Your Market Outlook
April 2026
Markets dip after flat February
Equity markets declined in March, driven by the Iran conflict and rising oil prices. Bonds experienced pressure from the rise in the 10-year Treasury rate. The CBOE Volatility Index (the VIX) closed at 27.4, well above the 20 level that is considered stable. We expect volatility to remain elevated, but markets can continue performing well in such environments.
| Market | March |
|---|---|
| S&P 500 | -5.7% |
| Nasdaq | -5.4% |
| Dow Jones Industrial | -6.0% |
| Russel 2000 Small-Cap Stocks | -5.2% |
| Dividend Stocks | -3.3% |
| Bloomberg Aggregate Bond Index | -2.5% |
Data represented through March. 26
Iran conflict adds new uncertainties
February’s concerns over AI-related disruption in tech sectors have been overshadowed by the Iran conflict. A repeating pattern has emerged: potential ceasefires followed by renewed fighting, and surging oil prices followed by corrections. The ongoing market impact is difficult to predict, but oil prices will likely remain high and contribute to overall inflation.
Unemployment uptick, no rate cuts
On March 6, the Bureau of Labor Statistics (BLS) reported a loss of 92,000 jobs in February, compared to 130,000 jobs created in January and 50,000 in December. The unemployment rate ticked up to 4.4% from 4.3% last month, triggering mild caution but not pointing to a deteriorating job market.
The latest CPI inflation report showed a 2.4% year-over-year increase in February (same as the prior month), which was encouraging for markets. Rising oil prices, however, make higher CPI a concern in the months ahead. The current Fed rate stands at 3.5%–3.75%, and the direction going forward is both uncertain and complicated by high oil prices.
Another successful earnings quarter
Earnings growth has been a big driver of strong market performance in recent years. The big question is whether this growth can be sustained. The first-quarter earnings season showed strong aggregate growth of 12.5%, marking the sixth consecutive quarter of double-digit increases.
Only 55% of the companies shared positive guidance, down from the previous 70%–80% range. Estimates for the full year are 13%–15%.
Resilience and strength give rise to optimism
Despite new worries about war, trade, and oil prices, our outlook for 2026 remains positive. We anticipate 7%–11% growth driven by continued earnings increases. The chance of a correction is high, and we expect volatility to stay elevated. Additionally, midterm elections may add to market volatility.
The economy has proven to be relatively resilient and strong, and investment opportunities remain across a wide spectrum. We’re broadening our focus on undervalued, underappreciated assets while expanding into private markets. Dividend stocks will likely continue to stand out. The current market valuation stands at 20.5 times forward earnings.
Sources: JP Morgan Asset Management, Bureau of Economic Analysis, Bureau of Labor Statistics, Morningstar, Factset, Barron's, KKR, and YCharts
