April Economic Update

Market Summary

March brought heightened volatility to financial markets as investors reacted to a combination of weaker labor data, persistent inflation concerns, and ongoing geopolitical tensions in the Middle East. Equity markets experienced uneven performance throughout the month, with early declines followed by partial recoveries as investors reassessed the path of monetary policy. For the month, the S&P 500 lost -5.13%, the Nasdaq 100 pulled back -5.01%, and the Russell 2000 retreated -6.01%. (1)

Iran War

Geopolitical tensions were the key driver of market sentiment during March. Ongoing instability in the Middle East continued to influence energy markets, keeping oil prices elevated and contributing to inflation concerns. The largest impact to the markets centers around the Strait of Hormuz and the almost complete halt to shipping traffic impacting commodities such as oil, natural gas, and fertilizer, raising concerns around inflation, consumer confidence, slowing economic growth, and the path moving forward that the Federal Reserve will take regarding interest rates.

As of the writing of this newsletter, Iran has a matter of hours before President Trump’s deadline for an agreement for a ceasefire and to reopen the Strait of Hormuz. As a threat to Iran, Trump is claiming that he will bomb Iran’s infrastructure if an agreement is not made by the deadline; a move that experts claim would be a war crime committed by the United States since it would directly be attacking the wellbeing of Iran’s citizens rather than targeting Iranian military assets. Given that, it is hard to believe that Trump will carry out these threats but we won’t know for certain until the deadline passes.

Economic News & Releases

Economic releases in March reinforced the narrative of a moderating - but not yet contracting - economy. The Consumer Price Index (CPI) increased 2.4% year-over-year in February, according to the U.S. Bureau of Labor Statistics. This, of course, does not factor in the recent gas price increase seen in March. Economic activity indicators were mixed. Retail sales rebounded modestly after January’s weakness, suggesting consumers remain engaged, though more selective in spending. Meanwhile, the ISM Manufacturing Index hovered near the neutral 50 level, signaling stabilization but limited expansion in the industrial sector. (2,3)

Looking Forward…

The next month will largely be dictated by what happens with the Iranian war, so we expect more short-term volatility. However, if a cease fire does occur, we could see a fast and furious rally. Only time will tell.

Annual Firm Disclosures

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Monthly Financial Tip:

Take time to review your asset allocation relative to your risk tolerance. Market movements can shift portfolio weightings over time, and periodic rebalancing helps ensure your investments remain aligned with your long-term financial goals.

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Citations:

1. Schwab Feb 27, 2026

2. Reuters April 1, 2026

3. Institute for Supply Management March 2, 2026

Disclaimers:

This post has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Bob Lawson is not engaged in rendering legal or accounting services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.