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From the desk of:
Kenneth T. Kozlowski, CFP, CLU, ChFC Chief Investment Officer
Market Insights, week of May 7, 2026
Resilience Amid Uncertainty.
While economic conditions remain broadly stable, markets continue to navigate a complex backdrop shaped by geopolitical tensions, elevated energy prices, and shifting central bank expectations. Encouragingly, the U.S. economy has shown resilience, but rising inflation pressures—particularly tied to oil—are influencing both market performance and investor sentiment. Below are a few key takeaways a recent update our EIM team provided to financial professionals.
Economic Backdrop:
The U.S. economy remains on solid footing, supported by a relatively low unemployment rate of 4.3%.
Job openings remain roughly in line with the number of job seekers, though hiring activity has slowed modestly.
Inflation & Interest Rates:
Inflation has moved higher, with headline CPI rising to 3.3%, driven in part by elevated oil prices.
Core inflation (excluding energy and food) is more stable but still above the Fed’s 2% target at 2.6%.
The Federal Reserve (Fed) appears to be taking a “wait-and-see” approach, closely monitoring whether higher energy costs begin to impact broader prices.
Rising fuel and travel costs are putting pressure on consumer spending.
Oil Prices Driving Markets:
Oil prices remain volatile and a key driver of markets, recently fluctuating around $90–$100 per barrel.
Higher oil prices have weighed on both equities and fixed income, increasing correlation between the two asset classes.
Since the onset of the Iran Conflict, correlations between equities and fixed income have increased as both tended to trade based on the direction of oil prices.
Interest Rate Landscape:
Despite rate cuts last year, longer-term yields remain elevated, resulting in a steep yield curve.
Inflation concerns and government spending continue to keep upward pressure on interest rates.
Outside the U.S., expectations have shifted and many global central banks are now expected to raise rates, rather than cut them.
Market Performance & Rotation:
After a weak March, April delivered strong equity returns: US large and small caps returned double digits in April. International developed markets were also positive with emerging markets leading the charge among equity asset classes.
Growth stocks rebounded in April, outperforming value for the month, but value remains ahead year-to-date.
Fixed income performance has been more muted, with modest gains overall.
Volatility & Investor Sentiment:
Market volatility, while still above historical averages, has moderated since March highs.
Investors remain cautious given the uncertain geopolitical backdrop, particularly the ongoing situation in the Middle East.
Fed Policy Watch:
Leadership changes at the Federal Reserve are in focus, with an upcoming transition underway.
Fed independence remains a priority, supporting confidence in long-term economic stability.
Bottom Line: The economy remains resilient, but inflation and oil prices are key risks to watch. In March, markets were driven heavily by external factors and geopolitical developments. In April, robust corporate earnings boosted optimism and supported recovery but volatility and uncertainty continue to remain elevated.
Insights are as of May 7, 2026, and are subject to change. Not to be used, or interpreted, as investment advice or recommendation.
Important Information
Definitions:
S&P 500 Index is a weighted index of common stocks of 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities. The index is capitalization weighted, thereby giving greater weight to companies with the largest market capitalizations.
Russell 2000® Index is an unmanaged index which measures the performance of approximately 2000 of the smallest companies in the Russell 3000® Index, which represents approximately 10% of the total market capitalization of the Russell 3000® Index. It is market-capitalization weighted.
MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.
A basis point (BPS) is a unit of measure used to indicate percentage changes in financial instruments. Basis points are typically expressed with the abbreviations "bp," "bps," or "bips." One basis point is equal to 1/100th of 1%, or 0.01%. In decimal form, one basis point appears as 0.0001 (0.01/100).
Information provided in this newsletter is general in nature, is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed are those of the author(s) as of the stated date of their contribution and any such views and opinions are subject to change at any time based onmarket, or other conditions, and are not intended to be a forecast of future events, a guarantee of future results or investment advice. Securities and sectors referenced should not be construed as a solicitation or recommendation, or be used as the sole basis for any investment decision.
All investments contain risk and may lose value. Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that any investment strategy opined on will work under all market conditions or is appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.
Past performance is not a guarantee of future results. Portfolio re-balancing and diversification do not guarantee a profit or protection against loss in a declining market.
No guarantee or representation is made that investment objectives and/or opinions stated will be achieved. The experience of each specific client or investor may vary.
Due to the subjective aspect of these analyses, the effective evolution of the economic variables and values of the financial markets could be significantly different from the projections, forecasts, anticipations and hypotheses, which are communicated in this material.
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GE-8919987.1 (05/2026) (Exp. 05/2030)
