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Looking forward, the trajectory of equities in 2026 will likely depend on several variables, including the path of inflation and interest rates, corporate earnings, stability in the energy sector and of course the turmoil in Iran.
Geopolitical Conflict: The geopolitical conflict in the Middle East and its impact on global oil markets, took center stage in the first quarter and could continue to shape how market conditions move forward in Q2 and beyond. Any escalation or de-escalation could trigger reactive moves across equities, commodities, and currencies.
Interest Rates and Inflation: As always, Federal Reserve policy remains a central influence and we may experience a “higher for longer” stance from the FOMC.
Corporate Earnings: First quarter corporate earnings were healthy and investors need to remember that corporate earnings still play a meaningful role in stock prices. While there is currently a high degree of volatility and short-term uncertainty, long-term we remain positive.
Moving forward, the media might continue repeating many words that could raise fear and concern, such as “dip”, “correction”, and “bear market”. Please remember, volatility is part of the investment experience and long-term investors know that the upward climb in never a straight line.
A long-term mindset can help shield you from succumbing to media pressures and swaying from your financial goals and plans. As you navigate through the next few months, please keep in mind that, as you can see from our chart, for more than a seventy-year span, the S&P 500 has experienced a dip about twice per year; a correction about once every 18 months; and a dip of 20% or more once every six years.
Volatility can also present a potential opportunity. Periods of market weakness can bring opportunities to invest at more attractive prices, rebalance portfolios, or harvest losses to help offset capital gains.
We believe an informed client is the best client. Our commitment is to offer you consistent, meaningful communication and to proactively help you navigate the changing economic environment.
As always, we encourage you to share any concerns you have with us. Our team is here to help you with every step of your journey toward your financial goals. We greatly value the trust and confidence you place in our firm and look forward to continuing to serve you.
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