First, the Returns… 1. 2026 RETURNS HAVE BEEN MIXED: Here are the 2026 market returns through the first quarter (total return as of March 31, 2026): Stock Indexes: - S&P 500: -4.42%
- Dow Jones Industrials: -3.31%
- U.S. Small Cap: +2.11%
- International – Developed: +0.07%
- International – Emerging Markets: -2.77%
Bond Indexes: - U.S. Aggregate Bond Index: +0.04%
- U.S. Government Bond Index: +0.14%
The State of the Consumer: 2. OIL PRICES SURGED, THEN EASED—BUT THE RISK REMAINS: The conflict in the Middle East pushed oil prices sharply higher, with crude briefly moving above $100 per barrel as fears grew around potential disruption in the Strait of Hormuz through which approximately 20% of the world’s oil travels. Since then, prices have come down somewhat. A key reason is that, despite the blockade being implemented, U.S. naval presence has allowed ships to continue moving through the strait, easing some of the market’s worst fears. Gas prices, which had risen quickly alongside oil, have also stabilized somewhat. If current conditions hold, energy markets may continue to stabilize. However, if tensions escalate or access through Hormuz is meaningfully disrupted, we could still see a renewed spike in oil prices, which would likely bring higher inflation and potentially slower global growth. This remains a key situation to watch. 3. THE REAL ESTATE MARKET IS MIXED NATIONALLY, BUT STRONGER LOCALLY: Nationally, the housing market remains in a state of tension. Mortgage rates remain elevated, and the market appears locked in a standoff between buyers and sellers. Despite an approximate 50% increase in home values since 2020, many sellers are reluctant to lower prices, while buyers are equally hesitant to stretch affordability at current rates. This dynamic has created one of the most lopsided markets since at least 2013, with significantly more sellers than buyers in many parts of the country. That said, real estate is highly localized and our region is telling a different story. Here in the Tri-Cities, the housing market posted a 10.3% sales gain in March, and the regional median sales price came in at $282,000, up 4.4% from a year ago. That suggests pricing fundamentals remain intact locally, even as individual markets diverge across the country. For those paying attention, it’s a reminder that national headlines don’t always reflect what’s happening in your backyard. 4. UNEMPLOYMENT IS RISING, BUT IT’S STILL HISTORICALLY LOW: During the first quarter, one theme that dominated the headlines was that artificial intelligence was rapidly replacing workers. While unemployment has increased slightly, it hasn’t been the bloodbath portrayed in the headlines. Currently, unemployment stands at 4.4%, which is well below the average rate over the last 50+ years. Not to mention, prime-age employment (ages 25–54) is higher today than it was at any point during the 2010s. Maybe things aren’t quite as bad as the media would like us to believe. The State of the Companies: 5. CORPORATE PROFITS ARE STILL ROBUST: While stock prices have declined since the start of the year, corporate profit margins and earnings have held up incredibly well. According to FactSet, the estimated year-over-year earnings growth rate for the S&P 500 in Q1 2026 is 11.6%. If that estimate holds, it will mark the sixth consecutive quarter of double-digit earnings growth, which is nothing short of remarkable. 6. IT’S NOT JUST U.S. COMPANIES THAT ARE THRIVING: While American companies are expected to continue growing earnings in 2026, both developed and emerging markets are on pace to deliver impressive growth as well. Notably, emerging markets’ earnings growth is expected to roughly double that of the U.S., reinforcing the case for diversification. Keep in mind, these are forecasts, so things could change, but the current trends are encouraging. 7. THE WAR IN IRAN AND TARIFFS REMAIN THE BIG QUESTION MARKS: Given that the war in Iran is dominating the headlines, it’s easy to forget that, back in February, the Supreme Court ruled President Trump’s tariff strategy unconstitutional. For anyone who thought that would be the end of tariffs, we had another thing coming, as the president almost immediately reinitiated them under a different piece of legislation. How global companies will continue to navigate the economic uncertainty posed by both the war and tariffs remains a key question as we move forward. For now, all we can say is, “So far, so good.” The State of Investing: 8. THE HOPE FOR MORE RATE CUTS IS WANING: Heading into 2026, the expectation was that the Fed would cut rates three more times, but that hope now appears all but gone. More than that, the market is beginning to price in the possibility of a future rate hike depending on how things evolve with oil prices and unemployment which would have been nearly unfathomable just a few months ago. That said, nobody knows what will happen next, so we’ll simply have to adjust our sails accordingly. 9. VOLATILITY IS OPPORTUNITY: As can be seen in the returns section above, the impact of the headlines on returns has so far been more bark than bite. More recently, we’ve seen just how quickly sentiment can shift. The S&P 500 reached a new record high this week, and the NASDAQ posted 11 consecutive positive trading days before finally pulling back. Much of that momentum has been driven by growing optimism that the conflict in the Middle East could move toward a resolution. That alone is a powerful reminder: markets don’t wait for clarity they move in anticipation of it. Keep in mind, this time last year, we were in the midst of the tariff tantrum, which offers a helpful lesson we can apply today. It serves as a reminder that, historically speaking, volatility has created opportunities to pick up shares of wonderful companies at temporarily discounted prices. 10. DIVERSIFICATION HAS BEEN VALIDATED ONCE AGAIN: During the U.S. tech boom that defined the period between the Great Financial Crisis and the pandemic, the idea of diversification as a prudent investment strategy was often cast aside. But the last few years have reminded us why it remains a foundational principle of investing. Since 2020, we’ve seen the return of a global value premium, and more recently, international and emerging markets have comfortably outpaced the U.S. I like to think that prudence is diversification, and diversification is prudence, so we invest accordingly. Two Reasons for Optimism: 11. U.S. CRIME RATES HAVE DRAMATICALLY FALLEN: If you turn on the evening news, you’ll inevitably be bombarded with stories of violence. However, U.S. homicide rates have recently fallen to a 125-year low, with many other crimes in dramatic decline as well. The data doesn’t support the idea that the world is becoming more dangerous, despite what headlines might suggest. 12. THERE’S A LOT TO BE OPTIMISTIC ABOUT: Here is just a small sample of the progress happening right now: - Our air is getting cleaner
- Renewables generated more power than coal globally in 2025
- 95 million fewer children are living in poverty than in 2014
- 292 million people have gained access to electricity
The future is indeed bright. | 
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May 04, 2026
