Asset Management
04/27/2026 Market Strategy
April 27, 2026
Where Are We Now?
Even the Energy Sector Takes a Backseat to Technology as Investors See Earnings
Key Takeaways
- Most equity markets rallied as President Trump extended a deadline for negotiations to resume between the US and Iran at finding a workable solution to differences, and a reopening of the Strait of Hormuz.
- We adjust our S&P 500 sector ratings and suggested allocations to reflect strong demand for power from data centers, which benefits the utilities sector.
- The Q1 earnings season continued last week. With 28% of firms having reported, earnings are up 28% from a year earlier on revenue growth of 10%. Eight of the 11 sectors are seeing double-or even triple -digit earnings growth, with just one sector (consumer discretionary) showing a small decline.
- This week 179 companies are slated to report, with 128 set for the week of May 4.
Notwithstanding the yet unsettled conflict in the Middle East stocks stateside have shown significant resilience supported by fundamentals: Economic, corporate, consumer, and jobs -related, along with trends bolstered by innovation.
International markets, which outperformed last year into this year, have shown vulnerability tied to their dependency on oil...
From the S&P 500’s low for this year on March 30 the benchmark’s sectors have seen technology and communications services regain their position as the lead sectors of the benchmark through the market’s close as of last Friday April 24.
Energy, which had carried the lead for most of this year through the end of the first quarter, lagged all the other ten sectors in the benchmark off 8.8%, a little more than three weeks into the second quarter.
From its low at the end of March through last Friday, the S&P 500 has rallied nearly thirteen percent with information technology, communications services (over 70% tech related), consumer discretionary , and industrials the top four performing sectors in the period delivering double -digit returns of 24%, 18.3%, 15.5% , and 10.1% respectively as traders and investors focused on Q1 earnings season results which thus far have exceeded expectations.
Ten of the eleven sectors of the S&P 500 have posted positive returns from the end of March through last Friday with energy the only sector to post negative performance (off 8.8% in the period) even as oil prices remain high as a result of the conflict in the Middle East and the shutdown of the Strait of Hormuz.
Among the other six sectors in the S&P 500 gains have been more modest in the period, with real estate, financials, materials, consumer staples, utilities and healthcare showing respective performance gains of 8.9%, 6.3%, 1.7% 0.55%, and 0.16%.
From a perspective of style, growth has outperformed value across the Russell major stock indices as well in the period from the March 30 low through April 24.
Among market capitalizations large caps represented by the NASDAQ Composite and the S&P 500 as well as the Russell 2000 (small caps) have led stocks broadly higher posting respective gains of 19.4 %, 12.9% and 15.5%.
The S&P 600 (small caps) and the S&P 400 (mid-caps) have posted respective gains of 12.7% and 10.9% while the Dow Jones Industrials (30 large cap stocks) added 8.9% in the period.
In our view, these changes in performance early in this second quarter of 2026 show a continuation of a desire by market participants to practice diversification, avoid over-concentration and consider changes in valuations and potential growth factors as opportunities to be considered in making portfolio decisions.
International markets, which outperformed last year into this year, have shown vulnerability tied to their dependency on oil and oil derived imports as well as the degree to which technological innovation is part of their economic regime and corporate sectors as well as to a lesser degree to which technological innovation is part of their economic driver and corporate sector composition .
From March 30 through April 24 MSCI EAFE (developed international markets ex-US and Canada) MSCI Emerging Markets, and MSCI Frontier Markets have lost some of their luster in performance versus the US major indices delivering relative returns of 6.9%, 14.0% and 10.9%.
Where to From Here?
Resolution to the conflict in our view persists as a potential negative overhang to market performance on a day -to -day basis tied to news flows from the front, developments in negotiations taking place and supply chain disruptions that carry inflation risks.
That said stocks are showing thus far an appreciation for fundamentals that matter to revenue and profit growth.
Where Are We Now?
As the calendar moves into the ninth week of conflict in Iran it is our view that market participants have learned a number of key things from the current situation in the Middle East including:
- Oil remains a key lubricant of global trade and economic growth and is likely to remain so for some time into the future as:
- Alternative energy still lacks scale and efficiencies on the timeline leading to a point where alternative energy becomes the ubiquitous driver of world growth.
- Nations dependent upon imports of oil to maintain their economic trajectory will remain for some time at significant risk to disruptions of the flow of oil and its by -products.
- In the US , growth’s ability to overtake value investing remains contingent on the potential for revenue and earnings growth as well as relative valuations stateside and globally even as US tech has once again shown outsized ability to move the direction of stocks.
- The dollar continues to remain the safe haven currency of the world whenever a period of elevated geopolitical risk emerges on the global landscape. US markets as a result are once again capturing the attention of foreign investors.
- Sector as well as individual stock selection remains in our view key to performance with diversification an important factor in a marketplace quick to discount both positive and negative developments day to day and even hour to hour in the trading day.
- Along with diversification across sectors attention paid to market capitalizations and style can serve to avoid over -concentration as tech (semiconductors, hardware and software) meet the challenges brought about by changes tied to developments in AI.
- Our favorite sectors remain: information technology, communications services, industrials, financials and consumer discretionary.
- We continue to favor GARP (growth at a reasonable price ) growth, growthier value and cyclicals over defensives.
In our view it remains important for investors to avoid letting the noise and drama of day -to -day market activity obfuscate the intermediate and longer-term signal that can help stocks climb the proverbial “wall of worry.”
Resilience tied to the economy, earnings growth, the consumer, and job growth remain key to equity performance.
The dollar once again shows its ability to remain the safe haven currency of the world in periods of elevated geopolitical risk.
Name:
John Stoltzfus
Title:Chief Investment Strategist, Oppenheimer Asset Management Inc.
John is one of the most popular faces around Oppenheimer: our clients have come to rely on his market recaps for timely analysis and a confident viewpoint on the road forward. He frequently lends his expertise to CNBC, Bloomberg, Fox Business, and other notable networks.
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