For the period covering April 1, 2026, through April 30, 2026.

Global Perspective

A Resilient Economy Still on Solid Footing

The U.S. economy continues to show durability, with growth holding near trend and the labor market cooling in an orderly way, rather than breaking down. Inflation remains a concern, particularly while the Iran conflict drives oil prices higher. That said, steady growth, resilient consumers, and stable corporate performance all help explain why markets have remained strong and why recession is not the base case, even as risks have incrementally increased.

An Oil Shock Without the Historical Spiral

Oil didn’t just tick up; it spiked to almost $120 per barrel. This drastic increase was fueled by escalating tensions between the U.S. and Iran and sparked one of the most significant energy supply shocks in decades. In prior cycles, that kind of move risked tipping the entire global economy off balance. But this time around looks different. The world is far less dependent on Middle Eastern oil (now roughly 35% of supply versus 55–60%, historically), and the U.S. has transformed into a more resilient producer, with output spread across 30+ states. The result: Volatility surged, but the system held up. In other words, this wasn’t the start of an economic unraveling—it was a stress test. And so far, the market has bent but not broken.

Inflation Pressures Remain High Due to Energy Costs

The issue isn’t just how fast prices are rising anymore—it’s where they’ve landed. After a sharp run-up, the overall price level is now roughly 26% higher, compared to about 13% under a steady 2% inflation path. That gap is sticking, and so is the pressure on everyday budgets. That pressure is driving a stark disconnect: Inflation may be improving on paper, but the cost of living has been reset higher in practice. Even as the pace slows toward ~2.5%, households are still operating in a more expensive world. And importantly, without recent shocks like the spike in oil or tariff-related pressures, inflation would likely already be closer to ~2.1%, which is much closer to the Fed’s target. Instead, progress has been uneven, and for consumers, it still feels like prices haven’t come down. Because they haven’t.

Global Growth Divergence: A World Out of Sync

The global economy is splitting into distinct paths rather than moving in lockstep. The U.S. continues to lead, with Growth around 2.4%, while Europe and Japan lag closer to sub-1% and struggle to gain momentum. Meanwhile, Emerging Markets are picking up speed, delivering stronger growth of roughly 3.5% overall, with China closer to 4.7%. That gap is more than just a headline, as it’s driving real divergence in policy. The Federal Reserve is preparing to cut interest rates, while other central banks are facing very different pressures and may lean tighter. The takeaway: This isn’t a synchronized global cycle but a patchwork economy. And for investors, that creates both risk and opportunity, depending on where you look.

Equity Overview

Earnings Do the Heavy Lifting

Despite shifting headlines throughout April, earnings were the key source of stability for equities. As the month progressed, corporate results consistently came in better than expected, and analysts broadly revised forward earnings estimates higher. By late April, consensus projections were pointing to double-digit earnings growth for the S&P 500 for the year, with profit margins holding near recent highs, despite elevated rates and energy costs. The strength in earnings helped anchor equity markets during April, allowing investors to look through short-term volatility, even as macro and geopolitical risks persisted.

Tech Leadership Shifts, Concentration Persists

For much of this cycle, market gains have been driven by a small group of mega‑cap technology stocks. In April, participation improved modestly, with more companies tied to AI infrastructure and semiconductors joining the rally, and small and mid‑cap stocks also posting strong gains.

That said, leadership remains concentrated. A handful of large technology names still account for a disproportionate share of returns, and overall market breadth remains below historical norms. April reflected stabilization and selective participation rather than a full broad‑based expansion. This is progress, but not yet a structural shift in market leadership.

Much of that incremental improvement came within artificial intelligence itself. Early AI gains were dominated by GPU leaders like NVIDIA, driven by demand for training large models. In April, leadership broadened within semiconductors, with strong performance from CPU‑focused names like AMD (AMD +74.3%) and Intel (INTC +114.1%) as attention shifted toward inference, infrastructure, and deployment. As companies move from building AI to operating it at scale, demand is expanding beyond GPUs and into the broader compute stack, pointing to a more durable phase of adoption.

Global Markets Rebound, Led by Emerging Asia

International equities rebounded strongly in April, participating in the global risk rally as investors looked past geopolitical risks and refocused on earnings and growth. Developed markets posted solid gains, with the MSCI EAFE Index rising roughly 7.5% for the month, though performance generally lagged the U.S.

Emerging markets were the clear leader among international equities. The MSCI Emerging Markets Index gained 14.7%, driven primarily by Asia. Taiwan and South Korea posted outsized returns as capital flowed back into the global AI semiconductor supply chain, benefiting hardware and components exporters tied to datacenter and infrastructure investment. While the rebound was meaningful, leadership within international equities remained concentrated in technology‑exporting regions, rather than broadly across all markets.

Fixed Income Overview

Higher Yields, Mixed Results

Fixed income markets were volatile in April, as higher energy prices and persistent inflation pressures kept rates elevated. Treasury yields moved modestly higher across most of the curve, with the U.S. 10‑year yield ending the month at 4.4%. Rising oil prices and reduced expectations for near-term Fed rate cuts contributed to upward pressure on yields, particularly beyond the very short end of the curve.

 Despite higher rates, credit markets held up relatively well. Investment grade and high‑yield spreads stayed tight by historical standards, supported by resilient corporate fundamentals and strong risk appetite. High‑yield (US Corp HY Index +1.7%) and floating rate loans were among the better performing fixed income segments during the month, while longer duration (US LT Treasury Index -0.7%) lagged due to rate sensitivity.

A Look Ahead

Energy

Oil remains one of the key variables shaping the outlook. After moving back above $100 per barrel, energy prices are once again influencing inflation expectations and market volatility. A meaningful easing in geopolitical tensions could allow oil prices to drift lower, reducing pressure on inflation and helping stabilize markets. If not, elevated energy costs risk keeping inflation sticky and volatility higher.

Fed Balancing Act

The Fed’s challenge today is dealing with inflation that remains stubbornly elevated while signs of labor market softening begin to emerge. Headline inflation has been pushed back above 3%, largely due to higher energy prices, and progress toward the Fed’s target has slowed. At the same time, parts of the labor market are losing momentum, raising the risk of overtightening. Rate cuts later this year remain possible, but they are far from assured. Any sustained pressure from energy prices or broader inflation spillovers could quickly narrow the Fed’s room to maneuver.

Labor

As noted above, the labor market is cooling but not yet broken. Hiring has slowed and job openings have come down from prior highs, signaling easing demand for labor, while layoffs remain relatively contained. A modest rise in unemployment would be consistent with slower growth and could help ease inflation pressures. A broader uptick in layoffs, however, would have more immediate implications for consumer spending and growth. For now, momentum is clearly fading, but the labor market has not reached a decisive turning point.

Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor and affiliate of Wealth Enhancement Group®.

This information is not intended as a recommendation. The opinions are subject to change at any time and no forecasts can be guaranteed. Investment decisions should always be made based on an investor’s specific circumstances. Investing involves risk, including possible loss of principal.

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