Tactical Positioning Update: From Preparation to Action

George Smith | Portfolio Strategist
Last Updated: April 16, 2026

Over the past year, LPL Research’s Strategic and Tactical Asset Allocation Committee (STAAC) has emphasized that tactical investing does not require constant activity. Instead, it requires preparation, patience, and the discipline to act only when the expected benefit of a change clearly outweighs the risks. We have made some changes to our Tactical Asset Allocation (TAA) guidance but continue to reflect that disciplined philosophy.

STAAC has updated our TAA to move portfolios to modestly overweight equities and underweight fixed income. Importantly, this adjustment builds on positioning decisions made well before volatility increased, rather than reacting to market stress after the fact. In our view, the recent increase in volatility has improved the prospective risk‑reward for taking incremental equity risk, allowing us to translate preparation into action while remaining within our established tactical framework.

Our Growth with Income (GWI) portfolio, which tracks most closely the traditional 60/40 stocks/bonds portfolio, is shown below, and compared to our GWI Diversified benchmark.

LPL Research Growth with Income (GWI) Tactical Asset Allocation (TAA)

Source: LPL Research 4/16/2026
Disclosures: Past performance is no guarantee of future results.

What Changed?

The recent adjustment reflects two related allocation changes:

• Neutralizing the existing underweight to U.S. small cap value, which results in a modest equity overweight
• Reducing exposure to mortgage‑backed securities to fund that change

From a portfolio construction perspective, this shifts the Growth with Income model slightly above benchmark equity exposure while keeping overall portfolio risk well within the intended tactical range. The adjustment reflects an improvement in expected forward equity returns following recent market weakness, coupled with a more restrained outlook for select areas of core fixed income where valuations and technicals appear less supportive.

This is not a wholesale change in positioning or a reversal of longer standing views. Large cap equities and growth‑oriented exposures remain preferred within U.S. equities, and quality remains a central theme across asset classes. However, as dispersion has increased and valuations have reset modestly, we believe the relative opportunity set for equities has improved compared to mortgage‑backed securities.

Why Add Small Value Here?

Our upgrade of small value to neutral is primarily driven by our quantitative analysis work indicating durable technical trends that have developed since the start of the new year. With a path to ending the Iran conflict emerging and related lessening risk of extreme negative outcomes, we expect equities to broadly outperform fixed income. Fundamentally, small value stocks are supported by attractive valuations, bank deregulation, and robust capital investment. In an environment that is likely to get more supportive of risk-taking, eliminating the small cap underweight and moving to an overall overweight equities position seems prudent.

Why Reduce Mortgage-Backed Securities?

Our multi-year overweight position in MBS has served us well in terms of relative performance vs. the broad bond market. However, over that time, spreads have tightened meaningfully and remain below longer-term averages, diminishing the relative attractiveness of the asset class. While near-term momentum of lower interest rate volatility and constrained net supply may continue through the first half of the year, already tight spreads and the eventual likelihood that lower mortgage rates will increase prepayment risks may potentially cap returns.

What Are Our Other Tactical Views?

Following this update, our Tactical Asset Allocation reflects the following underlying themes:

• A slight overweight to equity risk expressed through domestic large cap growth
• An emphasis on balance sheet quality and earnings durability
• Continued caution in fixed income (MBS and Corporates) amid rate volatility and changing supply and demand dynamics
• A continued overweight to diversifying strategies / alternative investments, specifically multi-strategy and global macro strategies, funded from cash.

Why This Is Our First Tactical Trade of the Year

Coming into 2026, we made a deliberate and somewhat contrarian decision to position portfolios more defensively and with greater diversification than was broadly expected at the time. That decision was grounded in the view that market conditions were unusually complacent and that the range of potential outcomes was wider than reflected in asset prices. While that positioning ultimately proved to be early, it has been beneficial on a relative basis as volatility has increased and correlations have shifted.

That preparation matters. Because those diversification decisions were made earlier, we are not being forced to de‑risk or reposition under pressure today. Instead, we are able to evaluate opportunities from a position of strength, with the flexibility to adjust risk as expected forward returns improve. This trade reflects that dynamic. It represents a measured re‑engagement of equity risk when conditions became more favorable, rather than a reaction to recent price action.

Periods like this highlight the risks of being overly active. Tactical investing does not mean frequent trading. Highly reactive decision‑making in volatile environments can easily result in being whipsawed, such as reducing risk near market lows or adding it back after prices have already rebounded. It can also introduce unnecessary transaction costs and tax inefficiencies. We believe restraint, when warranted, is often the most effective expression of tactical discipline. Tactical does not mean frequent. It means nimble, but selective.

Final Thoughts

This TAA update reflects the progression of a disciplined process. Preparation came first. Patience followed. Action comes only when the expected benefits justify the risks. We will continue to monitor economic conditions, market developments, and technical signals closely. Volatility can be uncomfortable, but it is also what creates opportunities for investors who remain disciplined and avoid the urge to overreact.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1093790

Source

Best Performing Sector During the Iran Conflict May Surprise You

Jeff Buchbinder | Chief Equity Strategist
Last Updated: April 15, 2026

In what should be a surprise to no one, energy has been one of the better performing sectors since the joint U.S.-Israel airstrikes on military targets in Iran on February 27, although it has given up some ground since a two-week cease fire was announced last week. The S&P 500 is up slightly during this period (+1.2%) while the energy sector has gained 0.4% (price appreciation, excluding dividends).

What may surprise you is that gain is only good enough for fifth place in the sector rankings since February ended. Technology is on top with a 5.9% gain. Technology beating energy during an oil price spike is surprising enough, but it comes amid selling pressure in the software industry due to fears of artificial intelligence (AI) disruption. The application software group is down about 5% and some widely held names like Salesforce (CRM) and Workday (WDAY) are down more than 10%.

Technology a Surprising Sector Leader During Iran Conflict

Source: LPL Research, FactSet 04/14/26
Disclosures: Indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.

How Surprising Is This Technology Strength?

How surprised should we be by this strong performance from technology? Not much, based on the following analysis. Using a hypothetical study of sector performance during oil price spikes over 30%, we find that energy fares best (no surprise). But technology was second in this hypothetical scenario, suggesting that the sector’s relative strength during this period is not an outlier. Technology companies are not a heavy oil users, mitigating the effects of higher oil prices.

Energy Estimates Have Popped, But the Technology Estimate Increases Aren’t Too Shabby

The next question you might ask is whether the strong performance by the technology sector is justified by fundamentals. Fueled by the AI buildout, the technology sector will likely grow earnings at least 44% year over year for the soon-to-be-reported first quarter (source: FactSet). But a strong growth outlook didn’t help sector performance from November 2025 through January of this year when technology underperformed.

We would argue technology strength is justified based on the improvement in the earnings outlook in recent weeks. As shown in the accompanying chart, earnings per share (EPS) estimates for technology in 2026 have increased by more than 6% since March 1. Earnings were expected to grow at a strong clip, but analysts again underestimated the sector’s earnings power. Excellent earnings growth has been anticipated, but we don’t think the market was prepared for a possible 50% increase in technology earnings in the first quarter.

It’s Not Just Energy Helping to Boost Earnings Estimates

Source: LPL Research, FactSet 04/14/26S
Disclosures: Indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results. Estimates may not materialize as predicted and are subject to change. EPS is earnings per share.

Tech Sector Valuations Have Become Attractive, If Not Compelling

We also believe recent strength in technology is justified by attractive valuations. The underperformance late last year and early in 2026, coupled with booming earnings growth, brought the sector’s forward (next 12 months) price-to-earnings ratio (P/E) down to near the market at the recent lows. The latest bounce leaves the sector at about an 8% premium to the S&P 500 forward P/E, about in line with the long-term average and still attractive given the strong outlook for earnings growth and robust profit margins.

Relative P/E of the Technology Sector Has Become Attractive

Source: LPL Research, FactSet 04/14/26
Disclosures: Indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results. Estimates may not materialize as predicted and are subject to change.

Conclusion

Technology’s leadership during an oil shock is not particularly unusual, nor is it unjustified. History shows technology tends to perform well during periods of sharply rising energy prices, and today’s fundamentals appear consistent with that pattern, though past performance does not guarantee future results. Improving earnings expectations, driven largely by the AI buildout, have helped restore investor confidence after a period of underperformance. At the same time, valuations remain reasonable relative to both the market and the sector’s history. Technology appears well positioned to remain a relative winner if earnings momentum continues and is a strong candidate for an upgrade on a tactical basis.

EPS stands for earnings per share. This metric tells investors how much money a company makes for each of its shares. EPS is one of the most common ways to gauge a company’s profitability.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1090739

Source

Michael McClain | Alternative Investment Research Analyst and Due Diligence
Last Updated: April 14, 2026

Asset-Based Lending

While headlines related to private credit’s direct lending sector have captivated market participants over the past month, there exists a meaningful investment universe, each with distinct characteristics, under this broader umbrella. Following direct lending, the asset-based lending (ABL) industry has experienced consistent growth and renewed investor interest.

ABL is a form of lending in which loans are primarily secured by a borrower’s tangible assets rather than by cash flow or earnings. Common forms of collateral include accounts receivable, inventory, equipment, and, in some cases, intellectual property. ABL is most often used by middle-market companies with meaningful working capital needs, seasonal cash flow patterns, or business models where asset values provide more reliable support than earnings. As many ABL borrowers are capital-intensive businesses, there exist working capital gaps and seasonality related to inventory builds that ABL lenders can bridge. This financing is not related to poor operations, rather, how certain firms convert assets into cash over time. The amount a borrower can access is typically determined by a borrowing base, which applies an advance rate to eligible assets and adjusts as collateral values change. From a structural perspective, ABL typically sits senior in the capital structure and benefits from first-priority liens on collateral. This seniority and asset coverage often results in lower loss severity and stronger recovery rates in stressed scenarios compared with unsecured or cash flow-based lending.

ABL vs. Direct Lending: Risk, Liquidity, and Cycle Sensitivity

Risk: At a high level, the main difference between direct lending and ABL centers on the type of risk a lender is underwriting. Direct lending focuses on cash-flow lending to middle-market firms, with credit risk primarily assessed on EBITDA, free cash flow, and margin stability. In contrast, ABL considers the age and quality of accounts receivable, liquidation value, and inventory turnover. Meaningful risk will always be present in both; however, the origins of any credit problems will be unique.

Liquidity: ABL portfolios feature shorter loan durations and self-liquidating structures. In contrast, direct lending is often characterized by longer-dated loans tied to sponsor-backed transactions, where exit timing depends heavily on refinancing or merger and acquisition markets.

Cycle Sensitivity: Earlier in an economic cycle, direct lending often benefits from expanding leverage capacity, stable or growing EBITDA, and accommodative refinancing conditions. In these environments, cash‑flow‑based underwriting can support returns as sponsors pursue growth and acquisition activity. However, later in a cycle, earnings volatility typically increases, refinancing windows narrow, and forecasting future cash flows becomes more challenging. While ABL may offer slightly lower yields than direct lending, it may provide more downside risk mitigation and greater resilience across economic cycles. As a result, ABL is often viewed as a defensive or stabilizing strategy within the broader private credit market, particularly during periods of economic uncertainty.

LPL Research Takeaway

From a portfolio construction standpoint, we believe both direct lending and ABL may provide attractive risk/return profiles for suitable investors and offer complementary characteristics. Neither is inherently superior; rather, investors should consider which private credit sector best aligns with their goals, provides portfolio diversification, and meets their liquidity needs. ABL may serve as a stabilizing complement to traditional direct lending, potentially smoothing volatility, and enhancing downside risk mitigation in late-cycle environments. ABL appears well positioned, not as a replacement for direct lending, but as a differentiated tool within the larger private credit universe.

Looking ahead, in the same manner that investors consider which public equity or bond styles/sectors are more appropriate at a given point in the market cycle; when investing in private markets, product development has evolved to the point where investors may tailor their desired exposure, rather than relying on one-stop solutions featuring broad private market beta.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1090738

Source

Private Credit: A Cycle of Reset

Kristian Kerr | Head of Macro Strategy
Last Updated: April 09, 2026

Private markets benefited enormously from the post-Great Financial Crisis era of ultralow interest rates that stretched through much of the 2010s and into the early 2020s. Amid regulatory change and muted returns in traditional fixed income during this time, investors were increasingly pushed into alternative areas of capital markets in search of yield. Private credit, in particular, emerged as a favored destination for institutional capital, including pensions, endowments, and insurers. The sheer volume of capital entering the space created competitive pressures that, in hindsight, were distinctly late cycle. Spreads compressed, underwriting standards loosened in some segments, leverage crept higher, and growth at any cost became a dominant objective for many managers. In many cases, deals were structured under assumptions that financing would remain cheap, and refinancing would be readily available. As liquidity ebbs and rates normalize at higher levels, those assumptions will undoubtedly be tested.

It is important to note, however, that acknowledging excesses and the existence of a credit cycle does not mean the private market asset class is structurally impaired. Credit cycles are not a flaw of the system; they are a feature of it. Periods of easy money tend to inflate asset prices and encourage excess risk-taking, while tighter financial conditions reassert discipline, reset valuations, and reward selectivity. We are clearly in that phase today. While additional adjustment and some degree of further pain appear likely, overall loss rates in private credit remain low by historical standards. Even if defaults were to triple from current levels, they would still represent a relatively small portion of total assets under management. What is changing is not the viability of the asset class, but the degree of differentiation between truly skilled managers and mediocre ones.

Source: LPL Research 03/07/26

Every cyclical credit downturn acts as a stress test. Managers who prioritized asset growth, overly concentrated in specific sectors, stretched covenants, or relied on optimistic refinancing assumptions will find the current environment less forgiving. By contrast, firms that maintain conservative leverage, disciplined underwriting, and robust downside protections are entering this phase from a position of strength. This will be especially relevant for vintages that originated in 2020 and 2021. Many of those loans are now approaching refinancing windows in a materially higher-rate world, compressing interest coverage ratios and exposing weaker capital structures. Yet this is precisely how cycles are supposed to work. Capital becomes scarcer, pricing power returns to lenders, and prudent risk management is rewarded.

Private credit is unquestionably facing a more challenging operating environment than it has in years. But difficulty does not equate to dysfunction. In fact, the current backdrop is restoring many of the conditions long term investors should consider, including wider spreads, stronger lender protections, and fewer undisciplined competitors. In our view, opportunities will eventually emerge and disciplined managers will be there to take advantage of them in the repair and recovery stages. As financial history repeatedly demonstrates, cycles do not eliminate asset classes; they reset them, though past performance does not guarantee future results. For investors willing to be selective, patient, and cycle aware, private credit will be an asset class that is not defined by its recent stress, but by the managers who actually put processes in place that were built to perform across the full length of the credit cycle, not just the expansion.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1090486

Source

Long-Term Opportunities Always Present Themselves

LPL Research
Last Updated: April 08, 2026

Source

March Flows: Risk-Off Rotation Reshapes Portfolios

Jeff Buchbinder | Chief Equity Strategist
Last Updated: April 07, 2026

Source

LPL Research
Last Updated: April 02, 2026

LPL Financial and the stock market will be closed on Friday, April 3 for the Good Friday holiday.

LPL Research provides its Weekly Market Performance for the week of March 30, 2026. U.S. equities rallied during the holiday-shortened week, snapping a multi-week losing streak as easing Treasury yields, quarter end rebalancing, and hopes for a de-escalation in the U.S.–Iran conflict supported risk assets, with the Nasdaq outperforming on strength in large cap technology. Internationally, European stocks advanced on improved risk sentiment and cooler inflation data, while Asian markets were mostly weaker. Core bonds posted gains as Treasury yields pulled back on more dovish rate expectations pricing. Crude prices continued to trend higher as the conflict in Iran continued, while the U.S. dollar traded modestly lower amid volatile headlines.

Stock Index Performance

S&P 500 Index Sectors

Fixed Income and Commodities

Source: LPL Research, Bloomberg 4/2/26 @3:16 p.m. ET
Disclosures: Indexes are unmanaged and cannot be invested in directly.

U.S. and International Equities

U.S. Equities: Despite capping a down month and the first quarterly loss over the last four, the S&P 500 snapped a five-week losing streak, posting a healthy four-day advance over the holiday shortened week.  After rate-sensitive trading on Monday sent equities lower alongside Treasury yields, following calming remarks from Federal Reserve (Fed) Chair Powell, major averages delivered a stout two-day relief rally on optimism around U.S.-Iran offramps. Fueling the surge was reports that President Trump told aides he is willing to end hostilities in Iran should the Strait of Hormuz be re-opened, with separate reports later indicating that Iranian President Pezeshkian stated he is ready to end the war accelerating gains. Improved market positioning, month- and quarter-end rebalancing dynamics, and mostly higher big tech names also broadly padded gains helping lift the Nasdaq a bit more than the S&P 500. The abbreviated week ended on a mixed note, as stocks pared early Thursday losses on a report that Iran is drafting a protocol with Oman to monitor traffic through the Strait of Hormuz after President Trump threatened potentially intensifying attacks over the last few weeks of the conflict. While remaining lower on the day, the development was seen as a step in the right direction by investors given the reversal of a 1.5% loss in the S&P 500.

International Equities: European equities also advanced through Thursday trading. Utilities and basic resources industry groups led the charge with the latter receiving support from metals and mining names on the prospect for record aluminum prices following Iranian strikes on aluminum plants in Bahrain and the UAE, threatening a supply strain. Risk appetite was lifted on hopes of a ceasefire in the Mideast, with sentiment further buoyed by hopes that price pressures may be less than initially feared following a slightly cooler than expected preliminary consumer inflation report for March. After recent outperformance, energy shares were relative underperformers with the lion’s share of gains arriving on Thursday as crude prices turned higher.

On the other side of the coin, major Asian markets traded mostly lower heading into the first Friday of the month. South Korea remained a standout as the KOSPI remained highly sensitive to the vast swings in geopolitical headlines, with some downward pressure to start the week also stemming from pension authorities warning over the need to stabilize the won. Chipmakers were also a weak spot, with a similar dynamic weighing on Taiwan, while Japanese benchmarks also dropped on raised fiscal jitters from recent yen weakness, firmer crude prices, and central bank minutes discussing more rate hikes. Greater China continued to display some relative insulation to geopolitical worries as Hong Kong moved higher while mainland losses were subdued as Hong Kong moved higher while mainland losses were subdued.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, measured by the Bloomberg Aggregate Index, traded higher on the week heading into Friday’s abbreviated session. The Treasury market enjoyed some upside this week as bonds rallied alongside equity markets on hopes that an end to U.S.-Iran hostilities is around the corner. Yields pulled back as traders began to re-price a chance of a Fed rate cut in 2026 — or more likely a hold which is still more dovish than a rate hike — and continued to fall on Thursday despite speculation that elevated oil prices could stick around after Wednesday’s Presidential address.

More broadly in fixed income markets, the ongoing conflict in Iran has pushed global bond yields higher in March, weighing on the national municipal market as well. While March is typically a challenging month for munis — the average return over the past 10 years is ‑0.32% — last month’s ‑2.5% decline was the worst March performance since March 2022, which coincided with the most aggressive Fed tightening cycle in decades. It was also the worst monthly return since September 2023, with negative returns broad‑based across credit quality. With the drawdown, however, valuations have improved meaningfully and relative value versus Treasuries and taxable corporates has also improved, making munis competitive for investors with marginal tax rates as low as roughly 29%.

One caveat: April has historically been a difficult seasonal month for munis, with six of the past 10 Aprils producing negative returns and an average return of ‑0.40% over the past decade. Elevated supply, weak reinvestment flows, and tax‑related redemptions tend to pressure the market during this period. Nonetheless, value has returned to the municipal market, particularly in the intermediate portion of the curve.

Commodities and Currencies: The broader commodities complex was poised for a weekly advance Thursday afternoon as crude oil prices continued to march higher as April begins. Despite relatively rangebound trading, and even dipping lower on Wednesday, West Texas Intermediate (WTI) crude prices soared back into positive territory Thursday after President Trump’s primetime address from Pennsylvania Avenue disappointed investors by not providing a clear resolution timeline on the conflict in Iran or when the Strait of Hormuz will reopen, remarking that attacks may escalate as the U.S. campaign nears its end.  WTI remained near weekly highs despite the reports that Iran is working with Oman on a protocol to monitor traffic through the waterway. Elsewhere, gold prices continued to bounce off key technical levels reached last week, adding over 3% through Thursday afternoon trading, while silver also gained ground.  In currencies, the U.S. Dollar Index faced choppy trading amid volatile geopolitical headlines, rate expectations, and economic outlooks, ultimately trading slightly lower but still hovering near 100.

Economic Weekly Roundup

Tuesday’s release of the JOLTS jobs report indicated hiring and job openings fell but, not across all sectors. Data from the Bureau of Labor Statistics suggested the quits rate and hiring rate fell in February as the labor market cooled from the headwinds of inflation and tariff uncertainty. We won’t see the potential impact of Operation Epic Fury until next month. Across most industries, the February quits rate is below pre-pandemic levels, indicating workers’ uncertainty within the job market. On the other side of the equation, we see hiring rates have also weakened, particularly in healthcare services. This is important given the driving force in payrolls recently. Expect weakness in Friday’s nonfarm payroll report within cyclicals like retail trade and construction. But it’s not all bad news. In contrast, hiring rates (a signal from firms) and quit rates (a signal from workers) rose in the information technology space. Product demand is supportive of a decent job market for this industry.

For many workers, the uncertainty within the job market has suppressed the desire to move from one job to another. On the labor demand side, firms have pulled back on hiring rates. The one anomaly is within the information technology sector as solid labor demand has bucked the trend.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: ISM Services Index (Mar)
• Tuesday: ADP Weekly Employment Change (Mar 21), Durable Goods Orders (Feb preliminary), Capital Goods Orders and Shipments (Feb preliminary), New York Fed One-Year Inflation Expectations (Mar), Consumer Credit (Feb)
• Wednesday: MBA Mortgage Applications (Apr 3), FOMC Meeting Minutes (Mar 18)
• Thursday: Personal Income and Spending (Feb), Headline and Core PCE Price Index (Feb), Initial Jobless Claims (Apr 4), Continuing Claims (Mar 28), GDP (4Q third reading), Personal Consumption (4Q third reading), Core PCE Price Index (4Q third reading), Wholesale Inventories (Feb final), Wholesale Trade Sales (Feb)
• Friday: Headline and Core CPI (Mar), Real Average Hourly Earnings (Mar), Real Average Weekly Earnings (Mar), Factory Orders (Feb), University of Michigan Consumer Sentiment Report (Apr preliminary), Durable Goods Orders (Feb final), Capital Goods Orders and Shipments (Feb final)

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