Corporate earnings and retail sales are on the rise but Middle East tensions remain.
Taking a closer look…
- Developments in the Middle East are still top of mind. Updates to the fragile ceasefire or closure of the Strait of Hormuz could jolt the markets up or down, and last week was no exception. Maintaining broad investment diversification may help investors stay the course through periods of market volatility.
- Despite ongoing geopolitical tensions, US companies continue to show strong earnings growth. Of the companies that have reported first-quarter results, more than 85% have outpaced earnings expectations. Key themes for this earnings season have been significant spending on artificial intelligence (AI) technologies and steady consumer spending.1
- Retail sales rose in March. This shows that the US economy was on solid footing during the initial stage of Middle East tensions. While a surge in consumer spending at gasoline stations was expected due to rising prices, spending was positive across many categories including home furnishings, electronics, and gardening equipment.2
- The US Federal Reserve (Fed) chair nominee Kevin Warsh testified before the Senate Banking Committee last week. He emphasized a commitment to maintaining monetary policy independence. Looking ahead, a growing US economy and higher energy prices may make it difficult for the Fed to cut interest rates in the coming months as additional cuts may lead to higher inflation.
Institutional Portfolio Manager, Strategic Advisers
"Many investors struggle with how markets continue to rise despite a myriad of concerns, including higher oil prices, inflation, and AI-related disruptions. The fact is, most investors tend to naturally give more weight to negative news than positive news. That’s why it’s important to adhere to a disciplined investment process backed by diversification and risk management to help stay aligned to financial plans."
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For over 30 years, Strategic Advisers and its dedicated group of seasoned investment professionals have helped clients reach their financial goals. Our team of portfolio managers, with specialized areas of focus in asset allocation and specific asset classes, along with our deep quantitative and fundamental research, drive our investment selection and risk management decisions on behalf of our clients.