Markets Navigate Geopolitical Risks, Strong Earnings, and Resilient Consumer Demand

Matthew Rubin Chief Investment Officer

 

1. Last week’s ceasefire extension reduced immediate geopolitical risk, but oil prices remained elevated amid ongoing supply disruptions.
2. Earnings reports released last week came in stronger than expected, with profit growth broadening beyond a few market-leading sectors.
3. Various economic reports showed consumer spending and hiring remained steady, supporting expectations for continued economic growth.

 

1. Ceasefire Extension Offers Time for Diplomacy as Oil Markets Stay Tight

Last week, President Trump extended the U.S.-Iran ceasefire, easing concerns about a broader military conflict in the near-term and allowing more time for diplomatic efforts. While the announcement helped calm some market fears, conditions in global energy markets remained strained.¹ Oil prices moved higher as shipping through the Strait of Hormuz continued to face disruptions, and U.S. restrictions on vessels departing Iranian ports remained in place.² Last week, Brent crude rose back above $105 per barrel, while West Texas Intermediate ended the week at $94.2 Both benchmarks are up more than 70% YTD.²

Even so, futures markets suggest investors are expecting the current supply pressure to ease over time rather than become permanent. Current pricing implies that crude oil could return to the mid-$70 range by year-end if transport routes improve and trade flows normalize. A decline of that magnitude would likely reduce gasoline and diesel costs, help moderate headline inflation, and provide relief to industries with high fuel and transportation expenses. For now, markets appear focused on whether temporary disruptions will become a longer-lasting supply issue.

2. Earnings Season Starts Strong with Broad-Based Growth

First-quarter earnings season continued last week, with encouraging results as corporate profits came in stronger than expected. Tesla was the first of the Magnificent 7 companies to report, with earnings per share (EPS) of $0.41 on roughly $22 billion in revenue,³ representing solid year-over-year growth and beating analysts’ expectations of $0.36 EPS.¹

Across the broader market, early earnings trends were also favorable. With about 17% of S&P 500 companies having reported thus far, 84% have exceeded profit estimates.¹ On average, those companies delivered earnings about 13% above expectations.¹ Analysts also raised their forecast for first-quarter earnings growth to more than 12%.¹ If reached, that would mark the sixth consecutive quarter of double-digit profit growth.

Technology companies are expected to lead earnings gains by a wide margin, followed by materials and financial firms. Growth is projected to be broad, with eight of the index’s 11 sectors expected to post year-over-year profit increases.

3. Consumer Spending Holds Up as Labor Market Remains Stable

Economic data released last week showed that U.S. consumers continued to spend at a healthy pace in March, even as higher oil prices raised costs in several areas. Retail sales for March rose 1.7%, following a 0.7% gain in February, slightly exceeding expectations.⁴ Part of the increase came from a sharp rise in fuel sales at gas stations, where spending climbed 15.5% as fuel prices moved higher.⁴

Beyond gasoline, the broader spending picture also remained firm. Control-group retail sales, which remove several volatile categories and are often used to measure core consumer demand, increased 0.7%.⁴ That result was stronger than forecasts, suggesting households are still spending across a range of goods and services.

Labor market data also point to continued stability. The preliminary ADP employment report, which is published weekly and often referred to as the NER Pulse preliminary estimate, showed private employers added about 55,000 jobs in the four weeks ending April 4th.⁵ It marked the fifth straight week of improving job growth.

Together, steady hiring and resilient household spending indicate that consumer activity remained a key support for the broader economy last week. If these trends continue, they could help sustain economic growth for the remainder of the year.

For the period ending 4/24/26.
* Small-cap stocks are represented by the Russell 2000^® Index. International stocks are represented by the MSCI EAFE. Bonds are represented by the Bloomberg US Aggregate Bond Index. Oil is represented by WTI Oil (West Texas Intermediate Oil), a benchmark for light, sweet crude oil and a primary measure for pricing oil contracts and futures in the U.S.

Sources
¹ Bloomberg
² FactSet
³ Tesla Q1 Press Release
⁴ U.S. Census Bureau
⁵ ADP Research Institute

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Comparative Index Descriptions: The Standard & Poor’s (S&P) 500 Index, The Russell 2000^® Index, The NASDAQ Composite Index, The MSCI EAFE Index, Dow Jones Industrial Average^® (Dow Jones or DJIA), The Bloomberg Barclays US Aggregate Bond Index (US Agg Bond), The CBOE Volatility Index (VIX). CSP2026001_17