Weekly Investment Perspective

Markets delivered another strong week though weekend developments quickly tempered optimism. The S&P 500 and Nasdaq rallied 4.55% and 6.84% respectively, with both benchmarks reaching fresh record highs, while the Dow advanced 3.19% for its third consecutive weekly gain and the Russell 2000 added 5.57%. Friday’s catalyst was clear: Iran’s foreign minister declared the Strait of Hormuz open for commercial vessels, oil prices plunged more than 11%, and stocks surged to all-time highs. By Saturday morning, the relief was over. Iran reversed course and reinstated control of the Strait, saying it would remain closed until the United States completely lifted its blockade of Iranian ports. Over the weekend, the U.S. Navy seized an Iranian-flagged cargo vessel in the Strait after firing on its engine room, and maritime authorities reported gunfire involving Indian-flagged vessels attempting to transit the waterway. The conflict that drove months of volatility has not been resolved, and the latest developments are a reminder that headline-driven swings are likely to continue.

Away from the weekend’s geopolitical developments, last week’s economic releases were more mixed but generally supportive. March core producer prices rose just 0.1% (though they were still up 3.8% year-over-year), below expectations, while both the Empire State and Philadelphia Fed manufacturing surveys came in better than expected and initial jobless claims remained contained. Offsetting that, existing home sales declined 3.6% from the prior month and homebuilder sentiment fell to its lowest level since September. Taken together, the data still points to an economy that is holding up reasonably well, even as more interest-rate-sensitive areas show some softness. Markets also welcomed a return of leadership from large-cap technology and other AI-linked areas ahead of a much busier earnings calendar over the next two weeks, with software and semiconductors among the strongest groups.

Earnings were another source of support for markets last week. Financials got the reporting season off to a solid start, with Bank of America, Morgan Stanley, and BNY Mellon all beating expectations, confirming that balance sheets remain sound and consumer credit is holding. PepsiCo also rose after reporting better-than-expected earnings and revenue. The one notable disappointment came from Netflix, whose strong Q1 results were overshadowed by second-quarter guidance that fell short of Wall Street’s expectations. Commentary from the large banks was also relatively measured on private credit exposure, which helped reassure investors that broader financial conditions have not deteriorated materially.. On balance, first-quarter earnings season is off to a constructive start, and that fundamental backdrop remains an important anchor for portfolios even when headlines are turbulent.

The week’s record highs are a reminder that markets can move quickly when geopolitical risk recedes, even temporarily. The weekend’s reversal is a reminder that this conflict is not over. What remains unresolved is the harder test: whether Washington’s blockade, Tehran’s warnings, and the broader conflict can be converted into a lasting settlement. That question will continue to drive volatility in the near term. In the meantime, the earnings data continue to provide a constructive underpinning. This week, the focus turns to second-round negotiations in Islamabad, the Fed Chair nomination hearing for Kevin Warsh on Tuesday, and the continuing flow of first-quarter earnings.

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