April 7, 2026

The Markets

The first three months of 2026 felt a bit like summer school.

In summer school, students learn a lot in a short amount of time. A normal semester gives students about 15 to 17 weeks to learn, but summer classes cram all that information into 6 to 8 weeks. The lessons move quickly and it can be hard to keep up.

That’s what the markets felt like in the first quarter of the year. Investors had to take in a lot of new information very quickly to keep up with economic data, interest rate changes, and global events. Here is a brief recap:

• Enthusiasm for artificial intelligence (AI) tempered. “Technology stocks have been pummeled since peaking in October amid growing concern about whether hefty spending on artificial intelligence will pay off, while more recently the escalating war in Iran further dented risk appetites,” reported Alexandra Semenova of Bloomberg.
• Investors looked past geopolitics – until they didn’t. Geopolitical upheaval has been a hallmark of 2026. We’ve seen a United States military incursion into Venezuela, strong talk about the U.S. invading Greenland and Cuba, and policy choices that have reshaped global alliances and rewired the world economy. Investors took it all in stride until recently.
  
  “The world and the markets changed on Feb. 28, when the U.S. and Israel launched attacks on Iran. In the opening days, investors believed the war would be brief… Over a month has passed, and not only is the war continuing and the Strait still closed, but there has also been significant damage to a key LNG facility in Qatar and a pair of major aluminum production plants,” reported Tom Lauricella of Morningstar.
• Expectations for rate hikes instead of rate cuts. In 2025, the Federal Reserve (Fed) cut the federal funds rate three times. At the start of this year, with inflation closing in on the Fed’s target and employment softening, market analysts anticipated the Fed would continue to lower the rate in 2026, reported Sarah Hanson of Morningstar.
  
  That’s no longer the case. “Economies around the world are coping with an energy shock that has revived inflation worries, opened the door to interest rate hikes instead of cuts, and raised concerns about slowing economic growth,” reported Lauricella.
• U.S. Treasury yields rose. Before the Middle East conflict began, the yield on the 10-year U.S. Treasury (a benchmark for mortgage rates) moved briefly below 4 percent. After military action began, the yield moved higher and finished at 4.35 percent last week.
• Government debt climbed. “The United States just marked another unfortunate milestone: surpassing $39 trillion in national debt. This level of debt is more than the economic output of China and the entire Eurozone, combined. As a percentage of GDP, our debt levels are close to the level of debt after World War II. Worse still, U.S. debt is accelerating relative to history; put another way, we are adding debt faster than ever,” reported the Peter G. Peterson Foundation.
• Companies continued to perform well. Publicly traded companies have proved nimble, adapting to the rapid pace of political and economic change. During the last three months of 2025, in aggregate, companies in the Standard & Poor’s 500 Index (S&P 500) reported earnings growth of 14.0 percent. It was the fifth straight quarter of double-digit earnings growth, reported John Butters of FactSet.

Early last week, the S&P 500 was on the brink of correction, down 9.1 percent (a 10 percent decline signals a correction) when it rebounded. Investor optimism about an early end to the Middle East conflict, along with unexpected economic data showing strong employment gains for March and improved activity in the manufacturing sector drove stocks higher. The yield on the 30-year Treasury bond ended the week at 4.91 percent.

Data as of 4/3/26	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	3.4%	-3.8%	16.1%	16.9%	10.1%	12.3%
Dow Jones Global ex-U.S. Index	1.8	1.5	24.2	12.4	4.5	6.2
10-year Treasury Note (yield only)	4.3	N/A	4.2	3.4	1.7	1.8
S&P GSCI Gold Index	3.4	7.8	47.8	32.8	22.0	14.4
Bloomberg Commodity Index	2.3	25.1	28.3	8.8	10.6	5.9

Is It an April Fools Joke or Isn’t It?

On April 1, it can be difficult to tell truth from fiction. Brands get bold, headlines get weird, and even your most trustworthy friends might be in on the joke. Here’s a challenge. Read through these short descriptions of news stories. Two are classic April Fool’s pranks designed to trick, delight, or confuse. One is real. Think you can spot it?

Story 1: The Last Days of Paper Currency

“The days of pulling a crumpled $20 bill out of your wallet may be numbered. The U.S. Treasury has officially greenlit a sweeping monetary overhaul that will replace all paper currency with a combination of government-issued cryptocurrency and physical gold coins by 2027. The plan calls for a full phase-out of paper money in favor of two new official forms of payment: TrumpCoin, a blockchain-based digital currency, and a line of gold coins embossed with the president’s likeness…,’” reported Laura Beck of GoBanking Rates.com.

Story 2: AI Agents Hire Humans

There’s a new job board online. While it looks a lot like other websites that connect freelance talent to companies that need it, there’s a big difference. Instead of humans looking for human help, this website is for AI agents that need human help, explained Reece Rogers of Wired. The company’s website states: AI needs your body. Get paid when agents need someone in the real world.

Story 3: Pants That Improve Your Golf Game

For years, a top golf brand has helped golfers improve their game. It offers insights on every club and every shot. Its rangefinder factors in wind, slope, and atmospheric pressure. In April, the company introduced smart pants, an innovation that continuously monitors players’ key performance indicators as they traverse a course. The biometric trousers track “heart rate variability, stress levels, and first-tee anxiety,” according to the company.

While smart golf pants may be on the horizon, they’re not here yet. The U.S. currency change is also April Fool’s mischief. The fact is that AI agents really are hiring humans to complete real-world tasks!

What was your favorite April Fool’s joke this year?

Weekly Focus – Think About It

“There is nothing in the world so irresistibly contagious as laughter and good humor.”

—Charles Dickens, Author

Wishing you and your families well,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

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