from market commentators but remains a focus among economists and investors. The Consumer Price Index (CPI) rose by 0.3% in the month, putting the annual inflation rate at 3%, both of which are below expectations. Excluding volatile food and energy, Core CPI showed a 0.2% monthly gain, and an annual rate of 3%. A 4.1% rise in gasoline prices was the largest contributor to CPI, while food prices were up by 0.2% and commodities overall rose by 0.5%. On an annual basis, energy rose by 2.8% and food rose by 3.1%. Shelter costs, which make up 33% of the CPI, rose by 0.2%, up 3.6% from a year ago. The administration’s tariff policy remains a concern for inflation moving forward. Thus far, corporations have found ways to shift to lower tariff countries as well as absorb a portion of the cost of the tariffs to avoid passing along the full costs on to the consumer. However, the Federal Reserve will be closely monitoring the economic environment as inflation has clearly moderated but remains well above their 2% target.

Earnings season is well underway, and corporations continue to show robust earnings growth. With 64% of S&P 500 companies having reported Q3 2025 results, 83% reported a positive earnings per share (EPS) surprise and 79% reported a positive revenue surprise. For Q3 2025, the blended (year-over-year) earnings growth rate for the S&P 500 is 10.7%, which would mark the fourth consecutive quarter of double-digit earnings growth for the index according to FactSet. Financials and technology were the two largest contributors to the increase in earnings for the S&P 500. Investors will continue to focus on the massive capex guidance for mega cap technology companies who have shown no signs of slowing down spending as the AI race continues. Earnings guidance has been mixed for Q4 2025, as 28 companies have issued negative EPS guidance, while 21 companies have issued positive EPS guidance. Despite strong earnings at the index level, valuations remain above historical averages with the forward 12-month price earnings (P/E) for the S&P 500 now at 22.9, above the five-year average (19.9) and 10-year average (18.6).

Investors continue to look beyond the uncertainty, discounting the impacts of the ongoing government shutdown, geopolitical concerns and historically rich valuations. The truth is that AI could transform the world, so investors may be willing to pay higher prices. We understand that history does not repeat itself, but it often rhymes. Therefore, we believe investors should not expect a smooth ride throughout this evolution, as firms will have to successfully deliver on all the commitments being made now, as well as show a strong return on their investments in the future. We think investors should remain enthusiastic about mega cap technology stocks but also balance portfolio concentration risk with diversification across asset classes, sectors and regions.

Source: Earnings Insight, FactSet, Oct. 31, 2025

Authored by Melissa Santas Peterson

Following a volatile Q2, markets rose during the quarter with major indices reaching all-time highs. This optimism was based on a combination of strong corporate earnings, continued enthusiasm around AI and a Federal Reserve rate cut. Furthermore, despite the uncertainty surrounding U.S. trade policy, the economic data reflected minimal disruption due to tariffs. The Fed cut rates by 25bps in September, citing softening in the labor market, the potential for a slowdown in economic growth and sticky inflation. However, investors shrugged these signs off, viewing these instead as a catalyst for further Fed easing. Even amid this rally, concerns over heightened geopolitical tensions, inflation and rich stock valuations persisted.

Against this backdrop, the S&P 500 ended the quarter up 8%, boosted by continued strength in AI stocks and solid performance within the financial and healthcare sectors. The return differential between U.S. and international equities was notable, with developed and emerging markets outperforming the U.S. by over 3% for the quarter. Overall, the bond market experienced modest positive returns, driven mostly by expectations for more rate cuts. 

Equities

U.S. equity performance has been supported by AI capital expenditures, and for the momentum to continue, these mega cap technology companies will need to keep spending on AI investment. MSCI ACWI, which represents predominantly large- and mid-cap global stocks, was up 7.6% in the second quarter. Style performance was mixed for the quarter. Within small-caps, value outperformed growth by a narrow margin of 0.41% for the quarter, large-cap growth outperformed large-cap value by 5.2% and mid-cap value outperformed mid-cap growth by 3.4% in Q3. International growth outperformed international value by 3.2% for the quarter. Emerging markets were up 10.6% for the quarter, helped by weakness in the U.S. dollar.

Bonds

Fixed income has delivered strong returns this year, and municipal bonds started to outperform recently after lagging taxable fixed income for the past nine months. Bond markets provided stability amidst the uncertainty. The Bloomberg Barclays Aggregate Bond Index, which is comprised mostly of government credit and U.S. Treasuries, was up 2.0% in Q3. Investment-grade corporates were up 1.5% for the quarter. High yield bonds were up 3.3% in Q3, while bank loans were up 1.8%. Credit-sensitive securities benefited from favorable technical, high demand and opportunistic refinancing activity.

Alternatives

Alternatives, which provide benefits like income generation and relative value, posted mixed results. Gold continued to perform exceptionally, reaching record highs driven by central bank demand, geopolitical tensions and a weakening dollar. Rising 17% in Q3, the commodity is up 47% for the year.

Summary

It is difficult to speculate where the market is going from here; however, in the short term we remain optimistic. The market continues to show resilience, riding higher on positive investor sentiment. Corporations have shown the ability to navigate through challenges and produce strong earnings, accommodative monetary policy supports continued spending, and growth may be slowing, but is not recessionary. Beyond the next three-six months, we are cautious as issues that remain a modest concern today can easily grow into a bigger problem down the road – geopolitical conflicts can worsen, tariffs exacerbate inflation more, unemployment rises faster or a yet to be identified issue comes into play.

Diversified portfolios are better built to weather a variety of market environments. Strategic allocations across different asset classes, sectors and geographies allow investors to capture opportunities in various parts of the market, help mitigate the impact of poorly performing assets, while stabilizing overall returns. Further confidence can be found by understanding the underlying holdings. As always, we remain focused on managing risk and identifying opportunities that align with your long-term financial goals.

Source: Morningstar Direct

Authored by Jeremy Robert

Equities continued their upward trend in August, despite some intra-month volatility. Investors grappled with data reflecting increased economic uncertainty, as the labor market showed signs of weakness, growth continued to moderate, and inflation remained stubbornly high. Federal Reserve (the Fed) President Jerome Powell spoke from Jackson Hole, his message providing the market with more confidence that the Fed may begin cutting rates soon. However, their decision remains data dependent, as they consider conflicting economic metrics. Against this backdrop, the S&P 500 rose by 2%, while the technology-heavy Nasdaq rose by 0.9% in August. With the anticipation of interest rate cuts, small cap stocks (Russell 2000) posted a strong month, rising by 7.2%, offering investors some hope that there could be a broadening of market performance outside mega cap stocks. International stocks (MSCI ACW Ex US) had another strong month, delivering a 4% gain, adding to their lead over domestic stocks for the year. Fixed income (Bloomberg US Aggregate Bond Index) was higher by 1.2% as treasury yields were mostly lower for the month.

The Fed’s fight against higher prices continues to prove challenging as the implementation of tariffs is starting to create inflationary pressure. The Consumer Price Index (CPI) increased by 0.2% for the month, with the annual CPI coming in at 2.7%, which was unchanged from June according to the Bureau of Labor Statistics. Core CPI, which excludes volatile food and energy, increased by 0.3% for the month, and 3.1% from a year ago, which was a bit higher than forecasts for 3%. The monthly core rate experienced the biggest increase since January while the annual rate was the highest since February. Shelter costs continue to be a large contributor to the rise in the core index, increasing by 0.2% for the month of July. Inflationary pressures driven by tariffs were reflected in increases in several categories including household furnishings which rose by 0.7% after rising 1% in June. Other tariff sensitive categories saw more modest increases including apparel prices up 0.1%, and core commodity prices up just 0.2%, while canned fruits and vegetables were flat in the month. The jury is still out as to whether tariffs will cause a one-time price increase or will be the catalyst to inflationary pressures, driving prices higher again. We are still far away from the Fed’s 2% target, but markets continue to price at a strong chance the Fed will cut interest rates in September. The August inflation data combined with the labor market data will likely determine if the Fed will cut or hold rates.

The Q2 earnings season is almost wrapped up, with 98% of S&P 500 companies having reported results. Despite the economic uncertainty, corporations have proven resilient, showcasing their ability to navigate through difficult conditions. 81% of S&P 500 companies reported a positive earnings per share (EPS) surprise, and 81% of the companies reported a positive revenue surprise according to FactSet. For Q2 2025, the blended year-over-year growth rate for the S&P 500 is 11.9%, which is strong and would mark the third consecutive quarter of double-digit earnings growth for the index. The dominance of mega cap technology and communications services companies continues to distort the index growth figures since these companies have driven the bulk of the earnings growth. Not only are these companies the beneficiaries of the growth, but the mega cap technology companies are also the biggest investors as a significant portion of NVIDIA’s earnings were derived from Meta, Amazon, Alphabet and Microsoft. The market is forward looking, as are investors. Earnings guidance during the quarterly calls was mixed as 47 S&P 500 companies issued negative EPS guidance while 52 issued positive EPS guidance. Despite strong earnings, the market trades above historical valuation averages with the 12-month forward P/E ratio now trading at 22.4, which is above the 5-year average (19.9) and 10-year average (18.5).

The market continues to move higher despite weakening economic metrics and the flurry of actions by the administration. The labor market and inflation data will continue to dominate the headlines with both moving away from their intended targets but still remaining somewhat in line for now. Investors are concentrating on spending by the mega cap technology players, searching for signs they pull back investment because they anticipate a broader economic slowdown, reminiscent of 2022. For investors looking for more diversification and higher levels of income, fixed income continues to provide a ballast to risk assets. September has historically been a weak month for the stock market, so we would not be surprised to see volatility increase given the complacency experienced over the summer months.

Source: Earnings Insight, FactSet, Aug. 29, 2025

Authored by Jeremy Robert

Stocks continued their strong run in July, up for the third month in a row, as the S&P 500 and Nasdaq reached new highs. Positive momentum was fueled by a strong start to the earnings season, the passage of the One Big Beautiful Bill Act and the easing of tariffs and trade tensions. The data continues to reflect a resilient macroeconomic backdrop, including moderating inflation. The tariff levels, even after negotiated deals, are much higher than seen since the 1930s, yet the expected impact on the economic and inflation data has not played out. However, investors are taking notice of the softness starting to show in the labor market. Artificial intelligence continued to dominate the headlines and boost market sentiment, leading the technology heavy Nasdaq to rise by 3.7% while the S&P 500 rose by 2.2% for the month of July. Small-cap stocks (Russell 2000) were up 1.7% as investors preferred large-cap stocks in this environment. International stocks (MSCI ACWI ex USA) were lower by 1.1% for the month, but still outpace U.S. equities for the year, up 17% year-to-date. Yields bounced around during the month but were relatively unchanged, which led to bonds (U.S. Aggregate Bond Index) finishing the month down by a modest 0.3%.

Inflation was higher in June, as the first signs of the administration’s tariffs are slowly starting to impact segments of the economy. The Consumer Price Index (CPI) increased by 0.3% in the month, bringing the 12-month inflation rate to 2.7% according to the Bureau of Labor Statistics. This was in line with expectations, but still higher than the 2.3% 12-month inflation rate recorded in April and higher than the Federal Reserve’s (the Fed) 2% target. Excluding volatile food and energy, core inflation rose by 0.2% in the month and 2.9% on an annual basis. Vehicle prices fell in the month, which could be attributed to a rush to purchase cars prior to tariffs going into effect. Additionally, tariff sensitive apparel prices rose by 0.4% and household furnishings (influenced by tariffs) increased by 1% for the month of June. Shelter prices increased by only 0.2% for the month but remained the largest contributor to the overall increase in prices, bringing the 12-month shelter inflation to 3.8%. Energy prices rose by 0.9%, still down modestly from a year ago, and food prices increased by 0.3% resulting in an annual gain of 3%. Although June saw a reversal of the previous several months’ trend of lower CPI prices, levels remained relatively tame. The Fed kept rates unchanged in June, leaving the Fed Funds target range at 4.2-4.5%. The Fed continues to be patient, needing more time to determine if the administration’s tariff policy will impact prices and drive inflation higher.

Earnings season is underway, as 66% of the S&P 500 companies have reported results for Q2 2025. Results have been strong with 82% of S&P 500 companies reporting a positive earnings per share (EPS) surprise, which is above both the five- and 10-year averages of 78% and 75% respectively. For Q2 2025, the blended year-over-year earnings growth rate for the S&P 500 is 10.3% according to FactSet, which would mark the third consecutive quarter of double-digit earnings growth for the index. Earnings growth continues to be led by technology and communication services companies, as these sectors are the center of artificial intelligence capital expenditures spending. On the other hand, consumer discretionary and healthcare sectors are the clear laggards in EPS growth. Investors continue to focus on earnings guidance given the uncertainty surrounding the economy and the administration’s economic agenda. For Q3 2025, 30 S&P 500 companies have issued negatives EPS guidance, while 27 S&P 500 companies have issued positive EPS guidance. The market continues to trade at higher multiples than recent averages with the forward 12-month price earnings (P/E) ratio at 22.2 above the five-year average (19.9) and 10-year average (18.5).

Volatility is likely to escalate as we move into the summer months, which has generally been a seasonally weak period for markets. Investors seem to favor risk assets despite a weakening labor market, tariff concerns and the inability for businesses to plan beyond the next few months. We have yet to see the full impact of tariffs and who will ultimately bear the burden, but the consumer is likely to see higher prices on goods imported from outside the U.S. We believe mega-cap stocks will most likely continue to dominate the market, driving the returns for the S&P 500, which will increase the magnitude of volatility in a market downturn. Despite the concentration in a handful of stocks, we continue to find opportunities across regions and sectors while participating in the artificial intelligence theme. Fixed income remains appealing, with historically high yields providing a cushion for potential moves higher in interest rates. We expect markets to be dynamic; therefore, our portfolios are built to withstand volatility and allow investors to stay invested during uncertain times.

Source: Earnings Insight, FactSet, Aug. 1, 2025

Authored by Melissa Santas Peterson

The changing economic and geopolitical landscape kept investors on their toes during the quarter. Markets were shocked in early April by a surprise tariff announcement, hailed as the “Liberation Day” tariffs. Uncertainty over the potential impact of these new costs dominated headlines, sparking volatility and raising concerns over global growth. Against this backdrop, the S&P 500 dropped 12% in a week, and bond yields spiked. However, markets quickly rebounded as policymakers moved to suspend tariffs, initiate trade talks and diminish recession fears.

Furthermore, the Federal Reserve adopted a wait-and-see approach, holding rates steady to maintain the target range of 4.25-4.5%. They cited mixed economic data and the need to balance concerns over tariff-driven inflation and slowing economic growth. Despite the turbulent start, the S&P 500 ended the quarter up 11%, boosted by healthy gains in large cap technology stocks. While technology stocks remain in focus, we're encouraged to see broader participation across the U.S. market as investors seek opportunities with more compelling valuations. The performance differential between U.S. and international equities narrowed significantly, with developed and emerging markets outperforming the U.S. by less than 1% for the quarter. In the bond market, investor focus shifted from expectations of interest rate cuts to concerns over the sustainability of government debt, resulting in muted performance across the credit spectrum.

Equities

U.S. equity performance was driven by strong returns in the technology and communications sectors as investor appetite for some of the high beta stocks returned and Q1 earnings results were robust. MSCI ACWI, which represents predominantly large- and mid-cap global stocks, was up 11.5% in Q2. Growth companies outperformed their value counterparts for the quarter as investor enthusiasm for stocks with exposure to AI returned. International stocks outperformed U.S. for the quarter due to their attractive valuations and more supportive fiscal and monetary backdrop. Emerging markets were up 12% for the quarter, helped by weakness in the U.S. dollar.

Bonds

Although uncertainty around Fed policy and broader economic conditions caused volatility and produced tepid returns in fixed income overall, it also provided opportunities. Bond markets provided stability amidst the uncertainty. The Bloomberg Barclays Aggregate Bond Index, which is comprised mostly of government credit and U.S. Treasuries, was up 1.2% in Q2. Investment-grade corporates were up 2.5% for the quarter. High yield bonds were up 3.3% in Q2, while bank loans were up 2.3%. Credit-sensitive and floating rate securities performed well, supported by a strong technical backdrop and high demand.

Alternatives

Alternatives posted mixed results, with REITs posting a slightly negative return for the quarter and gold continuing to rally due to a weaker U.S. dollar, persistent inflation and strong central bank demand.

Summary

While the market’s speedy rebound from recent lows may encourage complacency, we believe maintaining diversification and thoughtful positioning remains essential. There seems to be a disconnect between headlines and economic data. Uncertainty will most likely persist, with unresolved tariff issues, ongoing geopolitical conflicts and the delayed passage of the “One Big Beautiful Bill” continuing to pose potential risks. However, inflation, unemployment and GDP data continue to trend in the right direction. As we look ahead, gaining greater clarity related to tariffs, tax cuts and potential deregulation should create positive momentum for the markets.

As economic conditions continue to shift, diversified portfolios will help investors mitigate the risks of concentrated exposures while maintaining participation in areas with attractive valuations and the potential to outperform going forward. This quarter has illustrated how important it is to remain invested despite volatility and ambiguity.

Source: Morningstar Direct

Authored by Jeremy Robert

Markets extended their recovery in May despite the uncertainty caused by the administration’s tariff policies, which seemed to change by the hour. Stronger than expected earnings, easing inflation and improving consumer sentiment allowed investors to look beyond the tariffs for the time being. However, concerns regarding the high level of tariffs in place, signs of weakness in the labor market and heightened geopolitical risk persist. Against this backdrop, the S&P 500 rose by 6.2%, while the Nasdaq posted gains of 9.6% as mega cap technology stocks rebounded after delivering strong earnings and reemphasizing their focus on artificial intelligence. Small-cap stocks also experienced a healthy rebound, with the Russell 2000 Index delivering a return of 5.2%, boosted by the proposed tax and regulatory changes in the U.S. budget reconciliation bill. Although U.S. markets outperformed for the month, developed international stocks (MSCI EAFE index) continued to post healthy gains, rising by 4.8%. Emerging markets (MSCI EM Index) rose by 4%, propelled by a weaker dollar. Interest rates continued to rise in May after a credit rating downgrade by Moody’s, a weak 20-year auction and investor attention returned to the significant fiscal deficit. This led bonds (U.S. Aggregate Bond Index) to finish lower by 0.6%.

Inflation continued to trend lower in the month of April, as the Consumer Price Index (CPI) registered a modest increase rising by 0.2% for the month, and 2.3% over the past 12 months. Year-over-year inflation continued to show signs of cooling, reaching the lowest level since February of 2021, according to the Bureau of Labor Statistics. The largest contributor to the increase in April’s inflation was shelter costs, which rose by 0.3% and accounted for more than half of the total increase in the CPI. Energy costs rose by 0.7% due to increases in natural gas and electricity prices, though gasoline prices declined by 0.1% from March. The much talked about egg prices fell by 12.7%, though they were still 49% higher than a year ago. While the recent CPI data has been relatively tame, the market continues to worry about the impacts the Trump tariffs will have on future inflation, especially given that not much progress has been made in trade negotiations. The recent inflation data and tariff uncertainty has the Federal Reserve in a wait and see mode, although we have started to see signs of weakness in the labor market. If we see the labor market deteriorate and no change in tariff policy, the Fed will likely have to choose between their dual mandate of stable prices and full employment.

Earnings season has just about wrapped up with 98% of S&P 500 companies having reported results. Corporations continued to perform above expectations with blended year-over-year earnings growth for the S&P 500 coming in at 13.3%, which would mark the second straight quarter of double-digit earnings growth for the index according to FactSet. 78% of S&P 500 companies have reported a positive earnings per share (EPS) surprise and 64% reported a positive revenue surprise reflecting companies’ ability to deliver strong results against an uncertain backdrop. However, we understand that earnings are backward looking and do not reflect the current tariff policy of the administration. Therefore, guidance was mixed for Q2 2025, with 51 S&P 500 companies issuing negative EPS guidance, 43 issuing positive guidance and many giving no guidance at all. Despite the strong earnings in the rear-view, analysts lowered EPS estimates by 4% from March 31st to May 29th. After the strong rebound by the S&P 500, the forward 12-month P/E ratio is 21.3, above the five-year average of 19.9 and 10-year average of 18.4.

Investors favored risk assets in May, encouraged by the partial rollback of tariffs, which helped to reduce fears of a recession. However, the current ambiguity causes challenges for corporations, consumers and investors as they seek to make plans for the future. In this environment, we expect our globally diversified portfolios comprised of high-quality businesses with strong fundamentals and management teams to perform well. We continue to own fixed income at these attractive yields understanding the importance of locking in a healthy level of income generation going forward. Lastly, we think it is advantageous to follow a disciplined investment approach as this will allow you to remain invested throughout the volatility, ensuring you are capturing the upside of the markets’ best days, which often occur shortly within its worst days.

Source: Earnings Insight, FactSet, May 30, 2025

Authored by Jeremy Robert

Volatility increased significantly during April, as confusion surrounding the administration’s tariff policy rollout caused high levels of uncertainty. Because tariff levels were much higher than anticipated, the announcement was followed by a sharp market sell-off. This reaction led the administration to call for a 90 day “pause,” resulting in an immediate massive recovery in the U.S. equity market. Although economic data has not reflected any weakness yet, consumer sentiment surveys are telling a different story, showing that consumer confidence has plummeted due to economic uncertainty and inflation worries. Against this backdrop, the S&P 500 fell by 0.7% in April, while the technology heavy Nasdaq climbed by 0.9% for the month. As investors continued to look overseas for diversification and cheaper relative valuations, international stocks outperformed U.S. stocks as the MSCI EAFE Index rose by 3.7%, and emerging markets (MSCI EM) were flat for the month. Regarding fixed income, yields across the curve were volatile and spreads began to widen out for both investment grade and high yield debt. Bonds as represented by the U.S. Aggregate Bond Index were modestly higher by 0.4%.

The annual inflation rate in the U.S. was lower for the second consecutive month in March 2025, the lowest since September 2024. The Consumer Price Index (CPI) rose 0.2% for the month, bringing the annual inflation rate to 2.4%, lower than the 2.8% of the previous month and below forecasts of 2.6%. Gasoline prices declined 6.3% from February to March, while food prices (particularly groceries) saw an increase of 0.5% for the month, neutral from the prior month. Additionally, the core CPI, which removes volatile food and energy prices, fell from 3.1% to 2.8%, marking the lowest level since March 2021. Shelter is the largest component of inflation and continues to show progress, easing to 4% in March, the smallest increase since November 2021, according to The Bureau of Labor Statistics. Although the backward-looking data shows progress on inflation, the data does not reflect the impact of the current administration’s tariff policies which were enacted at the beginning of April. Economists believe that tariffs will likely lead to a “one time price hike” rather than continued acceleration of prices.

Earnings season is in full swing for Q1 2025, with 72% of S&P 500 companies having reported actual results. According to FactSet, the blended year-over-year earnings growth rate for the S&P 500 is 12.8%, which would mark the second straight quarter of double-digit growth for the index. Of the S&P 500 companies who have reported results, 76% reported a positive earnings per share (EPS) surprise, while 62% reported a positive revenue surprise. We continue to see the resilience of corporations in the U.S.; however, management teams have taken a more cautious tone in their forward-looking guidance since “Liberation Day,” noting the uncertainty that the administration’s tariff policies may have on business. Many companies have stopped providing guidance altogether or are providing multiple outlooks dependent on recessionary scenario versus the status quo. The forward 12-month price earnings ratio (P/E) for the S&P 500 is 20.2, which is above the five-year average (19.9) and 10-year average (18.3).

Looking ahead, we continue to see ambiguity in the economy which is impacting the behaviors of both corporations and consumers. We expect growth is likely to slow due to the impact of tariffs; however, the administration’s decisions going forward will determine how much GDP growth will slow. We have yet to see the “pro-growth” policies that were expected from this administration, policies like extending and enhancing tax cuts and decreasing regulation, which could revive positive momentum in the second half of the year. Investors can always find reasons to stay on the sidelines and therefore be hesitant to invest in the markets. However, strong recovery days have very closely followed the worst days in the market, so it is important to follow a disciplined investment plan. Our focus on maintaining globally diversified portfolios and strategically adjusting our fixed income positioning has helped manage through the volatility.

Source: Earnings Insight, FactSet, May 2, 2025

Authored by Melissa Santas Peterson

Uncertainty surrounding government policies, rising global tensions and fears of an economic slowdown made for a turbulent start to the year. Concerns were exacerbated by the likely enactment of tariffs, leaving investors to speculate as to how this administration’s strategy will play out. Furthermore, the Federal Reserve decided to remain on the sidelines, maintaining the target 4.25-4.5% range, citing mixed signals, like strong labor market conditions, low unemployment, but elevated inflationary pressures. Against this backdrop, performance was mixed across global markets. The S&P 500 posted its worst quarterly performance since Q3 2022, experiencing a correction of more than 10% since its February peak. Negative returns were concentrated in the technology, communications and discretionary sectors, as investors continued to rotate out of growth stocks. The remaining eight S&P 500 sectors posted a positive performance. Conversely, international markets posted positive returns buoyed by fiscal stimulus, monetary support and improving economic backdrops. Bonds also had a strong quarter, as investors sought stability amid ongoing economic uncertainties.

The optimism we had heading into this year has waned a bit, as we consider the likelihood of persistent uncertainty hindering consumer spending and business investment in the short-term. To understand how the markets will move, the focus going forward will be on tariff policy, the labor market and earnings growth. We anticipate sizeable daily market swings will continue to be the norm, as perceptions change quickly in reaction to headlines. Speculating as to the impacts tariffs will have on the global economy will continue, all while investors hope for the roll-out of market-friendly priorities like deregulation, tax code changes and more supportive fiscal policy which could fuel economic growth.

It is natural to be concerned about the future of the U.S. economy and its impact on the market; its trajectory remains uncertain—as it always does. Risks are always present in the market, but during times like these, it is important not to let fear of losses drive one’s investment actions. Investing in a diversified portfolio, comprised of high-quality companies, and staying true to your strategic approach, can be an effective way to navigate choppy and ambiguous markets. Furthermore, for those who have a long-term horizon, volatile markets can present opportunities to put new money to work or rebalance portfolios.