Stocks had another good week and the Standard & Poor’s 500 and Nasdaq Composite Index both ended at new record highs. Year-to-date, the S&P is up 5.6%, while the Nasdaq is 8% higher. The Dow Jones Industrial Average is up about 3% for 2026 but is below its record high. Meanwhile, bond prices slid and yields rose, with the yield on the ten-year Treasury Bond up to 4.378%. Bond prices and yields move in opposite directions.
(When you buy a bond, you are, for the most part, buying the cash flow that that bond provides. When you pay more for a specific bond, you are receiving cash flow that is a lower percentage of your purchase price. Therefore, the more you spend on a bond, the lower the yield of that bond. It works in reverse, too. If bond prices go down, you are spending less money to receive the same yield, and the percentage return is higher. But always remember that if held to maturity, a fixed-rate bond will be worth its face value.)
But we have to ask the same question as last week: with everything that’s going on, why are stock prices so high? Whence comes this optimism?
Apparently, we have entered the way-back machine, and the current rally is largely about artificial intelligence, which was moving markets up last year, before it started moving markets down. AI is either the end of civilization, or the hope of all people for the future. You choose!
Consumer spending, as always, is leading the economy. But the economy IS K-shaped. The wealthier you are, the more likely you are to spend. Many people also received their tax refunds recently, but with war-related inflation building across the country (and the world) one must ask how long the economy and the stock market can remain strong.
Last week we received the updated personal consumption expenditures index (PCE) for March. The data showed that the PCE climbed by 0.7% in the month of March and was 3.5% higher for the trailing twelve months. This shows that inflation is rising rather than falling. 3.5% is considerably higher than the Federal Reserve’s 2% inflation target, but not wholly surprising given how oil, gas, and related prices have risen since the end of February when the Iran war started.
And speaking of the Fed, it is likely that Kevin Warsh will be confirmed as President Trump’s pick for Fed Chairman, which made last week’s Open Market Committee the final one that Chairman Powell will chair. But in a surprising move, Powell has indicated that instead of leaving the Fed when his term as chair is over, he is going to stay on. His appointment tenure lasts until 2028. Not coincidentally, the Department of Justice has announced that its investigation into Powell could be resurrected at any time.
Think kids and grandkids are expensive? You are right! According to an analysis by Lending Tree, the national average for the cost of raising a child for 18 years is now $303,418. That doesn’t include college! The total is up 1.9% from last year.
The United Arab Emirates (UAE) withdrew from OPEC as of last Friday. OPEC watchers are still trying to figure out exactly what this means, but it seems obvious enough that the UAE was stunned when Iran started bombing it in retaliation for the US actions against Iran. Iran is an OPEC member. Other factors may also be in play.
We know that Iran is having trouble getting its oil to market with the Strait of Hormuz blockaded by the U.S. Some watchers have suggested that Iran’s oil capabilities are going to explode. Not so far. What HAS happened, though, is that Iran has so much unsold oil that it is now storing the oil in derelict tanks and tankers. Before the U.S. blockade, Iran was shipping about two million barrels each day. Now it’s down to one-quarter off that and is trying to get oil to China by railway.
For the week ending on May 1st, the S&P finished at 7,230, the Nasdaq at 25,114, and the Dow at 49,499. The yield on the ten-year Treasury Note closed at 4.378%. Contracts on WTI (American) crude oil were selling at about $102.31 per barrel, while Brent (international) crude contracts were going for $110.76. New York gold was bid at $4,574.20 per ounce, and one Euro was worth $1.17.
Elizabeth E. Cook
Partner, Diastole Wealth Management
News and information presented here were gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) Morning Brew, Barron’s, The Wall Street Journal, The Economist, CNBC, Axios, Bloomberg, The New York Times, Business Insider, USA Today, CNN, The AP, Fortune, CBS, Reuters, Yahoo Finance, and The Hustle. If you have questions, please call us at 203.458.5220, or email me, Liz Cook, at ecook@dwinvest.com.
The world’s shortest airline passenger flight operates between the Orkney Islands and Papa Westray in northern Scotland. The length of the flight? 1.7 miles and one minute. Hardly worth the beverage service!