May was another month for the record books. Global stock markets continued their strong advance following April’s stellar recovery from the pullback caused by the war in Iran: the S&P 500 notched its ninth consecutive weekly gain (something that has only happened twice over the past 25 years), the Dow closed above 51,000 for the first time in history, and the NASDAQ Composite is up nearly 30% since bottoming at the end of March. As we expected, investors shifted their focus back towards earnings growth following an encouraging Q1 2026 earnings season, and the technology sector rallied coming out of the March pullback with mega-cap technology companies driving the largest returns for the S&P 500 year to date. Despite an unresolved war with Iran that has now surpassed the three-month mark and the bond market flashing warnings signs of persistent inflation, the stock market continue to shrug off any threats and continue their trend upwards.
As we continue to hover near all-time highs, JNBA remains cautiously positioned towards stocks given the continued levels of heightened uncertainty. Stocks and bonds both remain in a sensitive spot amidst the repercussions from the war in Iran and a backdrop of challenging economic and inflationary data. However, history shows that the odds are in the market’s favor for continuing its general uptrend. Revisiting seasonality, we’re now entering the summer lull for stocks until the next earnings season ramps up again. Even with muted returns, history shows that positive returns are likely to lie ahead in the coming months.
“Buy low, sell high” is a popular mantra for investors, and that mindset can give investors pause when markets are at all-time highs. Another common saying on Wall Street is “the trend is your friend”, serving as a warning against betting against how the market is trending, both in up and down markets. Remember: as markets notch all-time highs, another all-time high is typically soon to follow.
The ongoing threats to global stock and bond markets remain credible and present, warranting our current cautious positioning towards stocks. Last month saw the release of April’s inflationary data which showed that inflationary pressures remain persistent and further complicates the Federal Reserve’s goal of keeping prices down. Ten-year U.S. Treasury yields are now nearly 40 basis points higher than they were at the beginning of the year, and the spike in yields created some volatility over the past few weeks as investors rotated from stocks to bonds to seek yields that haven’t been present in years. Additionally, Q1 Gross Domestic Product (GDP) was revised lower, adding to concerns of a slowing economy. Money markets are now expecting a Fed rate hike by March 2027 – a stark contrast from just a few months ago where markets expected a handful of rate cuts on the horizon with zero potential of rate hikes. With corporate profits remaining resilient, a resurgence in inflation appears to be the biggest threat to derailing the market from its uptrend – especially as the war with Iran remains ongoing, keeping oil costs elevated.
The JNBA Investment Committee is committed to monitoring the ongoing market environment and acting accordingly. As we continue to keep you informed, we encourage you to reach out to your JNBA Advisory Team with any questions.
Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from JNBA Financial Advisors, LLC.
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