WP Weekly Insight (4/18-4/24/2026)

Market Recap & Snapshot[1]

• The US stock market is looking past the conflicts in the Middle East, as well as concerns about an affordability crisis and an anemic jobs market at home, and is instead marching higher for a very good reason: strong corporate profits. America, Inc. has been on a hot streak for 5-plus quarters, and, ultimately, the fundamentals prevail.

• Oil started to rise again as both the US and Iran shut down traffic through the Strait of Hormuz. Brent crude, the global benchmark for oil prices, breached $100 a barrel for the first time in two-plus weeks, and gas prices stateside hit their highest level since summer 2022.
• Wednesday, April 22. Domestic stocks cheered President Trump’s extension of the ceasefire in Iran. Both the S&P 500 and Nasdaq closed at record highs.
• Thursday, April 23. Software stocks sold off following a fairly solid report from ServiceNow. The company raised its own AI revenue forecast, but lower margin guidance had investors selling not only NOW stock, which plummeted 18%, but the entire industry. The iShares Expanded Tech-Software ETF (IGV) dropped almost 6% on the day and closed the week down 19% year to date (YTD). Investors are worried that AI can simplify coding to the extent that software companies will see their products replaced at a fraction of the current cost.
• Chipmakers bucked the trend on Thursday, however. The PHLX Semiconductor Sector Index, known as “the SOX,” closed 1.7% higher to extend its winning streak to 17 trading days. The top five constituents in the niche index are household names: NVIDIA, Broadcom, Taiwan Semi, ASML, and Micron. (The SOX would make it 18 straight positive days on Friday.)
• Friday, April 24. The S&P 500, up 0.8%, and the Nasdaq Composite, 1.6% higher on the day, both closed the week at fresh record highs, and both indexes extended their winning streaks to four consecutive weeks.
• The 10-Year Treasury yield crept up 6 bps to 4.31%, likely due to inflation concerns surrounding higher energy prices.

The Persian Predicament

• TACO Tuesday. President Trump indefinitely extended the ceasefire with Iran a day ahead of the expiration of the original two-week armistice. Traffic through the Strait of Hormuz—through which 20% of the world’s oil trade once passed—is not set to increase, however, as Trump indicated that the US Navy’s blockade of ships traveling to and from Iranian ports would remain intact. Iran has effectively “closed” the Strait to all other seaborne traffic via the threat of strike.
• Oil output from Persian Gulf nations is down 57% below pre-war levels, according to an analysis by Goldman Sachs. More than 10 million barrels a day of oil and petroleum products—some 10% of global supply—are bottled up in the Gulf.[2]
• The energy crunch is hitting Europe the hardest, with the continent already experiencing dwindling fossil fuel reserves and plummeting liquified natural gas imports. Meanwhile, higher oil prices are encouraging South American producers like Brazil, Guyana, and Suriname to bring more barrels to market.
• Case in point has been the market for jet fuel. Middle Eastern producers can’t ship crude to Asia, which usually refines the oil into fuel and sends it back to Europe and elsewhere. European airlines have already started cutting flights and raising prices due to the shortage. American carriers are affected too but are in no danger of running out of fuel. Global travel and tourism this summer is likely to be both pricey and sluggish.[3]
• Meanwhile, in what would appear to be peculiar timing, Secretary of War Pete Hegseth fired US Navy Secretary John Phelan. Phelan had clashed with top leaders at the Pentagon, including over the Trump administration’s efforts to revive shipbuilding. Hegseth fired Army Chief of Staff Randy George earlier this month. The defense secretary has purged nearly two dozen senior military officers in his first 16 months on the job and is currently feuding with Secretary of the Army Dan Driscoll.[4]
• The Trump administration said it was awaiting a response from Iran on when to resume peace talks. As the week drew to a close, Steve Witkoff and Jared Kushner were en route to Pakistan for unconfirmed talks with Iranian Foreign Minister Abbas Araghchi. The US and Israel peeled off so many layers of the regime’s power structure in the first week of the conflict that it would seem impossible to trust or confirm that any agreement, if one is reached, is backed by a consensus amidst what must be an ongoing power struggle. In short, how can the US delegation be sure that they are even negotiating with the right people?
• The key sticking-points in talks include Iran’s stash of enriched uranium and the future of its nuclear program, control of Gulf waters and the Strait of Hormuz, and the role of Iran’s regional proxies, such as Hamas, Hezbollah in Lebanon, and the Houthis in Yemen. Iran would also need security guarantees against future attack and would like to explore some sort of path toward economic normalization following years of heavy sanctions.
• The longer the stalemate drags on, the higher oil will likely drift, placing greater pressure on global commerce and consumers as well as overall price levels. The threat of knock-on effects of higher energy prices may be enough to keep central banks, including the Fed, on hold even if economies begin to weaken. It’s possible that there will not be any interest rate cuts at all in 2026.

• Israel and Lebanon extended their ceasefire agreement for three weeks.
• As a footnote, we appreciated the following chart depicting the nuances of oil prices depending on locale and time of need. Brent crude is the global benchmark, while US commodity desks typically track West Texas Intermediate crude.

The Fog of [Trade] War

• Customs & Border Protection launched its tariff refund portal that is meant to allow importers to claw back payments after the Supreme Court’s ruling struck down the Trump administration’s global tariffs issued under the International Emergency Economic Powers Act (IEEPA). The web portal for claiming refunds, which was built in roughly six weeks, immediately experienced errors due to overwhelming traffic. The Yale Budget Lab estimated that the IEEPA tariff revenue amounted to about $165 billion. The administration has been exploring alternate legal routes to sustain the key tenet of its sweeping trade policy.

Economic Data

• Almighty American Consumer. Retail sales in the US surged 4% in the month of March on a year-over-year basis, driven largely by a 15.5% month-over-month increase in spending at—no surprise here—gas stations. Soaring prices at the pump were somewhat offset by early rounds of higher tax refunds. The average refund amount was up 11.2% through April 10, as reported by the IRS.[5] Consumer resilience may very well translate into robust Q1 real GDP growth—economists polled by FactSet are expecting 2.5%[6] versus 2.0% in last year’s Q4 and 2.1% for all of 2025.[7] Consumer spending accounts for roughly 70% of America’s economic output.
• Paradoxically, the University of Michigan’s consumer sentiment index fell to a record low in data stretching back to the late 1970s. Spiking gas prices, years of broader inflation, and elevated interest rates have brought about a perceived “affordability crisis” amid certain subsets of the US economy.
• Germany’s economic ministry halved its GDP growth forecast for 2026 from 1.0% to 0.5% and cut its projection for 2027 from 1.3% to 0.9%. Higher energy prices resulting from the war in Iran are straining household budgets. Economy Minister Katherina Reiche noted that Europe’s largest economy is mired near the bottom of the EU’s growth rankings despite enhanced fiscal spending efforts.[8]

Central Bank Watch

• The DOJ dropped its criminal investigation of Fed Chair Jerome Powell, which was ostensibly brought on due to cost overruns pertaining to the renovation of the Eccles Building, home of the Federal Reserve. Republican Senator Thom Tillis of North Carolina threatened to block the confirmation of Kevin Warsh, Trump’s pick to succeed Powell, unless the matter was resolved. The question WP has been asking this whole time: why in the world is our Fed chair in charge of a multibillion-dollar renovation in the first place? Seems like he has enough on his plate as it is. At any rate, we hold Powell and the integrity he has put on display as Fed chair in high regard and hope this ugly episode that posed a threat to Fed independence is finally behind us.
• Speaking of Warsh, he appeared before the Senate Banking Committee for a nomination hearing and foreshadowed some of the changes he would like to make should he be confirmed as Fed Chair. He advocated for ending forward guidance practices (which would mean no more quarterly Summary of Economic Projections), reducing the frequency of FOMC meetings (and hence the quantity of interest rate decisions), and restricting the number of speaking engagements for Fed governors and presidents. He also outlined his muddled stance that short-term interest rates could drift lower due to disinflationary productivity gains associated with AI adoption while concurrently shrinking the Fed’s balance sheet, which would involve the selling of Treasuries and mortgage-backed securities that would likely apply upward pressure on longer-term rates.
• Warsh was also pressed on whether he would act as President Trump’s “sock puppet” by lowering interest rates while inflation is still running above target and the economy is adjusting to other stimuli. We’d like to point out that the Fed is run by committee in a democratic fashion, which means that at least six of the other 11 FOMC members would need to vote along with the Chair for there to be any change in the federal funds rate.

(A)simov (I)saac

• Tesla’s shares fell 3.6% in the trading session after reporting Q1 earnings growth of 17% and an operating profit that more than doubled. Results beat expectations but remained far below the EV-maker’s 2022 peak as car sales disappointed. The company is shifting its focus—and capital spending—to the development of self-driving taxis, a space where Alphabet’s Waymo holds a huge lead, and humanoid robots, neither of which has yet generated meaningful revenue.
• Speaking of Elon’s empire, SpaceX, which recently merged with xAI, has agreed to acquire AI startup Cursor for $60 billion later this year or instead pay $10 billion for joint work. Musk recently admitted that xAI’s coding tools are deficient relative to rivals OpenAI (ChatGPT) and Anthropic (Claude). SpaceX is expected to list as one of the largest IPOs ever this summer.
• Shares of ASML, Europe’s largest company by market cap, fell after chip giant Taiwan Semi (TSMC) said it has no plans to buy the Dutch group’s high-end lithography machines due to cost. ASML’s gear is used to print complex circuit designs onto silicon wafers. The company says its most advanced machines will make this process more efficient.[9] TSMC produces ~90% of the world’s most advanced chips, such as those designed by NVIDIA and AMD, while ASML monopolizes the extreme ultraviolet (EUV) machine industry. Roughly 25–30% of ASML’s annual revenue comes from TSMC, and together they are perhaps the two most important companies in the world when it comes to the future of AI and humanity in general.
• Intel reported a blockbuster first quarter, with data center and AI revenue rising 22% and foundry revenue up 16%. The American chip pioneer was almost left for dead last year before selling a 9% stake to the federal government (bizarre) and 4.5% to NVIDIA. Intel is one of the few companies that both designs and constructs microchips. As mentioned in the bullet above, most advanced chip designers outsource actual production to Taiwan Semi, whose manufacturing technology is superior to that of Intel’s. Friday, however, belonged to INTC, with the stock rising 24% to close at its first record high since the dot-com bubble days of 2000.
• Anthropic, creator of Claude Code, has some checks to cash. Amazon is investing another $5 billion, and possibly up to $20 billion longer-term, on top of the $8 billion it has already plowed into the AI start-up. Later in the week, Alphabet’s Google announced plans to invest as much as $40 billion of additional capital.
• Big Tech Layoffs.Microsoft is said to be offering voluntary retirement buyouts to about 7% of its US employees, while Meta Platforms blasted out a memo saying it planned to terminate 10% of its workforce, or roughly 8,000 employees, starting May 20. Meta is also canceling plans to fill 6,000 open roles. The savings on salaries are likely to be repurposed toward AI CapEx.

Corporate Earnings & Stocks in the News

• Tim Cook will be stepping down as Apple’s CEO effective September 1 (but will stay on as executive chairman). John Ternus, the SVP of Hardware Engineering who has overseen the massive success of the iPad and AirPods, will replace him. Apple’s market valuation catapulted from $350 billion to $4 trillion during Cook’s almost 15 years at the helm. Take a bow, Mr. Cook.

• With war still slogging along in Ukraine on top of the conflict in Iran, America’s largest defense contractors—GE Aerospace, Northrop Grumman, RTX, and Lockheed Martin—reported surging orders along with their Q1 results. The lead time is measured in years; however, for Lockheed to increase production of its PAC-3 missile interceptors, and for RTX to increase production of its Tomahawk missiles.
• We are over a quarter of the way through Q1 earnings season, and 84% of S&P 500 companies reporting results so far have beaten analyst earnings estimates. The index is tracking toward 15% earnings growth, which would mark the sixth straight quarter of double-digit (YoY) growth. For the full calendar year 2026, analysts are predicting earnings growth of 18.6%, which, in our view, justifies the S&P 500’s historically elevated forward P/E ratio of just under 21.[10]

The Week Ahead

• Tech giants Alphabet, Amazon, Apple, Meta, and Microsoft will headline a docket of 180 S&P 500 companies scheduled to report Q1 earnings. Together, those five stocks comprise 24% of the market capitalization of the S&P 500.
• The Federal Open Market Committee will announce its monetary policy decision on Wednesday as Fed Chair Jerome Powell’s tenure draws to a close. Rates will almost surely stay put, but Fed watchers will be listening for policy guidance as it pertains to inflation due to surging energy prices related to the war in Iran.
• The Bureau of Economic Analysis will be releasing its personal consumption expenditures (PCE) price index, which is the Fed’s preferred gauge of inflation. The core PCE reading, which strips out volatile food and energy prices, stood at 3.0% last month and has not been below the Fed’s 2.0% target since February 2021.

Economic and Index Definitions