Stocks Stage a Relief Rally on Ceasefire News

Performance for Week Ending 4.10.2026:

The Dow Jones Industrial Average (Dow) gained 3.0 percent, the Standard & Poor’s 500 Index (S&P 500) added 3.6 percent, and the Nasdaq Composite Index (Nasdaq) jumped 4.7 percent for the week ending April 10. Sector breadth was positive, with ten of the 11 S&P sector groups closing higher. Energy was the weakest performer (-4.1 percent), while consumer discretionary (+5.8 percent) was the strongest.

*See below for Index Definitions

MARKET OBSERVATIONS: 4.6.2026  – 4.10.2026

The S&P 500 finished higher for a second straight week as investors reacted to a two-week US-Iran ceasefire that sparked hopes for relief from the global energy crisis that has threatened global economic growth. After hitting a bottom on March 30, the S&P has rallied 7.5 percent and is now just 2.3 percent below its all-time high reached in late January. The recent market gains suggest that investors may have started to move away from a worst-case scenario and look beyond the conflict.

Economic Roundup: Initial jobless claims rose to 219,000 in the week ended April 4, according to the Department of Labor, increasing from the previous week's 203,000 claims. Continuing claims, which track the unemployed population still seeking work, fell to 1.79 million for the week ended March 28, below economists' expectations of 1.83 million. Meanwhile, the Fed's preferred measure of inflation rose 0.4 percent in February, according to Personal Consumption Expenditures (PCE) index data released by the Bureau of Economic Analysis. Core PCE, which excludes the more volatile food and energy categories, also rose 0.4 percent on the month. On an annual basis, the headline and core PCE price indexes rose 2.8 percent and 3 percent, respectively, in line with expectations. Elsewhere, mortgage rates fell for the first time in over a month, bringing some relief for homebuyers as the busy spring season heats up. The average 30-year fixed-rate mortgage rate was 6.37 percent through Wednesday, according to Freddie Mac data, down from 6.46 percent a week earlier. Lastly, the services sector remained in expansion territory in March with the ISM Services PMI registering a reading of 54.0, but was below 56.1 in February—the strongest rate of expansion since July of 2022.

Fed Speak: San Francisco Fed President Daly said the US economy is in a good place, but it will take time to understand the consequences of the Iran war. New York Fed President Williams said his outlook for underlying price pressures in the US was largely unchanged despite his expectation that higher energy costs stemming from the war in Iran will boost overall inflation. Chicago Fed President Goolsbee said he is concerned the Iran war will drive inflation higher while slowing the economy, creating a challenging situation for the central bank with no clear policy response. Goolsbee described the current environment as uncomfortable, noting there is no obvious cookbook for the Fed to follow. Cleveland Fed President Hammack said that an interest rate hike could be appropriate if inflation remains persistently above the central bank’s 2 percent target, a sign that some policymakers are moving away from a bias toward easing. While she generally favors holding its policy rate steady for some time, she noted that the Fed might have to cut if higher gas prices slow growth and lift unemployment. If inflation remains elevated, however, a rate hike may be warranted, she added.

FOMC Meeting Minutes: According to the release of the March FOMC meeting minutes, a growing group of Fed policymakers felt that interest rate hikes might be needed to counter inflation that continued to exceed the central bank's 2 percent target, particularly given the inflationary impact of the U.S.-Israel war with Iran. "Some participants judged that there was a strong case for a two-sided description of the Federal Open Market Committee's future interest rate decisions, reflecting the possibility that upwards adjustments to the target range for the federal funds rate could be appropriate if inflation were to remain at above-target levels," the minutes said. At the conclusion of the meeting, the Fed held its benchmark overnight interest rate steady in the 3.50-3.75 percent range while nodding to the fresh uncertainty the war had introduced to the economic outlook. Despite the inflation risks, however, many participants still saw rate cuts as part of their baseline outlook, with most judging that an extended conflict in the Middle East would do enough damage to economic growth that even more cuts would be warranted. "Most participants raised the concern that a protracted conflict in the Middle East could lead to a further softening in labor market conditions, which could warrant additional rate cuts, as substantially higher oil prices could reduce households' purchasing power, tighten financial conditions, and reduce growth abroad," the minutes said.

Outlook: Amid the recent market volatility and uncertainty surrounding the duration of the Iran war, we are tactically cautious on the market, although looking out six–12 months we remain constructive and do not believe the situation in the Middle East—at least at this point—is enough to derail the current bull market. The focus should remain on what actually drives stock prices—earnings, the economy, and interest rate policy—all of which we think are in a favorable place. The U.S. economy is growing, earnings are forecast to grow at a double-digit pace this year, the Fed is expected to maintain an easing bias with expectations of at least one more rate cut this year, and fiscal policy from the One Big Beautiful Bill Act will likely be a tailwind during the first half of the year. History suggests that bull markets rarely end when the Fed is easing and both the economy and earnings are growing.

The Week Ahead: The Iran conflict will remain front and center with the focus on progress in ceasefire talks and reopening the Strait of Hormuz. In terms of the data calendar, reports of interest include March existing home sales, the March Producer Price Index, and March industrial production. First quarter earnings season will kick off in earnest with 29 members of the S&P 500 scheduled to report results, including Goldman Sachs, JP Morgan, Wells-Fargo, Johnson & Johnson, Bank of America, Morgan Stanley, and Netflix. It will be a busy week in terms of Fed speak with at least 10 Fed heads scheduled to make appearances. On Wednesday, the Fed is also scheduled to release the Beige Book report.

— By Michael Schwager, Chief Market Strategist, Managing Director

Definitions

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since Oct. 1, 1928.

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

The Nasdaq Composite Index is a broad-based capitalization-weighted index of stocks in all three Nasdaq tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of Feb. 5, 1971.

This material contains opinions of the author, but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC.