May 1, 2026
April 2026 Market Commentary
Markets recovered dramatically, and somewhat surprisingly, in April despite the ongoing war in Iran. Deciding whether investors are extremely savvy, or complacent, is a hard choice. The fact that there has been a cease fire is clearly a factor, but does not fully explain the bullish outlook while oil remains well over $100 per barrel, inflation is accelerating to the 4% range, and global stockpiles of oil, gasoline, diesel, and jet fuel are projected to run out within the next month. Such a development could lead to a further spike in oil prices, and drive inflation throughout the global economy for the balance of 2026.
For the month the S&P 500 surged from a YTD loss of -4.6% in March to a YTD gain of +5.3% by the end of April, to have the best monthly performance since 2020. Global markets also accelerated at a torrid pace, with an increase from -3.9% to +5.2% for the MSCI ACWI (Morgan Stanley All Cap World Index).
Fixed income markets took a different and more pessimistic view, with the US Fixed Income market (as measured by AGG, the iShares US Aggregate Fixed Income Index ETF) softening from a YTD loss of -0.6% in March to -0.8% in April. International Fixed Income (as measured by IAGG, the iShares Global Aggregate Fixed Income Index ETF) moved in sympathy from +0.1% to -0.2% YTD. The key factor being an increase in bond yields as inflation threatens bondholders who now demand higher yields.
The contrasting viewpoint between fixed income and equities is interesting. Declines in fixed income are closer to what most observers would probably have foreseen a month or two ago. At least one observer noted that most Wall Street Professionals are now young enough to have no recollection of events such as inflation of the 1970s, the stock market crash of 1987, the Asian Financial Crises of the late 90s, the Dot Bomb crash of 2000, and even the 2008 Financial Crises. Having come of age over the past two decades when market selloffs usually lead to a quick rebound and a “buy the dip” mentality, perhaps the reaction of the stock market is not a surprise, though one that could be ignoring potentially negative outcomes.
For now, there seems to be little chance of a quick resolution to the War with Iran. Some pundits are now referring not to TACO (Trump Always Chickens Out) but NACHO (Not A Chance that Hormuz Opens). If oil remains well over $100 per barrel for a protracted period and possibly spikes as global stockpiles of fuel evaporate, can markets continue to surge upward? Those with a long-term investment time horizon may be able to ignore these risks and stay fully invested. Those with a shorter-term horizon may be well advised to remain vigilant.
April 5, 2026
March 2026 Market Commentary
Markets in March can be summed up in one word. Uncertainty. The ongoing war in Iran and uncertainty introduced by it put the market into the realm of the unknown during the month. Questions arose as to whether the war would end? When? And with what outcomes? The key variable affecting the global economy and securities prices is, of course, the price of oil. Major price increases from the mid-60s range before the war to prices to as high as $112 per barrel drove major increases for gas prices, concerns that inflation is now accelerating to over 4% per year, and knock on effects that will cause price increases for food, transportation, goods production, and in general price increases throughout the economy. Expectations have gone from 1-2 rate cuts in 2026 to steady rates or even 1-2 rate increases.
Even a resolution of the conflict could result in long-term unknowns. If the USA simply declares victory and walks away will Iran continue to threaten shipping through the Strait of Hormuz? Will oil prices subside, or head to unprecedented levels? Some observers have suggested that oil prices could increase to $150 per barrel, or perhaps even $200 – $300 per barrel, if the USA walks away from the conflict. Implying that the USA may be stuck in a quagmire from which it cannot extract itself. Either way there could be protracted uncertainty, sustained ongoing inflation, and economic unknowns for an extended period-of-time.
Risk-tolerant investors with longer investment horizons may see current prices as an opportunity to jump back into the markets after a quick correction. More risk-averse investors may wish to stay on the sidelines, or only dip their toes into the market and proceed more carefully. In any event, the market seems to be holding on to an optimistic outlook and not yet adopted the view that things could get much worse from here. If sentiment does grow more negative as the conflict and uncertainty drags on, declines could ensue. In any event, markets could continue to be volatile, with major declines or gains. Investors remaining in the markets or buying in at this level should be prepared to stay invested for an extended timeframe to offset the risk of near-term volatility.
February 28, 2026
February 2026 Market Commentary
US Equities continued to be range-bound for the month. Since January 1st the S&P500 has moved sideways, stuck in a range from 6800 to 7000. Fears over the valuations of AI stocks continue to grow, introducing downward pressure on stocks in the near-term. Meanwhile, today’s attack by the United States on Iran introduces significant uncertainty, and could have negative repercussions on stock valuations if the war spreads throughout the Middle East and world oil supplies are threatened.
Meanwhile, International Equities continue to advance. The MSCI ACWI (Morgan Stanley Capital Investment All Cap World Index) increased its YTD gains from 2.2% in January to 2.8% by Feb. 27.
Fixed Income has benefitted as capital seeks a “safe haven.” The US 10 Year Treasury saw its yield decline from a peak of 4.28% on Feb 2 to 3.95% on Feb 27. A dramatic decline in one month of 33 basis points. Remember, bond yields move inversely to price. The decline in the 10 Year Yield below 4% helped push mortgage rates below 6% for the first time since 2022.
In the near-term, with uncertainty over AI, and a new war in Iran, caution is warranted. There is no compelling near-term driver to move stocks higher, while at least a minor self-off of 5% is likely in early 2026. International stocks continue to provide the best option in the near-term. In the US, small and mid-cap stocks, as well as dividend-oriented stocks, are more compelling at this juncture vs large cap equities.
January 31, 2026
January 2026 Market Commentary
Markets, both equities and fixed-income, largely moved sideways in January, at least in the United States. The S&P 500 gained 1.4% for the month, and the US Aggregate Fixed Income Market advanced by 0.25%. Concerns grew about near-term valuations for AI stocks, and investors reacted negatively to bellicose comments by the President over Greenland. Once again, things calmed down when the “TACO trade” (Trump always chickens out) became evident again when Allies pushed back against US Territorial ambitions in Greenland during the Davos get together.
Meanwhile, International stocks advanced more rapidly as the US Dollar weakened. The MSCI ACWI (Morgan Stanley Capital All Cap World Index) advanced by 2.2% during the months. Emerging Markets roared ahead with gains over 10%. South Korea advanced by a stunning 24%!
January 2, 2026
December 2025 Market Commentary
Markets continued to be range-bound during the month, with no major moves either upward or downward. Since Summer 2025 market pundits cannot decide whether we are in a bubble, or if AI stocks continue to offer a spectacular investment opportunity. On the surface the economy and corporate earnings appear to be ok for 2026. However, this seems to be predicated on the belief that inflation remains in check, interest rate cuts will continue to come, the job market will hold up, and that high-end consumers, in our “K-shaped economy”, can continue to power consumer spending on their own while the less well to do struggle with inflation, rising health-insurance costs, and an economy that seems to be less friendly to the lower 90%.
The S&P 500 did gain an impressive 16.7% for the year. However, this was mostly due to the “Magnificent Seven” stocks and those counting on future gains from massive AI Investments. The other 493 stocks in the Index could only muster gains in the single digit range. As evidence of this trend, we may observe that RSP, Invesco’s S&P 500 Equal Weight ETF (which holds an equal weighting in each of the 500 stocks), rose by only 9.6% in 2025. Given that a handful of tech stocks (the “Magnificent Seven and AI-oriented stocks noted above) comprise over 40% of the S&P 500 Index (due to it’s market capitalization weighting for all 500 stocks) and are responsible for all of the impressive gains, this indicates that the other 493 stocks in the Index generally only had gains in the low-to-mid-single-digit range, at best. We can therefore conclude that the overall health of US Stocks is less impressive than might appear to be the case on the surface.
Meanwhile, foreign stocks consistently showed much stronger gains in 2025, with much more reasonable valuations and a more compelling near-term investment outlook for the average stock. The MSCI ACWI (Morgan Stanley Capital Investment All Cap World Index) gained an impressive 19.5% in 2025, beating the S&P 500 by over 3% points. Many individual markets beat that number by a healthy margin, such as Korea’s KOSPI Index, which rose by an astounding 76% in 2025.
Despite short-term interest rate cuts in 2025 by the Federal Reserve, mid-to-long-term fixed income yields appear to have bottomed, and are now trending higher, due to significant tax cuts in the USA (which will drive increased US Government Deficits and borrowing going forward). The US 10 Year Treasury bottomed just at or under 4% in April, October, and November, but since November have trended upward once again, ending the year with a yield of 4.17%.
The trend is also evident in yields for the US 30 Year Treasury, now at 4.87%, up from an April low of 4.42% and a November low of 4.54%. Additionally, the spread between 10- & 30-Year Yields has increased to 68 basis points (68 hundredths of 1%) indicating an ever “steepening” of the US Treasury Yield Curve. While consumers and political pundits focus on short-term rate cuts, the market sees problems ahead for inflation, with mid-to-long-term yields heading upward.
In yet another twist, investors also fear that the US Federal Reserve will lose its traditional independence, and a new Fed Chair to be appointed in 2026 will be sure to take orders from the President, resulting in short-term interest rate cuts, but powering inflation over the longer-term. Pending resolution on these issues the near-term outlook is likely for a continued upward-trend in mid-to-long-term fixed income yields. As a result, mortgage rates (pegged to the 10 Year Treasury Yield), auto loans, and other longer-term financing costs, are likely to continue to remain elevated even while the Fed continues to cut short-term rates. The Fed may control short-term rates, but investors control mid-to-long-term yields. The Bond Market therefore appears to signal a more pessimistic outlook as compared to pundits’ outlook for Stocks.
November 29, 2025
November 2025 Market Commentary
Manic markets continued to debate whether we are in a bubble or not, with fears of an AI bubble dominating through the first twenty days of the month, followed by a rebound in positive sentiment as the month ended. For the month the major indices moved sideways, ending near where the month began. News that inflation held steady also helped send stocks higher as the prospects of a December rate cut by the Fed increased.
Mid-and-small cap stocks, as well as dividend-oriented stocks, showed strength during the month, generally increasing by 2-3%.
Bond yields trended upward past mid-month, before declining yields were observed towards month’s end as the job market and consumer spending appeared to weaken, and inflation held steady.
The debate over AI stock valuations may continue for an extended period, leading to potential volatility. No clear direction seems evident. As the year comes to an end the focus will also begin to incorporate the outlook for 2026. Overall sentiment is mixed, with bulls and bears split over the near-term outlook. Perhaps the best factor for 2026 is that markets tend to climb a “wall of worry”. As a result, stocks may move upward, even as the overall economy weakens and valuations for AI stocks continue to be debated.
Peter Gaylord, CFA
Gaylord Wealth Management, LLC
Rocklin, CA