Strong Earnings Outweigh War Uncertainty

Performance for Week Ending 4.24.2026:

The Dow Jones Industrial Average (Dow) fell 0.4 percent, the Standard & Poor’s 500 Index (S&P 500) added 0.6 percent, and the Nasdaq Composite Index (Nasdaq) gained 1.5 percent for the week ending April 24. Sector breadth was mixed, with five of the S&P sector groups closing higher and six closing lower. Energy was the weakest strongest (+3.2 percent), while healthcare (-3.1 percent) was the weakest.

*See below for Index Definitions

MARKET OBSERVATIONS: 4.20.2026  – 4.24.2026

The S&P 500 finished higher for a fourth straight week, with the broader market index closing on Friday at a new all-time high, reflecting the strong start to first quarter earnings season and President Trump’s extension of the ceasefire with Iran. Despite the extension, the U.S. Navy's blockade of the Strait of Hormuz remained in place, disrupting about 20 percent of global oil supply. Oil prices moved higher throughout the week, with U.S. crude prices jumping by 12.6 percent. The stock market’s bullish sentiment seemed to suggest that investors believe the war may ultimately be settled at the negotiating table instead of on the battlefield.

Fed News: At a preliminary confirmation hearing on Tuesday, Federal Reserve (Fed) chief nominee Warsh called for "regime change" at the U.S. central bank, including a new approach for controlling inflation and a communications overhaul that may discourage his colleagues from saying too much about the direction of monetary policy. Warsh's comments before the Senate Banking Committee left key questions about his nomination unresolved, with Republican Senator Tillis using his full time to explain why he would not vote for the 56-year-old lawyer and financier until the Trump administration dropped a criminal probe of current Fed Chair Powell—a stance that could leave Powell as head of the central bank indefinitely. Warsh repeatedly pledged to act independently if he’s confirmed as the next Fed chair, rejecting Democratic concerns he would be a “sock puppet” for President Trump, who continues to demand lower interest rates. On Friday, the Department of Justice announced it would drop the probe into Powell. In a follow-up on Sunday morning, Senator Tillis announced that he will support Warsh's confirmation, ending the standoff. The committee is scheduled to vote this Wednesday on advancing Warsh to a full Senate floor vote.

Q1 Earnings—Off to a Solid Start: Through Friday April 24, 137 companies in the S&P 500 have released Q1 results, with nearly 79 percent beating expectations. While it’s still early, aggregate earnings for this group are up 25.3 percent from a year ago, solidly ahead of the 13.7 percent projected year-over-year growth rate for the overall quarter. On the sector level, technology and materials have provided the biggest upside surprises and also the strongest growth rates. According to Bloomberg, consensus expectations are for S&P 500 earnings to grow by 18.5 percent for all of 2026, and by 16.2 percent in 2027.

Economic Roundup: Although investor sentiment has soured, it is always more important to pay attention to what they do versus what they say. On Tuesday, the Commerce Department reported that March retail sales jumped 1.7 percent, the largest rise since March 2025, after an upwardly revised 0.7 percent gain in February. While the larger-than-expected uptick in sales was boosted by a record surge in receipts at service stations amid elevated gasoline prices, strong year-over-year gains in tax refunds underpinned spending elsewhere. On a year-over-year basis, sales advanced 4.0 percent in March. On the housing front, contracts to purchase previously owned U.S. homes increased more than expected in March, but higher mortgage rates and tight inventory remained constraints for the housing market. The pending home sales index rose 1.5 percent last month to 73.7, according to the National Association of Realtors. In labor news, the number of Americans filing claims for unemployment benefits edged up last week but continued to point to stability in the labor market. Lastly, the April flash reading of manufacturing conditions from S&P Global increased to a 47-month high of 54.0 from 52.3 in March. The index for services conditions rose to 51.3 in April from 49.8 in March, compared with expectations for an increase to 50.6.

Outlook: Despite the recent market volatility and uncertainty surrounding the duration of the Iran war, we maintain a constructive view on the market and do not believe the situation in the Middle East—at least at this point—is enough to derail the current bull market. Our focus remains on what actually drives stock prices—earnings, the economy, and interest rate policy—all of which we think remain supportive. The U.S. economy is growing, earnings are forecast to grow at a double-digit pace this year and next, 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 should remain a near-term tailwind.

The Week Ahead: All eyes will be on the two-day Federal Open Market Committee meeting on Tuesday and Wednesday. While there is little chance the Fed will adjust rates in either direction, the focus will be on what they say, versus what they do. Recent speeches from Fed officials have stressed patience due to the uncertainty of the war in the Middle East, and ultimately how higher energy prices will impact inflationary pressure. Looking at Bloomberg’s World Interest rate Probability tool, the market is currently expecting a 44 percent probability of a single rate cut at the December meeting. On the data front, releases will include the first estimate of Q1 GDP on Thursday along with the March personal consumption expenditures (PCE) data. Other economic indicators of interest include the Conference Board’s Consumer Confidence Index on Tuesday and the ISM Manufacturing Index on Friday. In corporate earnings, 168 members of the S&P 500 are scheduled to release results. Amongst this group will be updates from Mag-7 members Alphabet, Microsoft, Amazon, Apple and Meta.

— 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.