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Weekly Market Commentary | Warsh Fed Regime: Policy Shifts & Treasury Market Impacts | May 11, 2026

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A New Fed Regime: Warsh, Policy Direction, and Treasury Market Consequences

LPL Research explores how a potential Warsh-led Fed could reshape policy, Treasury markets, and volatility amid rising deficits and shifting demand.

The Post-Powell Transition: As Jerome Powell’s tenure as Federal Reserve (Fed) chair draws to a close, markets are beginning to look beyond the familiar playbook that has guided monetary policy for much of the past decade. A likely transition to a Kevin Warsh–led Fed would represent more than a change in leadership — it could signal a shift in how the central bank interacts with markets, balances transparency with discipline, and defines its own role in the financial system.

A Smaller Fed Footprint: Warsh has consistently argued for a smaller Fed footprint, less explicit guidance, and a greater role for market price discovery. These priorities arrive at a delicate moment, as Treasury supply remains elevated and fiscal concerns are becoming harder to ignore.

Implications for Investors: For investors, the post-Powell era may be defined less by what the Fed promises and more by how markets respond when those promises are pared back, raising important questions about volatility, yields, and the true cost of capital in the Treasury market.

The Fed’s Next Chapter: Kevin Warsh and a Shift in Monetary Policy

As of early May 2026, the Fed stands on the cusp of one of its more significant leadership transitions in recent memory. Jerome Powell’s term as chair concludes on May 15 after guiding the central bank through the post-pandemic inflation surge and a rate-cutting campaign seemingly on hold, and Kevin Warsh — a former Fed governor, investment banker, and vocal critic of post-2008 monetary policy — appears poised for confirmation. Powell has signaled he will remain on the Board of Governors for an “indefinite period” until the ongoing investigation concludes with finality, providing continuity but explicitly declining any “shadow chair” role. His role as Fed Governor ends January 2028.

This handover occurs against a backdrop of robust but uneven economic growth, persistent fiscal expansion, and elevated public debt. For investors, the implications extend beyond short-term rate expectations. Warsh has articulated a clear preference for a smaller Fed footprint — through accelerated balance sheet normalization — and a deliberate reduction in forward guidance. These shifts could reshape market pricing dynamics, increase volatility, and intersect directly with mounting concerns over U.S. Treasury sustainability. In an environment where fiscal deficits remain structurally large, a less accommodative Fed could amplify pressures in the government bond market while forcing greater price discovery in risk assets.

Warsh’s Policy Framework: A Return to Restraint

Warsh’s approach to monetary policy is shaped by a more traditional view of what the Fed should and should not do. Rather than leaning heavily on intervention and detailed promises about the future path of rates, Warsh has consistently argued for restraint, humility, and a greater reliance on incoming data. During his Senate confirmation process, he described the coming shift not as a change in people, but as a change in how policy is conducted: a smaller Fed balance sheet and less emphasis on explicit forward guidance than has defined the Bernanke-Yellen-Powell era.

At the center of this philosophy is a belief that the Fed’s role expanded too far after the Global Financial Crisis. While extraordinary measures may have been justified at the time, Warsh argues they gradually became embedded features of policy, even as emergency conditions faded.

Rethinking the Fed’s Balance Sheet

Warsh has been a long-time critic of quantitative easing, referring to it as “reverse Robin Hood.” In his view, large-scale asset purchases supported financial markets and asset prices far more than the broader economy, widening wealth gaps and distorting how capital is allocated. As of late April 2026, the Fed’s balance sheet stood at around $6.7 trillion — still more than three times its pre-crisis size relative to the economy. To Warsh, this lingering expansion is evidence that the Fed never fully stepped back from its emergency footing.

The Fed’s Balance Sheet Remains Elevated

_{Source: LPL Research, Bloomberg, 05/05/26}

He also sees an oversized balance sheet as blurring the lines between monetary policy and fiscal support. By absorbing a large share of Treasury issuance, the Fed has effectively muted the market’s signal about government borrowing costs, reducing discipline on fiscal policy and making it harder for markets to assess risk.

Shrinking the Footprint — Gradually

Warsh’s proposed solution is straightforward, even if its execution is not. He favors returning the Fed’s asset holdings to a narrower focus on Treasuries and allowing securities to roll off over time, shrinking the balance sheet naturally rather than selling assets aggressively. This would steadily reduce the Fed’s presence and allow private investors and banks to take on a larger role.

Importantly, Warsh has suggested that balance sheet reduction could accompany easier interest rate policy — effectively pairing rate cuts with continued runoff. In that framework, policy support would come through rates rather than through ongoing asset accumulation. Over time, this would push more interest rate risk back into the market, likely leading to higher yields at longer maturities and greater price swings.

From Warsh’s perspective, this is a feature, not a bug. He believes markets function best when prices reflect risk rather than central bank reassurance. A smaller Fed balance sheet, in his view, would help restore healthier price discovery and reduce expectations of Fed intervention during periods of fiscal or market stress.

That said, shrinking the balance sheet further would require the banking system to operate comfortably with fewer reserves. Without changes to the current post-2008 framework — which encourages banks to hold large reserve cushions — the Fed’s ability to downsize meaningfully without triggering market disruptions could remain limited.

Less Guidance, More Market Discipline

Alongside balance sheet reduction, Warsh has been openly skeptical of the Fed’s modern communications toolkit. He has criticized heavy reliance on dot plots, frequent press conferences, and detailed rate signaling as creating an illusion of precision. In colorful terms, he has likened excessive forward guidance to “central bank fast food” — easily consumed, but not particularly nourishing.

Under a Warsh led Fed, investors should expect fewer explicit rate commitments and less commentary designed to smooth over near‑term volatility. The communications style would likely resemble an earlier era: less frequent, more measured, and intentionally ambiguous, encouraging investors to focus more on economic fundamentals — growth, inflation, and fiscal trends — rather than parsing every word from the Fed.

Market Implications: More Volatility, Fewer Promises

A pullback from detailed guidance would almost certainly come with tradeoffs. In the near term, interest rate volatility would likely rise, particularly at the front end of the curve, as markets adjust to less advance signaling. Equity and credit markets could also experience sharper repricing around data releases, as expectations shift more abruptly.

Over time, however, a less talkative Fed may reduce the risk of policy mistakes caused by overpromising support or backing itself into corners it later struggles to exit.

History offers a cautionary reminder here. The 2013 Taper Tantrum showed just how sensitive markets can be to changes in Fed messaging. Simply hinting at a reduction in asset purchases, without any actual tightening, was enough to send Treasury yields sharply higher within months. That episode underscores both the power of Fed communication and the potential consequences when that communication shifts.

Under Warsh, those shifts would be intentional: fewer guarantees, fewer safety nets, and a greater role for markets in setting prices, even if that means more volatility along the way.

Fiscal Pressures Move into Focus: Warnings Grow Louder

The potential shift in Fed leadership comes at a time when concerns about U.S. fiscal health are becoming harder to dismiss. In late April 2026, Fitch Ratings cautioned that persistently large deficits are likely to keep U.S. debt levels well above those of similarly rated sovereigns. The agency expects overall government deficits to run around 8% of gross domestic product (GDP) in both 2026 and 2027, reflecting a mix of recent tax cuts, elevated defense spending, and uncertain tariff revenue. Under those assumptions, the federal debt is projected to climb above 120% of GDP by 2027. Longer-term pressures tied to an aging population and recurring political standoffs over the debt ceiling, only add to the risk profile.

The International Monetary Fund (IMF) has delivered a similarly sobering message, expecting little additional improvement, with shortfalls stabilizing closer to the 7–7.5% range in coming years, and gross federal debt exceeding 140% of GDP by the early 2030s. Of particular concern, the IMF points to a growing reliance on short-term borrowing and warns that stabilizing debt would require a sizable fiscal adjustment.

Budget Deficits Need To Be Filled With Treasury Securities

_{Source: LPL Research, Bloomberg, 05/05/26}

These warnings are no longer theoretical. Debt held by the public has already risen above 100% of GDP for the first time since World War II. Annual interest costs on that debt now exceed $1 trillion, consuming $0.20 of every dollar of federal revenue. Looking ahead, deficits are projected to average above 6% of GDP over the next decade, implying a steady stream of heavy Treasury issuance. As demographic pressures intensify and entitlement spending grows, the window for an orderly fiscal reset appears to be narrowing — and markets may increasingly demand higher compensation to finance it.

A Heavier Supply Era: Treasury Issuance Meets a Changing Buyer Base

U.S. Treasury issuance has entered a new phase. After years of pandemic-era borrowing and structurally higher deficits, the supply of government debt remains far larger than it was before 2020 — and it is not coming down meaningfully anytime soon. Auction sizes are broadly running well above pre-pandemic norms, and recent fiscal legislation has reinforced a “higher for longer” borrowing outlook. What matters just as much as the volume of issuance, however, is who is being asked to absorb it.

Treasury Auction Sizes by Maturity Bucket

Source: LPL Research, Bloomberg, 05/05/26

For much of the past decade, Treasuries have benefited from a pair of reliable, price insensitive buyers. The Fed, through quantitative easing, bought duration regardless of yield, mechanically suppressing the term premium. Foreign central banks played a similar role, recycling trade surpluses into Treasuries as part of reserve management. Both anchors have weakened. The Fed is shrinking its balance sheet, and foreign official demand has faded as global reserve managers marginally diversify away from dollar-denominated assets. While the dollar’s reserve currency status remains intact, the identity of the marginal buyer has shifted decisively toward private investors.

Today’s buyers — domestic asset managers, insurance companies, hedge funds, and banks — are far more price sensitive. Unlike central banks, they require adequate compensation to take down supply. As issuance grows and demand becomes more discriminating, yields must do more to clear the market, raising the risk of higher term premiums and less predictable absorption of new debt.

What the Latest Treasury Guidance Tells Us

Last week’s Treasury Quarterly Refunding Announcement (QRA) underscores this dynamic. Borrowing needs remained large and increasingly front‑loaded, even though near‑term projections were broadly in line with expectations. Treasury revised up its estimate for second‑quarter marketable borrowing and projects a sizable borrowing requirement for the third quarter of 2026, in part to maintain higher Treasury General Account balances as a buffer against larger outflows and rollover risks.

At the same time, the issuance cadence is not changing. Treasury held auction sizes steady across nominal coupons, Treasury Inflation-Protected Securities (TIPS), and floating-rate notes for another quarter, reinforcing its message that current auction sizes are likely to persist for several more quarters — which means the Treasury will continue to rely on shorter-maturity Treasury Bill issuance. Heavy borrowing needs and unchanged issuance guidance imply that any future increases in coupon sizes are being pushed further out. Current expectations center on mid-2027, with the likely focus on intermediate maturities — particularly the two- to seven-year sector — where demand conditions will ultimately dictate timing.

The Bottom Line

The transition to a Kevin Warsh led Fed would represent more than a change at the top. It would signal a potential philosophical shift toward a leaner, less interventionist, and less communicative central bank at a time of rising fiscal pressures. Warsh’s emphasis on balance sheet reduction and pared back forward guidance is rooted in restoring market discipline, but it arrives against a backdrop of historically large deficits and rising debt service costs.

Whether this vision can be fully implemented remains an open question. Internal dynamics within the Federal Open Market Committee, combined with external political and fiscal constraints, will shape how far and how fast change can occur. As Mike Tyson famously quipped, “Everyone has a plan until they get punched in the mouth.” While no punches are expected, a policy environment marked by debate, dissent, and compromise seems likely. With the Committee increasingly aligned around a “higher for longer” posture, and with Powell’s continued presence limiting the scope for an abrupt dovish pivot, the odds of aggressive rate cuts under a Warsh chairmanship appear low, in our view.

Importantly, despite a growing debt burden and rising interest costs, the U.S. is not on the verge of a fiscal crisis, nor is the Treasury market at risk of losing its foundational role in the global financial system. Demand will persist, and deficits will be funded. The more relevant question for investors is not whether Treasuries will be bought, but at what price. To date, markets have absorbed supply without protest, suggesting that dire predictions about the immediate end of Treasury exceptionalism remain overstated.

That said, if Warsh’s framework is meaningfully advanced — a significant “if” — the era of abundant central bank insurance may be fading. A return to a more classical policy regime would place greater emphasis on fundamentals, price discovery, and risk differentiation, with a byproduct of volatility as the market does more work

For portfolio construction, this argues for flexibility and discipline. Fixed income investors may favor short-to-intermediate maturities or selective TIPS exposure to balance income generation with duration and inflation risks, while maintaining caution toward the long end of the curve until fiscal credibility improves. Credit markets may face headwinds from higher risk-free rates and a diminished Fed backstop, increasing the premium on issuer quality and balance sheet strength. While the adjustment may be uneven, elevated yields continue to offer attractive income opportunities, particularly for investors prepared to navigate a world with fewer policy promises and more genuine market signals.

Asset Allocation Insights

LPL’s Strategic and Tactical Asset Allocation Committee (STAAC) recently moved its equities recommendation to a tactical overweight and fixed income to underweight to reflect the improving macroeconomic backdrop.

Within balanced portfolios, this adjustment reflects two related changes: neutralizing the underweight to U.S. small cap value and reducing exposure to mortgage-backed securities (MBS) to fund that move. From a portfolio construction standpoint, this lifts equity exposure slightly above benchmarks while keeping overall risk well within the intended tactical range. This reflects improved expected equity returns following market weakness, alongside a more cautious outlook for select areas of core fixed income. While MBS have delivered strong relative performance over recent years, tighter spreads and rising prepayment risks suggest more limited forward return potential.

Overall, our tactical views emphasize a modest equity overweight led by large cap growth, a continued focus on quality bond sectors, caution in rate‑sensitive fixed income sectors, and an ongoing allocation to diversifying strategies and alternatives.

Lawrence Gillum, Chief Fixed Income Strategist, LPL Financial

Brian Booe, Associate Analyst, LPL Financial.

Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All investing involves risk, including possible loss of principal.

US Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The PE ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher PE ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower PE ratio.

Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company’s profitability. Earnings per share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-to-earnings valuation ratio.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Indexes are unmanaged and cannot be invested in directly.

The MSCI US Broad Market Index captures broad U.S. equity coverage. The index includes 3,204 constituents across large, mid, small and micro capitalizations, about 99% of the U.S. equity universe. Indexes are unmanaged and cannot be invested in directly.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Private credit carries certain risks — illiquidity, opacity, borrower concentration, and bespoke structures — that distinguish it from corporate bonds and bank loans and complicate its evaluation and oversight.

All index data from FactSet or Bloomberg.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations | May Lose Value

MC-0007019-0426 | For Public Use | Tracking #1104902 (Exp. 05/2027)

May 11, 2026

Weekly Market Performance | May 8, 2026

LPL Research
Last Updated: May 08, 2026

LPL Research provides its Weekly Market Performance for the week of May 4, 2026. U.S. equities advanced despite ongoing geopolitical volatility, as investors increasingly focused on strong corporate earnings, resilient economic data, and optimism for easing tensions between the U.S. and Iran. Cooling oil prices and falling Treasury yields supported sentiment, while fresh tech earnings reinforced risk appetite. Globally, equity markets were mixed but generally higher, navigating trade uncertainties, political developments, and earnings reports, while fixed income markets benefited from lower yields. Commodities trading remained volatile with oil still in the spotlight despite gold finding its footing.

Stock Index Performance

Index	Week-Ending	One Month	Year to Date
S&P 500	2.17%	8.91%	7.91%
Dow Jones Industrial	0.00%	3.32%	2.99%
Nasdaq Composite	4.35%	15.78%	12.75%
Russell 2000	1.42%	8.87%	14.95%
MSCI EAFE	1.62%	1.53%	8.04%
MSCI EM	5.74%	12.19%	23.94%

S&P 500 Index Sectors

Sector	Week-Ending	One Month	Year to Date
Materials	0.47%	-1.09%	12.36%
Utilities	-3.66%	-4.17%	4.98%
Industrials	0.12%	1.58%	11.63%
Consumer Staples	-0.17%	1.54%	9.88%
Real Estate	0.35%	4.75%	10.83%
Health Care	-1.40%	-4.42%	-7.64%
Financials	-1.56%	-0.15%	-6.74%
Consumer Discretionary	1.66%	11.79%	3.48%
Information Technology	6.86%	20.55%	15.49%
Communication Services	1.67%	12.82%	11.84%
Energy	-5.24%	-4.49%	23.83%

Fixed Income and Commodities

Indexes and Commodities	Week-Ending	One Month	Year to Date
Bloomberg U.S. Aggregate	0.05%	-0.18%	0.23%
Bloomberg Credit	0.13%	-0.06%	0.19%
Bloomberg Munis	0.17%	0.24%	1.16%
Bloomberg High Yield	0.02%	0.55%	1.35%
Oil	-6.26%	1.22%	66.42%
Natural Gas	-1.22%	0.81%	-25.50%
Gold	2.38%	0.10%	9.37%
Silver	6.75%	8.54%	12.26%

Source: LPL Research, Bloomberg 5/8/26 @3:15 p.m. ET
Disclosures: Indexes are unmanaged and cannot be invested in directly.

U.S. and International Equities

U.S. Equities: Stocks climbed through another week of headline volatility as market participants continued to refocus on strong fundamentals and a healthy macro backdrop. Geopolitical developments very much remained at the forefront of investors’ minds as the U.S. and Iran exchanged fire in the Persian Gulf while Washington submitted a fresh 14-point peace proposal to Tehran. With both sides still appearing committed to reaching a diplomatic resolution, and the White House remarking that the ceasefire remained intact and that negotiations are progressing well, easing upward pressure on crude prices and Treasury yields acted as a tailwind for equities.

Meanwhile, after a strong “peak week” for earnings last week, another 128 S&P 500 companies offered quarterly results over the last five days. Advanced Micro Devices (AMD) was among higher-profile highlights, as the leading competitor to NVIDIA (NVDA) gave robust long-term growth forecasts driven by artificial intelligence (AI) demand. Super Micro Computer (SMCI) was also a standout with its own upbeat AI-fueled guidance. On the macro front, improving payrolls data from ADP supported sentiment, while a stronger-than-expected Bureau of Labor Statistics payrolls print Friday morning added to risk-on trading and extended weekly gains.

International Equities: The regional STOXX 600 Index edged higher with individual markets trading mostly higher following the long weekend. Sensitivity to whipsaws in oil prices saw stocks flip between weekly gains and losses amid geopolitical uncertainty, amid a few other moving pieces. Tariff jitters returned to headlines late in the week after the European Union failed to secure a long-delayed U.S. trade deal, while the U.K. underperformed on political risk as local election results rolled in and some reports called for Prime Minister Starmer to plan his stepping down to avoid a disorderly exit. Earnings were also in focus, featuring strong sales results from Danish drugmaker Novo Nordisk and German automaker BMW, while London-based lender HSBC dropped on a profit miss driven by higher costs.

Trading across the Asia-Pacific region was relatively light amid the annual Golden Week holiday. South Korea surged over a four-day week as investors digested strong earnings reports from U.S. tech leaders, while the tech-heavy market of Taiwan also gained over a full five-day week. Greater China posted healthy gains following the holiday break, supported by improving services and stronger holiday travel data, hopes government incentives will help spark a recovery in home sales, and reports of DeepSeek fundraising. Japan ended higher after playing catch up in just a two-day trading week.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, measured by the Bloomberg Aggregate Index, traded higher this week as cooling oil prices relieved upward pressure on Treasury yields. If headline noise and choppy oil prices didn’t keep bond investors busy enough over the last five days, the Treasury Department quarterly refunding announcement also arrived this week.

The borrowing outlook offered by the Treasury was broadly steady but front‑loaded, with borrowing estimates for Q2 2026 and Q3 2026 that were in line with expectations, while also presenting higher projected end‑Q3 Treasury General Account (TGA) balances to accommodate larger outflows and increased Treasury rollover risks. Issuance guidance was unchanged as nominal coupons, Treasury Inflation-Protected Securities, and Floating Rate Notes were held flat for another quarter, with Treasury reiterating that current auction sizes are likely to remain in place for at least several more quarters. Plus, the combination of higher near‑term borrowing estimates and stable issuance guidance suggests a later start to coupon increases, now expected around May 2027, likely concentrated in 2-year to 7-year notes and driven by demand conditions.

Among other takeaways, the Treasury did announce changes to 20-year reopening settlement dates to ease repo specialness, and Treasury Borrowing Advisory Committee (TBAC) minutes highlighted ongoing study of investing excess TGA cash in repo markets — potentially reducing reserve volatility, though implementation appears distant. Bottom line, Treasury issuance remains well above pre‑2020 levels, while the buyer base has shifted away from price‑insensitive anchors (the Fed and foreign central banks) toward more price‑sensitive private investors, potentially needing higher clearing yields as supply grows. Treasury’s messaging reinforces a “steady but heavier” supply regime — issuance is large, growing more front‑loaded, and increasingly reliant on price‑sensitive private demand. Absent a renewed policy buyer or a meaningful deficit inflection, the bias is likely toward higher term premia and episodic volatility in the Treasury market.

Commodities and Currencies: The broader commodities complex reversed early-week strength to trade lower as elevated volatility continued. Oil markets remained focused on the ongoing closure of the Strait of Hormuz and brief clashes between U.S. and Iranian forces as American military ships helped guide tankers through the critical waterway. Despite the skirmishes, West Texas Intermediate (WTI) crude futures remain lower on the week on hopes of a firmer truce to end the conflict in the coming weeks, with Washington awaiting a response on its latest proposal. Meanwhile, gold found some traction with a weekly advance and four straight gains as optimism for a ceasefire helped alleviate worries around hotter inflation keeping interest rates elevated. Additional tailwinds for the yellow metal surrounded central bank buying and China’s central bank reporting its largest monthly purchase in over a year. Silver outperformed while copper also posted a solid advance. In currencies, the U.S. dollar weakened slightly, but the yen remained in the spotlight on signs of potential additional intervention overnight Wednesday.

Economic Weekly Roundup

Bureau of Labor Statistics data released Friday morning indicated U.S. companies added more jobs than expected last month, despite some uncertainty around rising costs due to the war in Iran. Nonfarm payrolls rose by 115,000 in April, besting consensus forecasts for a second month, to mark the largest two-month increase since 2024. Healthcare has been the primary driver of job growth over the last year, and continued to lead hiring again, while the transportation and warehousing, retail trade, and couriers and messenger services sectors all delivered multi-year highs in hiring. Manufacturing employment fell slightly. The unemployment rate remained at 4.3%, with key takeaways highlighted by signs that the labor market is becoming more balanced across industries.

The Week Ahead

The following economic data is slated for the week ahead:

Monday: Existing Home Sales (Apr)
Tuesday: NFIB Small Business Optimism (Apr), ADP Weekly Employment Change (Apr 25), Headline and Core CPI (Apr), Real Average Hourly and Weekly Earnings (Apr), Federal Budget Balance (Apr)
Wednesday: MBA Mortgage Applications (May 8), Headline and Core PPI (Apr)
Thursday: Import and Export Price Index (Apr), Initial Jobless Claims (May 9), Continuing Claims (May 2), Retail Sales (Apr), Business Inventories (Mar)
Friday: Empire Manufacturing (May), Industrial Production (Apr), Manufacturing (SIC) Production (Apr), Capacity Utilization (Apr)

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1101420

May 8, 2026

April Flow Trends Highlight Equity Strength

April Rotation: U.S. Large Caps Regain Dominance

Jeff Buchbinder | Chief Equity Strategist

Last Updated: May 07, 2026

Additional content provided by Kent Cullinane, CFA, Sr. Analyst, Research.

With April behind us, we conducted a deep dive into exchange-traded fund (ETF) flows over the month and year-to-date (YTD) periods. Flows measure the net movement of cash into and out of investment vehicles, such as mutual funds and ETFs. We analyzed flows to gain insight on investor demand and sentiment surrounding asset classes, sectors, and other segments of markets.

Broad Asset Class Flows

Following a global market sell-off in March, risk assets surged in April, with most equity categories posting double-digit gains. Easing geopolitical tensions and lower oil prices helped stabilize sentiment, allowing investors to refocus on corporate earnings. Quarterly results have generally exceeded expectations, with the Magnificent (Mag) Seven delivering strong performances and issuing guidance that continues to support optimism around the artificial intelligence (AI) theme. Bond yields declined as concerns about persistent inflation driven by the spike in oil prices dissipated.

The ETF market gained $1.4 trillion in assets from a combination of flows and performance, ending April at $14.9 trillion. Equities saw the largest inflow at $133 billion, followed by fixed income ($33 billion) and alternative investments ($4 billion). The only asset class to experience an outflow over the month was commodities, with a net outflow of $1.6 billion. One of the largest segments within commodities is oil. As tensions between the U.S. and Iran have eased — reducing concerns of a prolonged disruption in the Strait of Hormuz, a critical passage for roughly 20% of global oil supply — oil prices have pulled back significantly from their multi-year highs, leading to an outflow in broad-based and oil-specific commodity ETFs.

For the year-to-date (YTD) period, ETFs gathered $641 billion in assets, with roughly two-thirds of that capital flowing into equity ETFs. Equities now represent nearly 79% of total ETF market share, up from roughly 77% at the end of the first quarter. The combination of stellar performance and risk-on investor sentiment contributed to the surge in asset growth to end April. Bonds make up another 17% of the total ETF market share, with their relative share marginally decreasing. Combined, stock and bond ETFs represent more than 95% of the ETF industry. Outside of traditional asset classes, such as stocks and bonds, commodities represent roughly 2.5% of remaining ETF assets or $365 billion, followed by alternatives ($132 billion), currency ($128 billion), and asset allocation strategies ($43 billion). While commodities experienced net outflows during the month, all other segments saw net inflows, and every asset class has recorded positive net inflows year to date.

Risk-On Sentiment Returns: Equities Dominate April Flows

Trailing one-month, YTD, and one-year net asset flows across broad asset classes (AUM, Billions $)

Source: LPL Research, FactSet 04/30/26
Disclosures: Past performance is no guarantee of future results.

Asset Class Specific Flows

Equities: Within equities, domestic segments dominated monthly flows, with U.S. large cap, U.S. total market, and U.S. large growth rounding out three of the top four segments by flows. Broad U.S. large cap equity ETFs saw an astounding $72 billion in flows, more than seven times the next closest segment, U.S. total market. With hostilities easing in the Middle East and earnings estimates ticking higher, investors turned their focus back to the leading market tailwind, AI, and how its transformation and buildout is impacting the broader economy. Given their concentration in U.S. large cap indexes, representing roughly 30% of the S&P 500, investors can gain exposure to the Mag Seven by simply purchasing broad-based U.S. ETFs, which is what we saw in April with large cap, total market, and large cap growth gathering a little over $86 billion — representing nearly two-thirds of total ETF flows. Looking more specifically at the main input driving AI transformation, the third largest segment by flows over the month was global semiconductors, experiencing a nearly $6 billion inflow.

While U.S. equity ETFs gathered most of the capital this month, global and developed ex-U.S. markets continued to realize net inflows, with global total market, global ex-U.S. total market, and developed markets ex-U.S. ranking fifth, seventh, and ninth, respectively, in monthly flows. Foreign equities still outpaced domestic in performance over the YTD period, with emerging markets realizing a total return of nearly 15%.

At the other end of the spectrum, leveraged ETFs and ETFs predominantly comprised of oil stocks, saw meaningful outflows, with leveraged semiconductors and leveraged U.S. large caps experiencing outflows of $11 billion and $5.2 billion, respectively. Despite the rally in equities, investors continue to dump leveraged equity ETFs in favor of unleveraged, with both categories also the leading segments by outflows YTD. Given recent volatility in March — and even significant volatility in April 2025 — market participants may be looking for a smoother ride in stocks given leverage amplifies the magnitude of returns, positive and negative. Another notable segment that realized an outflow in April was U.S. small cap equities, losing $724 million in assets. YTD flows remain moderately positive (just above $1 billion), despite being one of the top-performing asset classes in 2026, with the Russell 2000 up over 13%. Although small cap equities have recently outperformed their large cap peers, they offer less direct exposure to AI. With AI back in focus — driven by its prominence in earnings and its broader economic impact — investors appear to have rotated out of small caps and into large caps over the month.

Fixed Income: In fixed income, the ultra-short Treasury segment was the third largest segment across asset classes (equity, fixed income, alternatives, etc.) by outflows, following a March in which they were the top asset-gatherer in a down market. Ultra-short Treasuries saw an outflow of $2.5 billion; however, they remained the second largest segment by flows YTD, gathering $47 billion. The next largest bond segment by outflows was floating rate investment-grade Treasuries, which saw an outflow of $778 million.

As previously mentioned, bonds broadly saw significant inflows in April, with more credit-sensitive sectors, such as high-yield and global bonds, realizing $3.9 billion and $3.2 billion in inflows, respectively. Like equity investors, bond investors rotated out of more conservative segments (ultra-short Treasuries) in March and into more aggressive sectors, with global bond markets entering the top 10 segments by flows YTD, gathering $17 billion. The appetite for fixed income remains healthy given the choppy environment in equities over the past 16 months and the ever-changing geopolitical landscape. While spreads remain tight in credit sectors, all-in yields remain attractive and fixed income continues to offer diversification benefits in a global multi-asset portfolio.

Diversifying Strategies: Across diversifying strategies, commodity ETFs, specifically those focused on oil, experienced the biggest outflows among diversifying strategies in April, losing $1.5 billion. As discussed earlier, oil prices came off multi-year highs, leading to a sell-off in the energy sector and those thematic ETFs tied to oil. With potential resolution on the horizon in the Middle East, performance may have peaked in this segment. Also, within commodities, silver continued to rank in the top 10 (fourth across asset classes) by outflows YTD, having lost $2.4 billion. Gold, on the other hand, realized an inflow in April ($329 million) but remains negative YTD ($1.3 billion). Gold sold off in March, along with equities and fixed income, and failed to climb back to its all-time highs as investors rotated more into growth-oriented assets, given easing inflation fears, lower geopolitical risk, and renewed enthusiasm around AI.

While small in size (0.9%), alternatives broadly have seen positive flows, with downside risk mitigation ETFs, also referred to as “buffer” ETFs, becoming more popular among investors as they try to protect their portfolios from drawdown risk with heightened volatility. Additionally, traditional hedge fund strategies, such as global macro, event driven, and managed futures, which are now being offered in ETF vehicles (although with stringent restrictions to stay within regulatory compliance), continue to gain assets. Collectively, these alternative strategies can be seen as defensive positions that offer uncorrelated return streams to traditional equities and fixed income.

U.S Large Cap Catapults to Top Segment by 2026 Flows

Trailing YTD net asset flows across FactSet segments (AUM, $ Billions)

Source: LPL Research, FactSet 04/30/26
Disclosures: Past performance is no guarantee of future results.

Key Tactical Asset Allocation Takeaways

When comparing the latest LPL Research Strategic and Tactical Asset Allocation Committee (STAAC) views with the April flows data, there are a number of similarities. The STAAC continues to like the top asset class by assets and largest by YTD flows, U.S. large caps. The STAAC maintains a slight overweight to large/mid cap equities, with a tilt towards large/mid growth, which continues to benefit from sentiment surrounding AI and strong technology-driven earnings growth. Regionally, the STAAC has been warming up to the fourth-highest segment by flows YTD, emerging market equities, on improving fundamentals and technicals, but remains neutral from a geographic perspective within foreign equities, with a slight bias towards the U.S.

Within fixed income, the STAAC prefers core bond sectors over spread sectors as historically tight spreads make the relative risk-return profile of spread sectors less attractive. Outside of traditional stocks and bonds, the STAAC maintains an allocation to alternative investments, specifically in global macro and multi-strategy funds.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1104203

May 7, 2026
Gold is Doing its Job, But Not the One You Expect

Kristian Kerr | Head of Macro Strategy
Last Updated: May 06, 2026

Additional content provided by Brian Booe, Associate Analyst, Research.

Gold’s behavior since the escalation of conflict in the Middle East has been, at first glance, counterintuitive. Periods of geopolitical stress typically push investors toward gold as a safe haven. Instead, gold prices have struggled to gain any sort of consistent traction, even amid one of the most severe global energy disruptions in decades. Understanding why requires stepping back and recognizing that gold does not sit neatly in any one asset category. It actually straddles several as gold simultaneously functions as a commodity, a reserve asset, and a currency surrogate. That overlapping identity is important, because it means the role gold plays in the monetary system is constantly in flux.

Gold Prices Have Struggled to Gain Traction Since the Middle East Conflict Began

Source: LPL Research, Bloomberg 05/05/26
Disclosure: Past performance is no guarantee of future results.

In 2019, gold was officially designated as a Tier 1 asset under global bank capital rules (Basel III). In practical terms, Tier 1 assets are those considered the highest quality for bank capital purposes. These are assets that carry either a zero or minimal risk weight and require little to no additional capital buffer. Cash and top‑rated sovereign bonds have long dominated this category. Gold’s inclusion reflects its treatment as a zero‑credit‑risk asset when held in allocated physical form on balance sheets. That status allows banks and sovereign institutions to count gold at or near full market value for capital adequacy purposes, rather than applying punitive haircuts that previously made it inefficient to hold during periods of stress. Importantly, this classification is about capital resilience, not liquidity per se. Gold still does not function like cash when immediate funding needs arise, especially during market dislocations — and that distinction matters right now.

The closure and effective throttling of the Strait of Hormuz has produced one of the largest energy supply shocks in history. With tanker traffic collapsing and exports curtailed, oil revenue across the Persian Gulf has fallen sharply. For countries that rely on energy exports to generate dollar inflows, this is not merely a growth issue; it is a liquidity problem.

In that environment, gold’s Tier 1 status makes it unusually usable. Not as a store of value, but as a source of dollars. Selling or swapping gold holdings provides immediate access to the currency that still sits atop the global funding hierarchy: the U.S. dollar. This helps explain gold’s unusual price action. Rather than seeing pure safe‑haven flows, we are likely getting official and semi-official supply, as some countries have been forced to monetize gold reserves to bridge revenue gaps created by disrupted oil exports.

We do not have to infer this stress indirectly. In late April 2026, U.S. Treasury Secretary Scott Bessent confirmed that multiple Persian Gulf allies had requested U.S. dollar swap lines to backstop liquidity amid the fallout from the Iran conflict and the restriction of Hormuz traffic. Public discussion has centered on the United Arab Emirates, but officials have been clear that the requests are broader and regional in scope. Swap line requests are not a sign of insolvency; they are a sign of dollar liquidity needs. Historically, when this dynamic emerges, domestic reserve assets, including gold, are often deployed to manage near term funding needs. In those moments, gold can function as less of a hedge and more as a balance sheet resource. That framing is critical. Gold is not failing in its role. It is simply being used.

At some point, a resolution (whether diplomatic or an escalation in hostilities that leads to overwhelming safe haven flows) around the Strait of Hormuz would remove this immediate source of supply overhang currently weighing on prices. But even then, gold’s next path may not be that straightforward. The period following major energy disruptions is typically one of rebuilding rather than diversification. Governments are likely to focus on securing energy supply, rebuilding inventories, and replenishing strategic petroleum reserves. These initiatives require capital, in dollars, and they compete directly with reserve accumulation in non-yielding assets like gold. In that sense, gold could temporarily fall down the priority list.

In the end, gold’s recent behavior is not a failure of the safe‑haven thesis; it is a reminder that funding needs often temporarily take precedence over fear‑driven positioning. When dollars are scarce and revenue is disrupted, even gold can become a source of funding. Until dollar funding pressures ease and energy flows normalize, gold may continue to trade less like a geopolitical hedge and more like a balance sheet asset.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1101414

May 6, 2026

How Portfolio Managers Are Thinking About 2026

Scott Froidl | Senior Investment Analyst
Last Updated: May 05, 2026

In Q1 2026, I stepped into the role less of an interviewer and more of an investigator, sitting across the table from 35 portfolio management teams covering mutual funds, ETFs, and SMAs in large cap growth, large blend, and large value. Each team was asked the same eight questions — no leading prompts, no room to dodge — so the evidence was clean and comparable. As the answers piled up, patterns began to surface: repeated narratives told by different voices, subtle tells that revealed where conviction was genuine versus rehearsed. Outliers stood out like fingerprints at a crime scene — views that broke from consensus, either by design or by blind spot. By lining up these responses and weighing both what was said and what was left unsaid, I condensed the common themes driving opportunity today, while also flagging the risks lurking beneath crowded assumptions and shared beliefs. What follows is the case file.

AI, Healthcare, and Volatility: Positioning for 2026

As equity markets transition into 2026, large cap equity portfolio managers share a surprisingly consistent framework — paired with sharp disagreements on where risk and opportunity sit. A survey of large growth, value, and blend managers reveals a market shifting away from simple narratives toward selectivity, fundamentals, and manager skill.

At the center of this discussion sits artificial intelligence. Nearly every manager acknowledges AI as a long‑term structural force, yet far fewer believe it remains an easy trade. At the same time, healthcare has emerged as the most consistently cited undervalued sector across investment styles, even as managers concede it remains one of the hardest areas to execute well.

What follows is a synthesis of where managers align, where tension exists, and what these dynamics suggest for equity markets heading into 2026.

AI: A Structural Force That No Longer Guarantees Returns

AI dominates nearly every strategic conversation. Managers broadly agree it represents a multi‑year earnings driver spanning software, semiconductors, industrial automation, data infrastructure, and services. The difference now lies in execution.

The earlier phase of AI investing rewarded broad exposure. We believe that phase has largely passed. Managers increasingly emphasize real earnings, sustainable demand, customer monetization, and the durability of competitive advantage. Several indicate that portions of the AI infrastructure, semiconductors, and enabling hardware have high valuations, leaving a limited margin for error.

This shift has created three emerging camps:

AI beneficiaries with recurring revenue and pricing power
AI survivors capable of absorbing competition and margin pressure
Mispriced AI losers where fear has outpaced fundamental deterioration

The tension centers on portfolio sizing. Some managers remain heavily allocated, treating AI as the next secular growth engine. Others deliberately neutralize exposure, framing AI as one of the largest potential sources of downside if expectations compress.

The implication is not AI fatigue, but higher hurdles. Exposure alone no longer drives results — security selection does.

Healthcare: Broad Opportunity, Narrow Margins for Error

Across styles and mandates, healthcare stands out as the most consistently cited undervalued opportunity. Managers describe the sector as under‑owned, poorly understood, and discounted relative to earnings potential.

Key drivers include:

Aging demographics
Innovation across biotechnology and medical devices
Increased M&A discipline within pharmaceuticals and services

Despite this optimism, healthcare simultaneously earns a reputation as one of the hardest sectors to win consistently. Regulatory scrutiny, binary outcomes in innovation, pricing risk, and complex reimbursement structures demand deep fundamental analysis.

Some managers cite healthcare as their best alpha‑producing sector, while others describe it as chronically frustrating. The divergence suggests healthcare may reward skilled managers, while punishing surface‑level exposure.

Market Breadth: Opportunity, With Conditions

Many managers report early signs of market broadening beyond mega‑cap technology leadership. Industrials tied to power infrastructure, aerospace, automation, and select consumer discretionary areas receive increased attention. Software segments that suffered during peak AI enthusiasm also appear on opportunity lists.

That said, conviction remains uneven. Several managers caution that leadership rotation has been episodic and fragile. Rapid reversals and crowded positioning continue to dominate trading patterns.

The prevailing takeaway is conditional optimism: new opportunities exist, but require patience and acceptance of volatility. Sustainable broadening remains unproven.

Volatility Without Capitulation

A rare consensus exists around volatility expectations. Managers broadly anticipate heightened market swings driven by geopolitics, policy uncertainty, valuation dispersion, and narrative shifts.

Yet despite this expectation, very few portfolios have moved outright defensive. Traditional risk‑off behavior, rotating heavily into low‑beta sectors, appears limited.

Instead, managers redefine defense through:

Earnings durability
Balance sheet strength
Cash flow consistency
Quality of business models

Volatility is treated less as a signal to retreat and more as a condition to navigate.

Traditional Defensives Face New Scrutiny

Historically defensive sectors such as staples and utilities received widespread skepticism. Multiple managers describe these areas as crowded, expensive, and vulnerable if leadership rotates or yields move.

High‑quality compounders, once perceived as capital‑preservation vehicles, also attract valuation concerns. In several cases, managers argue these stocks now carry asymmetrical downside due to stretched expectations.

A minority still view traditional defensives as stabilizers, particularly in uncertain macro environments, but this is no longer the dominant stance.

Software: Opportunity or Structural Risk?

Software divides opinion as sharply as AI itself.

One group argues that broad selling pressure has created mispriced opportunities. In this framework, fears of AI‑driven disruption overshot reality, and select companies retain strong customer relationships, sticky revenue, and pricing power.

Others maintain deep caution. They cite risks of commoditization, new competitive entrants, and overestimated addressable markets.

Software increasingly behaves less like a monolith and more like a case by case exercise — forcing differentiation rather than blanket exposure.

2026 Equity Return Expectations: Moderation Reigns

Despite differences in narrative emphasis, most managers converge on a moderate return outlook for 2026.

Typical expectations cluster in the mid-single to low double digits, with returns driven primarily by earnings growth rather than valuation expansion. A minority project flat outcomes, while a smaller bullish group targets double‑digit results.

The common denominator is realism. Few expect a repeat of momentum‑driven expansions. Discipline, patience, and earnings delivery dominate expectations.

Stock Picker’s Market or Macro Market?

A final tension cuts across all discussions: the weight of macro versus fundamentals.

Growth‑oriented managers emphasize bottom‑up execution, arguing company‑specific outcomes will matter more than interest rates or policy headlines. Several value‑oriented perspectives lean more heavily on geopolitical risk, tariffs, and policy volatility.

This divide influences portfolio construction and risk tolerance, shaping positioning more than any single sector call.

What This Means for Allocators

The survey suggests a market where manager differentiation matters more than style labels.

Consensus exists around structural forces, earnings discipline, and volatility. Disagreement centers on positioning, sizing, and conviction. The absence of universally “safe” sectors reinforces the importance of process, skill, and risk awareness.

As markets move into 2026, success may depend not on buying the right theme but on navigating the tensions within it.

Summary Tension Map

Summary Visual (At‑a‑Glance) – Interviews With Large Cap Portfolio Managers During Q1 2026

Theme	Agreement	Disagreement
AI	Long-term structural force	How much to down, valuation risk
Healthcare	Undervalued opportunity	Hardest sector vs. best alpha
Volatility	Expected to be high	Whether to de-risk portfolios
2026 Returns	Mid‑single to low‑double digits	Degree of optimism (flat → +15%)
Market Breadth	Broadening signs exist	Real rotation vs. head fake
Defensives	Staples/utilities expensive	Some still see them as ballast
Software	Mispriced pockets exist	Or still AI‑vulnerable
Macro Importance	Volatility matters	Macro‑driven vs. fundamental‑driven

Source: LPL Financial Coverage List Portfolio Manager Survey, Large Cap Equity Strategies, Q1 2026

Methodology: Identifying Key Risks and Opportunities

To identify the most prominent risks and opportunity sets across our firm’s internal Coverage List, we conducted structured interviews with 35 portfolio management teams spanning mutual funds, ETFs, and SMAs. Each team was asked the same eight survey questions, ensuring consistency of inputs and comparability across strategies, vehicles, and investment styles.

Responses were first reviewed and normalized to account for differences in terminology and communication styles. Qualitative answers were then coded into thematic categories, allowing us to assess areas of convergence and divergence across managers. Themes that appeared repeatedly across multiple teams, particularly when supported by strong convictions or detailed rationale, were categorized as common views. Conversely, perspectives that meaningfully deviated from the broader sample, either in direction, magnitude, or underlying assumptions, were flagged as outliers.

To differentiate risks from opportunities, each theme was evaluated through a forward‑looking lens, considering how widely held assumptions, positioning, or macro and fundamental dependencies could influence future outcomes. Particular attention was paid to areas where consensus appeared strong but underlying conditions could change, as these scenarios may introduce asymmetric risk. Similarly, underappreciated or less crowded views — especially those supported by clear catalysts or structural trends — were evaluated as potential sources of opportunity.

This process resulted in a consolidated framework that reflects not only what portfolio managers are collectively emphasizing today, but also where expectations may be stretched, narratives overly aligned, or convictions unevenly distributed. This report summarizes the key insights derived from this analysis, organized around the eight survey questions.

Important Disclosures

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Asset Class Disclosures –

Bonds are subject to market and interest rate risk if sold prior to maturity.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1097066

May 5, 2026

Weekly Market Commentary | AI-Driven Growth Fuels Strong Technology Earnings | May 04, 2026

PRINTER FRIENDLY VERSION

In investing, the goal is to find assets that appreciate. That can be accomplished in different ways. One way is to find businesses that aren’t growing very fast but can be purchased at a low enough valuation that the investment can perform well.

Another way to find potentially good investments is by identifying businesses (or groups of businesses that make up an index) that are growing rapidly but the market underestimates that growth. Some refer to this as “growth at a reasonable price” investing.

Whatever style of growth an investor might pursue, it’s clear that finding growth that the market doesn’t expect may be a path to success. That’s what we see in the technology sector currently — a sector with very strong earnings growth that, in our view, is not being sufficiently rewarded in the marketplace due to ongoing AI skepticism.

For more insights on market trends, see our analysis on emerging markets (February 09, 2026) and economic growth (January 26, 2026).

Hyperscalers Post Blockbuster Beats

A frenzied week of macroeconomic data and big earnings news offered glimpses under the hood of both the U.S. economy and some of corporate America’s highest profile companies. Here we’ll focus on the latter, as last week brought eagerly anticipated quarterly results from mega-cap artificial intelligence (AI) hyperscalers Alphabet (GOOG/L), Amazon (AMZN), Meta (META), and Microsoft (MSFT), as well as Apple (AAPL). While scrutiny on capital investments remains high, takeaways from results broadly leaned positive, in our view.

Alphabet grabbed the spotlight among last Wednesday’s reports as the Google-parent company blew past Wall Street’s expectations. High demand for cloud and AI offerings drove a “meaningful acceleration” in growth, indicating to investors that significant AI investments are paying off. Worries that their main business line — Google search — could be taken over by chatbots, ebbed on signs that the firm has successfully integrated AI into its search offering, while also driving down costs to answer users’ questions with AI.

Strong growth in Amazon Web Services highlighted the e-commerce giant Amazon’s report. The unit accounts for most of Amazon’s operating profit, and intense demand for AI computing power drove the fastest quarterly sales growth since 2022. Online sales, which still make up the largest share of revenue for Amazon, rose 12% last quarter.

Meta reignited worries around the social media company’s historic spending levels after revising capital expenditures higher while citing higher component pricing and additional data center costs. The company blamed disruptions in Russia and Iran for its first-ever quarterly decline in users.

Microsoft rounded out Wednesday’s slate of reports. All-important cloud revenue growth remained strong but came in only 1% above the consensus estimate and trailed peers.

At a higher level, all four companies met or exceeded earnings and revenue estimates and ramped up spending guidance yet again — now tracking toward $725 billion for this year, mostly earmarked for data center buildouts and equipment. With no signs of slowing down, AI-driven spending will likely continue to do the heavy lifting for S&P 500 earnings growth, led by the technology sector. Technology earnings are on pace to grow over 50% this quarter, while 80% of the 26% S&P 500 earnings per share growth is expected to come from the top three growth sectors: communication services, consumer discretionary, and technology.

AI Capex Cycle Picking Up Speed

As investment in AI ramps up and the market’s confidence in technology’s value increases, as we believe it did last week, the outlook for the technology sector improves. The debate about whether AI will fulfill its promise as a productivity enhancer won’t be settled for quite some time. But what we do know is that massive spending is going to continue. The top five hyperscalers building out AI data centers and unleashing unprecedented computing power, namely Alphabet, Amazon, Meta, Microsoft, and Oracle (ORCL), have told us spending could reach up to $725 billion, with Wall Street’s median forecasts calling for just over $670 billion (for comparison, that number was roughly $520 billion at the end of 2025).

AI Capital Investment by Largest Hyperscalers Could Exceed $700 Billion in 2026

_{Source: LPL Research, Bloomberg, 04/30/26

Disclosures: Past performance is no guarantee of future results. Estimates may not materialize as predicted and are subject to change.}

Strong Earnings Outlook Getting Stronger

Before the debate about whether investment in AI will pay off is settled (for the record, we suspect most of it will), the massive AI investment will translate into technology companies’ earnings. We also expect productivity enhancements to drive higher profit margins and support strong earnings. In the first quarter, by the time all results are in, technology sector earnings growth may exceed 50% and end up more than five times the pace of earnings growth from the rest of the S&P 500. Perhaps even more impressive, the consensus 2026 earnings estimate for the sector has been revised higher by nearly 15 percentage points year to date (23.4% to 38.7%) as capital investment targets increased.

But that earnings growth won’t come easily. Some of the infrastructure buildout is being funded by debt — and that cost could rise over time depending on AI’s ability to generate revenue. Some of the funding for the buildout will come from capital yet to be raised by private companies such as Anthropic and OpenAI. And if at some point the value proposition from AI adoption fails to live up to its hype, demand for computing capacity will slow down.

Bottom line, if these companies can deliver what they have told the market to expect, the technology sector has the potential for significant earnings growth and price appreciation ahead.

Significant Earnings Growth Gap Between Technology and the Rest of the S&P 500

_{Source: LPL Research, Bloomberg 04/30/26

Disclosures: All indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results. Estimates may not materialize as predicted and are subject to change.}

Margin Expansion Story Likely Not Over

Profit margins for the S&P 500 are at record highs and are likely to continue to go higher as AI adoption fuels productivity gains and revenue continues to grow at a solid pace. A lot of the margin expansion in the coming quarters is expected to come from the technology sector, as shown in the “Technology Enjoys Significant Profit Margin Advantage” chart.

Technology sector operating margins are expected to exceed 36% in the first quarter, compared to just 13.1% for the rest of the S&P 500. Given we are still in the early innings of the AI adoption cycle, we wouldn’t be surprised to see expanding margins for several more years — as long as the U.S. economy avoids recession. Just 60% of large companies have adopted AI, according to data from Ramp Economics Lab. For small companies, that number is 44%. Productivity gains will come at the cost of some displaced labor, but over time, we expect workers to reinvent themselves for the new economy as they have through prior technology revolutions, helping to mitigate any increase in unemployment.

Technology Enjoys Significant Profit Margin Advantage Over Rest of the S&P 500

_{Source: LPL Research, Bloomberg 04/30/26

Disclosures: All indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results. Estimates may not materialize as predicted and are subject to change.}

Technology Valuations Remain Reasonable Despite Recent Strength

With the S&P 500 at record highs and technology having outperformed the broader market in 2023, 2024, 2025, and year to date, suggesting the sector is reasonably valued may be hard to believe. The sector has nearly tripled in price since the start of 2023. However, at a forward price-to-earnings ratio (P/E) of 24, just 14% above the S&P 500, with compelling margins and earnings growth to the broad market, we believe the sector is undervalued. A few more years of massive AI infrastructure spending and potential margin expansion as AI adoption ramps could drive technology sector valuations much higher, in our view. If any sector can generate productivity gains from AI, it’s probably technology.

There are clearly risks, including disruption to software businesses because of the ease of coding with AI and possible funding challenges. But the path has been paved for higher valuations and continued strong earnings growth this year and next, and potentially beyond.

Conclusion

The technology sector’s renewed leadership reflects strong earnings growth amid lingering AI skepticism. While debate continues over the ultimate return on the massive investment in AI, capital spending plans are rising, earnings estimates are moving higher, the sector’s margins remain well above the broader market, and the sector’s free cash flow outlook remains robust. Together, these trends suggest the market is still underappreciating technology’s AI-driven earnings power. Despite several years of sector outperformance, valuations remain reasonable in our view, relative to the broad market and the sector’s compelling growth and profitability.

Risks remain, including potential software disruption from AI and financing challenges related to the buildout. There will no doubt be ups and downs for the AI trade. Even so, if companies can execute current plans and the economy continues to expand, technology appears well positioned for additional outperformance in the months and years ahead.

Asset Allocation Insights

LPL’s Strategic Tactical Asset Allocation Committee (STAAC) recently moved its equities recommendation to a tactical overweight and fixed income to underweight. This shift builds on positioning decisions implemented ahead of the recent rise in volatility. In our view, increased market uncertainty has improved the forward-looking risk‑reward for incremental equity exposure, allowing us to act within our established tactical framework while maintaining prudent risk controls.

Within Growth with Income (GWI) portfolios — our closest proxy to a traditional 60/40 allocation — this adjustment reflects two related changes: neutralizing the underweight to U.S. small cap value and reducing exposure to mortgage-backed securities to fund that move. From a portfolio construction standpoint, this lifts equity exposure slightly above benchmark while keeping overall risk well within the intended tactical range. This reflects improved expected equity returns following market weakness, alongside a more cautious outlook for select areas of core fixed income. Within equity sectors, the STAAC holds a positive view on the industrials and technology sectors.

Overall, our tactical views emphasize a modest equity overweight led by large‑cap growth, a continued focus on quality, caution in rate‑sensitive fixed income sectors, and an ongoing allocation to diversifying strategies and alternatives funded from cash.

Brian Booe, Associate Analyst, Research, LPL Financial

Jeffrey Buchbinder, Chief Equity Strategist, LPL Financial

Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All investing involves risk, including possible loss of principal.

US Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The PE ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher PE ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower PE ratio.

Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company’s profitability. Earnings per share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-to-earnings valuation ratio.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Indexes are unmanaged and cannot be invested in directly.

The MSCI US Broad Market Index captures broad U.S. equity coverage. The index includes 3,204 constituents across large, mid, small and micro capitalizations, about 99% of the U.S. equity universe. Indexes are unmanaged and cannot be invested in directly.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Private credit carries certain risks — illiquidity, opacity, borrower concentration, and bespoke structures — that distinguish it from corporate bonds and bank loans and complicate its evaluation and oversight.

All index data from FactSet or Bloomberg.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations | May Lose Value

RES-0007019-0426 | For Public Use | Tracking #1097811 (Exp. 05/2027)

May 4, 2026

Weekly Market Performance | May 1, 2026

LPL Research | Last Updated: May 01, 2026

LPL Research provides its Weekly Market Performance for the week of April 27, 2026. U.S. equities advanced for a fifth straight week despite cautious sentiment driven by geopolitical uncertainty in the Middle East, rising oil prices, and mixed reactions to AI-related developments and earnings. However, markets ultimately focused on positive takeaways and a broadly upbeat earnings backdrop. Global equities also gained ground, with Europe supported by steady central bank policies and a late-week drop in oil futures, while Asia extended gains broadly on the back of tech strength. Fixed income markets faced pressure from fiscal concerns, partially offset by improved demand from March’s weak outcomes. Commodity markets were led by continued gains in oil, while the yen rallied on likely intervention.

Stock Index Performance

Index	Week-Ending	One Month	Year to Date
S&P 500	0.95%	10.01%	5.67%
Dow Jones Industrial	0.71%	6.47%	3.15%
Nasdaq Composite	1.24%	15.12%	8.18%
Russell 2000	0.79%	11.81%	13.18%
MSCI EAFE	0.47%	3.69%	6.48%
MSCI EM	0.50%	11.93%	17.09%

S&P 500 Index Sectors

Sector	Week-Ending	One Month	Year to Date
Materials	-1.51%	1.60%	12.33%
Utilities	0.89%	1.08%	9.16%
Industrials	0.55%	5.47%	11.83%
Consumer Staples	1.08%	3.38%	10.00%
Real Estate	0.96%	7.88%	10.38%
Health Care	0.96%	-1.59%	-6.05%
Financials	1.16%	5.31%	-5.02%
Consumer Discretionary	0.80%	11.72%	2.21%
Information Technology	0.22%	17.89%	8.20%
Communication Services	4.42%	16.34%	9.87%
Energy	3.53%	-0.65%	31.05%

Fixed Income and Commodities

Indexes and Commodities	Week-Ending	One Month	Year to Date
Bloomberg U.S. Aggregate	-0.50%	0.10%	0.07%
Bloomberg Credit	-0.59%	0.33%	-0.09%
Bloomberg Munis	-0.35%	0.92%	0.97%
Bloomberg High Yield	-0.09%	1.31%	1.19%
Oil	8.19%	2.01%	77.86%
Natural Gas	10.38%	-1.21%	-24.44%
Gold	-1.77%	-2.78%	7.10%
Silver	0.14%	1.00%	5.82%

Source: LPL Research, Bloomberg 5/1/26 @3:13 p.m. ET
Disclosures: Indexes are unmanaged and cannot be invested in directly.

U.S. and International Equities

U.S. Equities: Cautious sentiment kept traders from making outsized moves for most of the week, with Magnificent Seven earnings and geopolitical developments at the forefront. Higher oil prices, lingering uncertainty around the Strait of Hormuz, and artificial intelligence (AI) jitters on OpenAI missing internal goals pressured major averages. However, Wall Street bulls persevered for a fifth straight weekly advance for the S&P 500. Investors shook off canceled negotiations and a ramp in U.S.-Iran rhetoric to focus on better-than-expected results from four of corporate America’s five main AI hyperscalers (amid a broadly blockbuster earnings season thus far). Strength in first quarter economic data through the headwinds of the Iran conflict and reports of a fresh proposal from Tehran also helped drive late-week gains.

In earnings, Google-parent company Alphabet (GOOG/L) stated cloud and AI offering demand remains high, boosting confidence that massive investments are paying off, while Amazon (AMZN) rose on strong sales results for its Amazon Web Services unit. Meta (META), however, faced some scrutiny around spending after flagging rising component and data center costs, while Microsoft’s (MSFT) cloud growth failed to inspire. Plus, Apple (AAPL) rallied after the iPhone maker posted a surprisingly strong revenue forecast.

International Equities: The European benchmark STOXX 600 Index edged higher over a holiday-shortened week for many markets. Higher crude prices acted as an overhang for most of the week, denting sentiment before stocks rebounded as upward pressure on oil prices eased late in the week. Key monetary policy decisions were also among focal points. The U.K.’s FTSE 100 Index rallied Thursday after the Bank of England held rates and Governor Andrew Bailey stated holding rates is a “reasonable place” to be — but suggested hikes remain on the table in the event of a continued energy supply disruption. Shortly thereafter, the European Central Bank also left rates unchanged, awaiting more clarity on economic implications of the U.S.-Iran conflict.

Asian equities capped a fourth week of gains amid holiday-thinned trading Friday. Japanese markets ended mixed, paring back gains as the yen strengthened as a result of verbal and suspected physical intervention from central bankers in Tokyo for the first time since 2024. This followed the Bank of Japan holding rates steady and offering some hawkish-leaning takeaways two days prior. Meanwhile, amid a busy earnings calendar, investors continued to favor AI-related names and suppliers on strong earnings growth expectations, powering outperformance for Korea. Taiwan ended little changed and Hong Kong fell, while Greater China rose with some support from upbeat earnings from rare earth and insurance names.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, measured by the Bloomberg Aggregate Index, traded lower this week. A couple of moving parts drew attention and weighed on weekly performance, one being the lingering overhang of fiscal risks. Fitch Ratings’ April 30 rating affirmation highlighted U.S. deficits running far above other double‑A peers, with deficits near ~7% of gross domestic product in 2026–27 and debt exceeding 120% of gross domestic product. Fitch cited tax cuts under the One Big Beautiful Bill Act, limited tariff offsets, and rising age‑related spending as key pressures, noting November’s midterm elections as pivotal for fiscal credibility.

Meanwhile, this week’s $183 billion slate of two‑, five‑, and seven‑year Treasury auctions showed improved demand versus March’s weak outcomes, with bid‑to‑cover ratios back to normal ranges. The results align with Treasury Borrowing Advisory Committee (TBAC) observations of broadly resilient demand, though a compressed auction calendar and ongoing supply fatigue capped performance. The juxtaposition of Fitch’s warning and smoothly clearing auctions suggests markets can still absorb elevated issuance. However, history shows this resilience can fade quickly if deficit expectations rise or investors demand greater risk compensation.

Overall, Treasury markets remain orderly, but the system is running on borrowed confidence. Auctions continue to clear, allowing fiscal deterioration to be deferred rather than addressed. In our view, with markets arguably complacent relative to the scale and persistence of deficits, longer‑dated yields are biased to remain elevated — or move higher — as fiscal risks reassert themselves.

Commodities and Currencies: The broader commodities complex gained ground this week with energy prices firmly remaining in the driver’s seat. With Tehran still blocking the Strait of Hormuz and the U.S. Navy blocking Iranian crude exports, West Texas Intermediate (WTI) and Brent crude prices rallied back near recent highs amid some caution from analysts that several countries may face acute oil shortages soon. Nonetheless, futures prices trimmed weekly gains on Friday’s report of Iran’s latest proposal to Washington. Also of note, U.S. crude exports scored fresh records with global buyers as the globe turns to American producers to offset the supply crunch. Gold prices eased and silver spot prices edged higher. In currencies, yen intervention drove strength in the Japanese currency. The moves came after the yen weakened through the physiologically important 160 yen per dollar threshold as a wide U.S.-Japan rate differential continues to favor the dollar following this week’s central bank decisions. The U.S. dollar weakened.

Economic Weekly Roundup

Fed Rate Decision. In a dramatic twist for Chair Powell, three regional presidents dissented, not over the rate decision itself, but over how it was communicated. Expect additional tension as a new Fed chair attempts to implement a new policy regime.

The rate‑setting committee kept policy rates unchanged, with one member favoring a 25‑basis‑point cut. No surprise here.
In an unusual move, three regional presidents objected not to the rate decision but to the implied forward guidance, most likely the use of the word “additional.”
Unrest in the Middle East remains the primary source of uncertainty for both the growth and inflation outlook.

Economic Data Highlights: Two key points from Thursday morning’s slate of data were the strong contribution from business capex and the warning signs from weakening disposable personal income. Our forecast for Q2 economic growth is below.

Core PCE accelerated to 3.2% on an annual basis in March, up from 3.0% the previous month. Despite the price shock in March, spending adjusted for inflation rose 0.2% m/m after rising an upwardly revised 0.3% m/m in February. Strong spending contributed to Q1 GDP growth.
In a related report, the economy grew 2.0% annualized in Q1, with one percentage point contribution coming from consumer spending. I expect a further deceleration in growth in the coming quarters yet still minimal recession risks.

Business investment continues to power the economy. If the late 90s are the pattern, we could expect non-residential investment to contribute to growth for the rest of the year. Slowing income growth will likely impact consumer spending in Q2 and Q3. Looking ahead, we expect Q2 GDP growth to be 1.8% annualized.

The Week Ahead

The following economic data is slated for the week ahead:

Monday: Factory Orders (Mar), Durable Goods Orders (Mar final), Capital Goods Orders and Shipments (Mar final)
Tuesday: Trade Balance (Mar), S&P Global U.S. Services and Composite PMIs (Apr final), ISM Services Index (Apr), New Home Sales (Feb and Mar), JOLTS Jobs Report (Mar), Building Permits (Mar final)
Wednesday: MBA Mortgage Applications (May 1), ADP Employment Change (Apr), U.S. Treasury Quarterly Refunding Announcement
Thursday: Challenger Job Cuts (Apr), Nonfarm Productivity (1Q preliminary), Unit Labor Costs (1Q preliminary), Initial Jobless Claims (May 2), Continuing Claims (Apr 25), Construction Spending (Feb and Mar), New York Fed One-Year Inflation Expectations (Apr), Consumer Credit (Mar)
Friday: Change in Nonfarm, Private, and Manufacturing Payrolls (Apr), Average Hourly Earnings (Apr), Average Weekly Hours All Employees (Apr), Unemployment Rate (Apr), Labor Force Participation Rate (Apr), Underemployment Rate (Apr), University of Michigan consumer sentiment report (May preliminary), Wholesale Trade Sales (Mar), Wholesale Inventories (Mar final)

Important Disclosures

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Asset Class Disclosures –

Bonds are subject to market and interest rate risk if sold prior to maturity.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1097810

May 1, 2026

Will Weak Seasonal Trends Upend the Current Rally?

Sell in May and Go Away? Maybe Not

Adam Turnquist | Chief Technical Strategist

Last Updated: April 30, 2026

The sharp rebound from the March lows has pushed most major equity indexes back to record highs. This upside momentum has been fueled in part by signs of de-escalation with Iran and growing expectations that the Strait of Hormuz could reopen soon. While the geopolitical environment remains fluid on a day-to-day basis, markets appear to be assigning a higher probability to a relatively near-term U.S. exit from the Middle East, alongside a normalization in global supply chains that could ultimately pressure oil prices lower.

Heading into month-end, the S&P 500 is up 9.2% as of April 29, putting it on pace for its strongest April performance since 2020. Support for equities has also come from solid first-quarter earnings and economic data that have shown limited signs of deterioration.

However, not all markets are sending the same signal. The physical oil market continues to reflect the risk of a “higher-for-longer” regime, suggesting tighter underlying supply conditions (a theme we explored further in Paper vs. Physical: What Tighter Oil Supplies Could Mean). The fixed income market also paints a similar story of lingering inflation risk as Treasury yields remain uncomfortably high. Although it’s important to note, yields have been less responsive to higher oil prices this month versus last month.

May Seasonality: Weak History, Strong Recent Trends

As the calendar turns to May, seasonal trends re-enter the conversation. Historically, May has been a relatively lackluster month for equities. Since 1950, the S&P 500 has delivered an average return of just 0.4% and finished higher 62% of the time, ranking as the fifth-weakest month of the year when it comes to returns.

More recently, however, the data tells a different story. Since 2013, May has averaged a stronger 1.5% return, with 12 of the past 13 years ending in positive territory. This suggests that while long-term trends remain subdued, recent performance has been far more constructive.

Sell in May and Go Away?

May also marks the beginning of the market’s traditionally weakest six-month period, lending support to the well-known “Sell in May and Go Away” adage. This phrase originated in London as “Sell in May and go away, come back on St. Leger’s Day,” referencing a historic horse race dating back to 1776. The idea suggests investors should step away from equities during the summer months and re-enter the market in November, when conditions have historically been more favorable.

The popularity of this saying likely stems from both its simplicity and the data behind it. Since 1950, the May–October period has produced the weakest six-month returns for the S&P 500, while November–April has been the strongest. Over time, this pattern, combined with the phrase’s widespread recognition, may have contributed to a degree of self-fulfilling behavior in markets.

Still, it’s important to keep this in perspective. While May through October has historically delivered a modest average gain of 2.1%, returns have been positive roughly two-thirds of the time over this period. More recently, performance has been even stronger. Over the past 12 years, median and average returns during this period were 6.3% and 5.1%, respectively, with positive outcomes in 82% of cases.

May–October Returns Tend To Be Underwhelming but Positive

Source: LPL Research, Bloomberg 04/29/26
Disclosures: Past performance is no guarantee of future results. All indexes are unmanaged and can’t be invested in directly. The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of the predecessor index, the S&P 90.

Despite these seasonal trends, LPL Research does not advocate for investors to exit equities during this period. However, ongoing geopolitical uncertainty, particularly surrounding Iran, and its implications for growth and inflation are likely to keep volatility elevated. The reopening of the Strait of Hormuz, while potentially positive, introduces second-order effects that remain difficult to quantify at this stage.

History also supports the expectation of increased volatility in the months ahead. The CBOE Volatility Index (VIX), often referred to as the market’s “fear gauge,” has historically trended higher from July through October, typically peaking in late September or early October. The VIX measures expected 30-day volatility based on S&P 500 options pricing; higher readings generally reflect increased uncertainty and risk aversion.

Volatility Tends To Ramp Up Into the Fall

Source: LPL Research, Bloomberg 04/29/26
Disclosures: Past performance is no guarantee of future results. All indexes are unmanaged and can’t be invested in directly.

Summary

Seasonal patterns can offer useful historical perspective, but they aren’t always a reliable guide for what lies ahead. Market direction will depend more on current forces, particularly geopolitical developments and oil prices, along with key fundamentals such as earnings, economic growth, inflation, the labor market, and monetary policy. An easing of tensions in the Middle East and a pullback in oil prices could provide ongoing support for equities, especially if earnings remain resilient.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1100416

April 30, 2026
Equity Diversification Across Regions and Sectors

Two Equity Trends That Highlight Diversification

Thomas Shipp | Head of Equity Research
Last Updated: April 29, 2026

Additional content provided by Tucker Beale, Sr. Analyst, Research.

With big tech earnings season kicking off in earnest this week, investors will split their attention between analyzing the latest signals on artificial intelligence (AI) spending plans and the seemingly never-ending peace negotiations with Iran (along with the still closed Strait of Hormuz). While LPL Research will be doing the same attention splitting exercise, we also wanted to take a step back and review two somewhat longer-term performance trends that we find instructive. First, we review the oft-debated asset allocation decision of U.S. versus international equities (and further between developed international equities and emerging market equities). Second, we review two U.S. equity sectors, information technology (I.T.) and energy, that have had the strongest total return performance over the trailing five years, and are two of the three sectors that individually outperformed the broad S&P 500 index (the third being communication services), despite exhibiting fairly low correlation to one another. Each of these look-backs are solely that, historical reviews of performance data, and this blog is not making a call on either trend continuing or reversing. Rather, we point out these trends because (1) we find them interesting given the seemingly myopic focus on U.S. tech stocks, and (2) they remind investors of the importance of diversification within equity allocations.

Last summer, as tariff fears eased and U.S. stocks attempted to re-assert leadership versus international developed market stocks (DM ex U.S.), we wrote about the factors that had driven U.S. stock outperformance over the prior 15 years (2010-2024), which were primarily expanding relative valuation spreads and superior top-line growth. We also highlighted that if international equities outperformed for the rest of 2025, it would be just the fourth calendar year since 2010 to do so. International stocks, from both developed and emerging markets, did in fact outperform U.S. stocks in 2025 and continue to outperform in 2026 year-to-date. The current year’s outperformance for developed market international stocks is small at less than 1%, but emerging markets have outperformed by over 11%. Taken together, international equities (measured by the MSCI All-Country World excluding U.S. Index) are outperforming domestic equities (measured by the S&P 500) so far this year by about 3.5%, excluding dividends. If we look back to the eve of the 2024 election to date, international stocks have outperformed U.S. stocks by ~9%. We home in on the 2024 election given the Trump administration’s “America First” policy posture and the market’s initial reaction to the election, where U.S. stocks outperformed through roughly the end of February 2025. However, as markets began to digest the potential impacts of the administration’s trade policies (i.e., tariffs), the dollar weakened, and the narrative shifted, and international stocks began to outperform. Despite the strong U.S. equity recovery from the “Liberation Day” lows in April through the third quarter, persistent dollar weakness and attractive relative valuations supported international equities through 2025 year-end. As noted, international outperformance has continued in 2026, driven by emerging market equities.

International Equities Have Outperformed U.S. Equities Since 2024 Election Day

Source: LPL Research, Bloomberg 04/28/26
Disclosures: Past Performance is no guarantee of future results. Indexes are unmanaged and cannot be invested in directly.

Shifting to domestic equity sectors, the trailing five-year performance of the 11 S&P 500 GICS sector indexes reveals a potentially unexpected sector among the leadership: energy. The S&P 500 Energy sector index, dominated by large integrated oil companies such as Exxon Mobil Corp. (Ticker: XOM) and Chevron Corp. (Ticker: CVX), has generated annualized total returns over the trailing five-year period of 23.3% (~184% on a cumulative total return basis). This compares to 20.6% annualized (~155% cumulative) for the S&P 500 I.T. sector index, and 13.0% annualized (~84% cumulative) for the broad market S&P 500 index. Now, the starting point of course influences this look-back, and anyone can have fun with charts and starting points. In April 2021, the energy sector was still trading below its pre-pandemic levels, while the I.T. sector was making new all-time highs. Nonetheless, trailing five-year performance is a common look back period, and the performance is what it is. Note that the above figures are based on total performance, i.e., inclusive of re-invested dividends. Using price-based returns, the energy sector falls slightly behind technology in the trailing five-year lookback (still good for second rank among sectors), given the energy sector’s above average dividend yield over the period.

Energy and Information Technology Best Performing Sectors Over Last Five Years

Source: LPL Research, Bloomberg 04/28/26
Disclosures: Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested in directly.

An interesting point on the sector performance data is that energy has tended to lead during periods of broader market weakness, serving as a useful diversifying asset. Elevated oil and gas prices weren’t always the driver of broader equity market weakness in these periods; in 2022, commodities broadly outperformed as inflation rose, though few would argue commodities drove the rise in inflation, at least initially. Some may point to the Iran war driving the recent outperformance of the energy sector and suggest that energy’s gain is the market’s loss. However, the energy sector was already outperforming before the war and has given back most of the performance it added after the war started. All that’s to say, over the last five years the energy sector has provided investors diversification benefits without sacrificing performance. In fact, during the trailing five-year period analyzed, the energy sector had the lowest correlation of weekly returns of all sectors relative to the broad market as well as to large individual sectors such as I.T., communication services, and consumer discretionary

While we found these trends insightful, we reiterate we are not making a call that any particular trend will either continue or reverse. Analyzing performance data such as these provide investors context for where markets have been, to better understand where they may go in the future and help make the case for diversification within equity portfolios, both by region and sector.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1097805

April 29, 2026
Assessing Implications of the Oil Shock

Paper vs. Physical: What Tighter Oil Supplies Could Mean

Adam Turnquist | Chief Technical Strategist
Last Updated: April 28, 2026

Additional content provided by Brian Booe, Associate Analyst, Research.

With the proverbial ceasefire negotiation can kicked down the road for the second time in a week, the U.S. and Iran remain in a stalemate over the Strait of Hormuz. While equity markets have bounced back this month, seemingly moving on to the more upbeat fundamental and macro backdrop, and crude oil futures have dropped off their March highs, the physical supply squeeze for oil may be somewhat underappreciated by investors. Entering 2026, crude oil over supply was expected to be a headwind for energy prices, but damage to the energy infrastructure and production cuts in the Middle East have accelerated uncertainty around the supply crunch sparked by the Strait of Hormuz closure. For perspective, one-fifth of global supply typically traverses the Strait, but roughly 23,000 outbound kilobarrels of crude oil have passed the waterway since March 1 (just under 1.5 days’ worth, based on the one-year average before the conflict). Early-year oversupply has helped absorb the immediate shock better than feared, while markets still face normalization that could take months.

Headlines have broadly focused on futures prices across the so-called paper market, but what slipped under the radar was a disconnect beginning in mid-March between the physical market. As evidence of the supply squeeze, futures prices remain lower than dated Brent prices (the benchmark for physical oil prices) and have resumed moving higher despite coming back to earth a bit after soaring past $140 per barrel before the U.S.-Iran ceasefire.

Dated Brent and Brent Futures Remain Disconnected

Source: LPL Research, Bloomberg 04/27/26
Disclosure: All indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.

Considering that the final cargoes that departed the Strait of Hormuz before the conflict arrived at their destinations during the week of April 13, simply securing barrels of crude is rapidly becoming paramount. Japanese refiners have snapped up U.S. oil, Chinese refiners drove shipments from Vancouver to record highs, and India has lifted purchases of Venezuelan oil, and reports indicate traders at some Asian refineries reportedly disregarded price in recent transactions.

Although futures prices may fall following the first headlines of a durable reopening of the Strait, the futures curve suggests a new floor for crude has been set as impacts in the physical market linger, potentially leading to a structural change for energy surrounding a shift from a just-in-time market to one involving a renewed importance in strategic inventory reserves.

What’s the Buzz Around the Petrodollar?

Another hot topic related to the physical oil squeeze has been the so-called death of the petrodollar. However, we don’t believe the petrodollar dynamic (a product of a 1970s U.S. agreement with Saudi Arabia to price oil in dollars, which has fueled capital recycling into U.S. assets) is over. Iran accepting tolls in Chinese yuan sparked angst around the end of the petrodollar, but the idea of a “petroyuan” seems farfetched as a meaningful shift would take years (potentially decades), not weeks or even months. We note the offshore petrodollar may not be as potent during this shock as in the past, given a few factors. One being Gulf States’ shift away from investing in traditional reserve assets (like U.S. Treasuries and dollars) toward sovereign funds buying equities. Another being the Saudis issuing dollar-denominated bonds rather than solely buying them. And of course, reduced Middle East energy sales from the Strait of Hormuz closure. But the U.S. acting as a net exporter will likely keep North American oil flush with onshore dollars.

What About Equities?

What about equities? Well, as evidenced by global market performance since the end of February, the impacts of higher oil prices are not felt equally across the globe. The U.S. has firmly established itself as a net exporter of total petroleum products. This provides domestic equities with relative insulation compared to the rest of the world, and U.S. equities also display less exposure to overseas revenue compared to their global counterparts — likely acting as a buffer from spillover across the Atlantic and Pacific. Developed international markets, however, are more exposed.

As European underperformance during the conflict suggests, higher energy and raw-materials costs may pressure margins, limiting the runway for European earnings growth. Plus, with inflation often “imported” as energy prices rise, market expectations of a European Central Bank and Bank of England rate hike have risen for this summer. Despite the shock being treated as a temporary, near-term inflation disruption by markets rather than a policy regime change, more restrictive monetary policy may challenge the upside potential for European stocks over a tactical time frame.

Japanese equities remain acutely exposed given approximately 88% of the archipelago’s oil imports originate from the Middle East. However, equities have displayed some resilience with the recent rebound in tech shares supporting benchmarks — a similar story to the emerging markets across Asia as exchanges without a sizable technology sector, such as Thailand and Indonesia, have been hampered by oil prices and the supply crunch compared to the tech-leaning markets of South Korea and Taiwan.

Conclusion

This historic energy supply shock does warrant monitoring by investors. Market pricing suggests higher oil prices may linger, and physical markets potentially face a structural shift as supply normalization will take time. However, we don’t believe this spells doom and gloom for the dollar or equity markets. The U.S. dollar index has strengthened since the start of the conflict and its reserve status remains secure. Calls for the end of the petrodollar may be over the top. Given both Washington and Tehran appear committed to holding the temporary ceasefire and working towards an agreement on the Strait of Hormuz, equity trading will likely continue refocusing on fundamentals, leaving the effects from the de facto closure of the waterway an undertone. In the near-term, we expect the U.S. to outperform developed international and emerging markets as tech-driven earnings strength will likely outweigh smaller relative drags from the oil shock.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1097803

April 28, 2026

Blog

A New Fed Regime: Warsh, Policy Direction, and Treasury Market Consequences

The Fed’s Next Chapter: Kevin Warsh and a Shift in Monetary Policy

Warsh’s Policy Framework: A Return to Restraint

Rethinking the Fed’s Balance Sheet

The Fed’s Balance Sheet Remains Elevated

Shrinking the Footprint — Gradually

Less Guidance, More Market Discipline

Market Implications: More Volatility, Fewer Promises

Fiscal Pressures Move into Focus: Warnings Grow Louder

Budget Deficits Need To Be Filled With Treasury Securities

A Heavier Supply Era: Treasury Issuance Meets a Changing Buyer Base

Treasury Auction Sizes by Maturity Bucket

What the Latest Treasury Guidance Tells Us

The Bottom Line

Asset Allocation Insights

Stock Index Performance

S&P 500 Index Sectors

Fixed Income and Commodities

U.S. and International Equities

Fixed Income, Currency, and Commodity Markets

Economic Weekly Roundup

The Week Ahead

Important Disclosures

April Rotation: U.S. Large Caps Regain Dominance

Broad Asset Class Flows

Risk-On Sentiment Returns: Equities Dominate April Flows

Asset Class Specific Flows

U.S Large Cap Catapults to Top Segment by 2026 Flows

Key Tactical Asset Allocation Takeaways

Important Disclosures

Gold Prices Have Struggled to Gain Traction Since the Middle East Conflict Began

Important Disclosures

AI, Healthcare, and Volatility: Positioning for 2026

AI: A Structural Force That No Longer Guarantees Returns

Healthcare: Broad Opportunity, Narrow Margins for Error

Market Breadth: Opportunity, With Conditions

Volatility Without Capitulation

Traditional Defensives Face New Scrutiny

Software: Opportunity or Structural Risk?

2026 Equity Return Expectations: Moderation Reigns

Stock Picker’s Market or Macro Market?

What This Means for Allocators

Summary Tension Map

Summary Visual (At‑a‑Glance) – Interviews With Large Cap Portfolio Managers During Q1 2026

Methodology: Identifying Key Risks and Opportunities

Important Disclosures

Hyperscalers Post Blockbuster Beats

AI Capex Cycle Picking Up Speed

AI Capital Investment by Largest Hyperscalers Could Exceed $700 Billion in 2026

Strong Earnings Outlook Getting Stronger

Significant Earnings Growth Gap Between Technology and the Rest of the S&P 500

Margin Expansion Story Likely Not Over

Technology Enjoys Significant Profit Margin Advantage Over Rest of the S&P 500

Technology Valuations Remain Reasonable Despite Recent Strength

Conclusion

Asset Allocation Insights

Stock Index Performance

S&P 500 Index Sectors

Fixed Income and Commodities

U.S. and International Equities

Fixed Income, Currency, and Commodity Markets

Economic Weekly Roundup

The Week Ahead

Important Disclosures

Sell in May and Go Away? Maybe Not

May Seasonality: Weak History, Strong Recent Trends

Sell in May and Go Away?

May–October Returns Tend To Be Underwhelming but Positive

Volatility Tends To Ramp Up Into the Fall

Summary

Important Disclosures

Two Equity Trends That Highlight Diversification

International Equities Have Outperformed U.S. Equities Since 2024 Election Day

Energy and Information Technology Best Performing Sectors Over Last Five Years

Important Disclosures

Paper vs. Physical: What Tighter Oil Supplies Could Mean

Dated Brent and Brent Futures Remain Disconnected

What’s the Buzz Around the Petrodollar?

What About Equities?