Surprise

We just completed a volatile quarter impacted by concerns over artificial Intelligence, the war in Iran, inflation and rising energy prices. Markets finished the period with less negative impact than I would have expected.  During the quarter, the Dow Jones Industrial Average and the S&P 500 Stock index both declined by over 10% from year end 2025, but by quarter end, were only off 3.6% and 4.6% respectively.  In addition, U.S. payrolls rose by 178,000 jobs in March, while unemployment declined to 4.3%.  Good news.  The economy appears to remain strong, with analysts forecasting double-digit earnings growth for S&P 500 companies for the 1^st quarter according to FactSet.  A good surprise.

While the markets have acted better than I would have expected, the final chapter has not yet been written.  We do not know and are not able to quantify the eventual magnitude of the issues above, or their impact on profits as they are resolved or work their way through the economy.  In the meantime, we can expect continued volatility based on the latest news, or comments from the President.

Strong well-managed companies with good business franchises will be able to adjust to the uncertain environment, although there may be some short-term effects on profits.  If we experience profit pressures, a period of increased market volatility would likely create investment opportunities.  We will remain vigilant and try to take advantage of these opportunities should they occur. 

In the meantime, we will stay the course to earn the potential long-term returns that equities and high-quality bonds typically have to offer.

This material is provided for informational purposes only and does not constitute investment advice. Opinions expressed are subject to change and are not guarantees of future results. Investing involves risk, including possible loss of principal.