Our team continuously monitors a broad spectrum of market research to identify the trends shaping the current landscape. This week’s selection highlights a fascinating period of internal market turmoil hidden beneath a calm surface. Have a great weekend!
John Luke: Despite headline concerns regarding a cooling labor market, “Real Final Sales” remain robust. This suggests that while hiring might be slowing, actual demand in the economy is holding firm.
Dave: The consumer is about to receive a seasonal tailwind in the form of tax refunds, which are projected to be roughly $10 billion higher than last year. This extra liquidity could provide a meaningful spark for spring spending.
Mark: On the surface, the S&P 500 has been remarkably calm, trading within its narrowest year-to-date range in over 15 years.
JD: But don’t let the index level fool you—the “quiet” at the top masks significant turmoil underneath. While the index remains range-bound, the volatility of individual stocks continues to soar.
Brian: This internal dispersion is most obvious in Technology. We are seeing a massive “great divide” where hardware stocks soar on infrastructure demand while software companies plummet on fears that AI agents will eventually replace traditional platforms.
Derek: Despite the recent software slump, the sector’s long-term relative strength remains intact. Historically, periods of underperformance like this have been healthy resets within a larger structural bull market for the industry.
David: The Magnificent 7’s influence extends beyond market performance and earnings; they are now a primary engine of global GDP through massive investment. Remarkably, CAPEX from these seven companies now accounts for 35% of the total capital expenditure within the S&P 500.
Joseph: While the “Magnificent 7” continues to dominate the narrative, the outsized CAPEX has narrowed their valuation premium. Surprisingly, the valuation gap between the Mag 7 and the broader S&P 493 is now at its tightest level in nearly a decade.
Brad: Over the last decade, a bad start doesn’t guarantee a bad year, but a strong start has consistently signaled a winning one.
John Luke: The S&P 500 is on track for its fifth straight quarter of double-digit earnings growth. Tech, Industrials, and Materials are leading the charge, fueled by the AI capex cycle. While revenue grew a solid 8.8%, the bar is getting higher; sustaining this pace will be the next big challenge.
Beckham: Positioning during an easing cycle depends heavily on the economic backdrop. If the Fed is cutting into economic growth, favor equities. If the cycle coincides with a recession, bonds are the place to be.
Brett: Assets in options-based ETFs are soaring. Investors are hungry for defensive, innovative ways to stay invested while hedging against broader market risks.
Jake: Earnings forecasts for 2026 are trending up, and the outlook for 2027 looks even stronger.
Matt: Small caps just endured one of their longest periods of underperformance in history. Is this the breaking point for a massive reversal?
Disclosures
Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. Forward-looking statements cannot be guaranteed.
Projections or other forward-looking statements regarding future financial performance of markets are only predictions and actual events or results may differ materially.
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