April 21, 2026

The Markets

One of the most exciting driving sequences in movies may be the scene from Baby Driver when “Baby” (a reluctant getaway driver) slings a red Subaru into a narrow 180-degree turn, slides backward between obstacles, and immediately pivots into another 180-degree turn, all while perfectly in sync with the beat of his music.

Since mid-February, the U.S. stock market has offered a similarly exciting ride.

The Standard & Poor’s 500 Index (S&P 500) was closing in on a record high level (7,000) in late February. Then the U.S. military conflict with Iran began and markets drifted lower. The S&P 500 hit bottom in late March when talk of a ceasefire inspired a 180 in outlook and U.S. stocks headed in the other direction. The index recovered lost value incredibly quickly. On Tax Day, it closed above 7,000 for the first time, reported Martin Baccardax of Barron’s.

There were three main drivers behind the remarkable recovery. These included:

Enthusiasm About the Prospect of Peace

Investor optimism surged on the possibility of an end to the Middle East conflict. “The stock market has now delivered a year’s return in about two weeks. While that might not be quite as impressive as all summer in a day, it’s been enough to provide a genuine reset for investors. The ‘end’ of the Iran war spurred a market celebration this week, even if the conflict is nowhere near officially over,” reported Teresa Rivas of Barron’s.

Over the 12 trading days of April through last Friday, the Nasdaq Composite Index had a double-digit gain, while the S&P 500 was up more than 8 percent, reported Rivas.

Excitement—Again—About Artificial Intelligence (AI)

Concerns about AI capacity being overbuilt and worries that data centers might not prove profitable, have faded amid rising demand, reported Joe Weisenthal and Tracy Alloway of Bloomberg.

“…AI can just do more as the models get better (not just cheaper), and obtain new capabilities, and this improvement should also be seen as a source of new demand. If, for example, [a new AI product] is as amazing at cybersecurity as all the hype says, then I’d expect we’ll see a big surge in AI consumption from people who work on securing computer networks.”

Investors’ appetite for AI is reflected in the performance of the S&P 500. Forty percent of its recent gains are owed to five of the biggest tech companies in the index, all are members of the Magnificent Seven, reported Baccardax.

A Strong Start to Earnings Season

Just 10 percent of the companies in the S&P 500 have reported on their performance during the first quarter. Among that group, more than 80 percent have reported positive revenue and earnings surprises. A positive surprise occurs when a company does better than analysts expected. In the first quarter of 2026, many of the companies that have reported took in more money and were more profitable than analysts anticipated, according to John Butters at FactSet.

Last week, major U.S. stock indices finished the week higher. In addition, yields on most maturities of U.S. Treasuries moved lower over the week.

Data as of 4/17/26	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	4.5%	4.1%	34.9%	19.7%	11.4%	13.0%
Dow Jones Global ex-U.S. Index	2.6	9.4	36.5	14.7	5.5	6.7
10-year Treasury Note (yield only)	4.3	N/A	4.3	3.6	1.6	1.8
S&P GSCI Gold Index	1.9	12.4	46.6	34.5	22.5	14.7
Bloomberg Commodity Index	-0.5	19.9	27.8	6.8	8.7	5.0

The Infrastructure Test

Recently, heavy storms in the Midwest and elsewhere have severely tested aging U.S. infrastructure. There have been significant failures in flood defenses, power grids, and transportation networks, reported Anna Skinner of Newsweek.

Since 1998, the American Society of Civil Engineers (ASCE) has evaluated infrastructure in the United States every two years. The authors of the 2025 Report Card for America’s Infrastructure explained why the analysis is important:

“America’s infrastructure is the foundation on which our national economy, global competitiveness, and quality of life depend. While often taken for granted when it is working properly, every American household or business immediately feels the impact of just one inefficiency or failure in our built environment.”

Poorly maintained infrastructure is costly. The ASCE found that “potholes damaging our vehicles, traffic delays leading to lost productivity and increased costs for products, aging water lines leading to spiking water rates, etc. – costs each American household $2,700 per year.”

How Well Is the United States Maintaining Its Infrastructure?

The most recent Report Card for America’s Infrastructure graded 18 categories of infrastructure, and the grades weren’t good. The lowest marks were for systems that affect millions of Americans: a D- for transit and a D for stormwater.

Overall, U.S. infrastructure earned a ‘C’, meaning mediocre condition; requires attention. Here’s how America’s infrastructure fared:

Aviation: D+	Hazardous Waste: C	Roads: D+
Bridges: C	Inland Waterways: C-	Schools: D+
Broadband: C+	Levees: D+	Solid Waste: C+
Dams: D+	Ports: B	Stormwater: D
Drinking Water: C-	Public Parks: C-	Transit: D-
Energy: D+	Rail: B-	Wastewater: D+

For investors, deteriorating infrastructure can weigh on local economies, raise business operating costs, and (when spending accelerates) create opportunities for growth in industries that benefit.

Weekly Focus – Think About It

“Always do what is right. It will gratify half of mankind and astound the other.”

—Mark Twain, Author

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

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