The S&P 500 has started 2026 with a relatively normal 1% gain through February 6, but there have been several dramatic shifts beneath the surface. The two best performing sectors of 2025 – Communication Services (home of Alphabet, Meta, and Netflix) and Technology (home of Apple, Microsoft, and Nvidia) – have been the worst performers so far in 2026, while 2025 sector laggards Consumer Staples, Energy, and Materials have started the year strongest. Within Communications and Tech, the key areas of…

Markets have rallied significantly from their April lows, and we are now in a situation where there are healthy year-to-date (YTD) gains in almost all major asset classes.1 Looking at the remainder of 2025, we wanted to provide a balanced look on the current state of the market: Reasons to remain bullish: Corporations are doing well: Earnings growth is solid, dealmaking activity picking up, and companies have been significant buyers of their own shares. For Q2 2025, S&P 500 earnings growth was up…

Israel has conducted significant airstrikes against Iran, targeting nuclear sites, scientists, and military leaders. In response, financial markets are volatile today, especially commodities as crude oil prices spike. How this event influences markets from here will depend greatly on what happens in the coming days and weeks in terms of continued Israeli strikes and Iran’s response, in particular if Israel attacks Iran’s oil infrastructure and if Iran chooses to target American assets or global shipping through the Strait of Hormuz.…

The S&P 500 fell 4.8% today, its largest one-day decline since March 2020. While yesterday’s tariff announcement itself was expected, we think the main points of negative surprise were: The new tariff rates to be imposed were significantly higher than expected for most countries, with Fidelity estimating a rise in the effective US tariff rate from 3% to 26%, making it the highest since WWII There is still a great deal of uncertainty post-announcement. Specifically, we think there are still…

It has been a volatile start to the year, with the S&P 500 now trading down slightly year-to-date (YTD) after peaking at +4.6% on February 19. We believe the most recent decline has been driven by two main factors: Analyst estimates have finally caught up to reality in some of the market’s biggest companies: The days of artificial intelligence-related stocks like NVIDIA blowing the roof off estimates when they report earnings and guidance appear to be over Given the relatively…

Now that the election is over, we wanted to share the main macro issues we will be watching into the new year, along with reasons to remain cautiously optimistic on equities. Key Issues to Watch Washington politics: While President-elect Trump has nominated candidates for many cabinet positions in the past two weeks, none of the main economic roles have yet been filled, most notably Secretary of the Treasury. It also remains to be seen which of his nominees will actually be…

On September 18, 2024, the Federal Reserve’s monetary policymaking body, the Federal Open Market Committee (FOMC), cut its benchmark interest rate by half a percentage point (50 basis points). This was the first rate cut since March 2020. Not only has this announcement received significant coverage, but leading up to this decision the financial press speculated endlessly on the matter. Initially, the speculation regarded whether the rate cut would happen at all and later it focused on the magnitude of…

Global markets are down sharply again this morning, with the S&P 500 currently trading off roughly 8% from its recent highs. Reasons for the sell-off: A sharp unwind of the Tech-driven Momentum trade. From JPMorgan1: “Momentum is a dynamic stock factor that changes its exposure depending on macroeconomic and fundamental conditions. As such, it often becomes crowded, followed by an inevitable and often sharp correction…This extreme Momentum crowding is due to sharp outperformance of right tail momentum, very narrow leadership…

Following the September/October market downturn, 2023 ended with very strong November/December returns for both stocks and bonds, capping off an unusual year for the capital markets. From their October lows, the S&P 500 rose over 15% and US Aggregate Bond Index over 9%, while the 10-year US Treasury yield fell sharply from 5.0% to 3.9%. While the ups and downs we experienced are a normal part of the investing journey, the wide disparity in performance between different types of companies…

The 10-Year US Treasury yield has risen from 3.4% in mid-May to its current 4.7%, the highest level since 2007. The recent weakness in the stock market is a direct result of this latest jump in rates, with the S&P 500 closing yesterday down roughly 8% from its recent July 31 high. The dual drop in both stock and bond prices echoes what occurred throughout 2022, and is a stark departure from the consistently negative stock-bond correlation that prevailed from…