April 13, 2026: Buying the dips, bracing for more volatility

BY MATT ORTON, CFA, AND JOEY DEL GUERCIO, CFA^{1, 2}

Key takeaways

• The S&P 500 Index has recovered nearly all of its drawdown since the start of the war, but do not count on a linear path forward.

• The market appears to be in a place where we believe it makes sense to consider using downside opportunistically while expecting further volatility.

• Areas to watch from the investment playbook: Mega-cap technology, beneficiaries of capital expenditures for artificial intelligence, gold, and gold miners.

 

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As we expected, stocks took the escalator down as geopolitical risk rose in the Middle East, then rode the elevator up once investors started to see a more constructive path forward.

With the S&P 500 Index having recovered nearly all of its drawdown since the start of the war, the rebound of the past two weeks has rewarded our view that selective dip-buying was warranted — particularly across more attractive parts of technology with durable growth drivers tied to the super-cycle in artificial intelligence (AI) capital expenditures (capex).

That said, the breakdown in recent negotiations with Iran is an important reminder that this remains a tenuous backdrop and that the path forward is unlikely to be linear. More volatility should be expected but not feared, because it could create potential opportunities for investors willing to wade in slowly and stay selective. That discipline becomes even more important as earnings season kicks off this week and the market focuses on fundamentals, management commentary, and the insights guidance provides regarding the underlying state of the economy, consumer, and inflation.

Our view continues to be incrementally more constructive as the most extreme scenarios are taken off the table. We believe the recovery in secular growth winners and prior market leadership could set the table for improving breadth, while a bottoming of investor sentiment and positioning could support the approach of slowly and selectively buying dips going forward.

The fog of war hasn’t quite lifted

While the US-Iran negotiations failed to yield any tangible results, it seems like enough progress was made to avoid a resumption of hostilities. Even the “blockade” of the Strait of Hormuz announced by President Trump seems to be a bid for more negotiating leverage and time rather than the start of renewed conflict.

Unfortunately, there are still more questions than answers. This is why elevated volatility remains our base case. But we expect that any sharp reaction in the market likely creates new potential opportunities for investors who were not prepared for the initial leg higher in equities. And there are still plenty of areas to consider — the S&P 500 may have made a sharp comeback last week thanks to the strength of large-cap technology, but 54% of index constituents remain more than 20% off their all-time highs and nearly 50% are underperforming the index year to date. Many sector and industry valuations have come down as a result of the war, and positive earnings reports and management guidance could help multiples expand once again.

 

Key questions for banks

First-quarter earnings season kicks off in earnest this week, with the money center banks setting the tone for whether fundamentals can keep pace with a still-complicated macroeconomic backdrop. While the aggregate earnings setup remains constructive, the early focus will be less on headline beats and more on the quality of results and the durability of guidance. For the banks, that means watching whether:

• Fee and trading strength can continue to offset a less-powerful net interest income tailwind,

• Loan and deposit growth are holding up,

• Credit costs and consumer trends remain contained, and

• Management teams sound more confident or more cautious about the economy, inflation, and broader demand trends.

Critically, we may move past the overhang of private credit on banks, which could allow for some multiple expansion, assuming a more benign backdrop, which has been our base case.

Investment Playbook

Markets took two steps forward last week on the news of a cease-fire, helping stocks extend their gain off the March 30 lows with the S&P 500 gaining more than 3% for a second consecutive week. While the rally has been largely driven by the largest technology companies, it’s important to see strength returning to prior market leadership. Unfortunately, Sunday’s setback with the breakdown in US-Iran negotiations and blockade of the Strait of Hormuz appears more like a bid for negotiating leverage than a departure from efforts to find an offramp.

With this backdrop, the market finally appears to be in a place where we believe it makes sense to consider using downside opportunistically while expecting further volatility along the way. Equity positioning looks to have hit a low just before the end of the first quarter — possible capitulation territory. If the market can better digest bad news and continue to rally toward new highs on good news, we would expect to see systematic buying flows increase as volatility starts to come down. The market has some negative news to work through to start the week, but the narrative is finally switching from macro to micro as first-quarter earnings season kicks off with earnings per share (EPS) growth expected to be in the mid-teens for the S&P 500. The driver of that growth is still mega-cap technology and AI. In light of these conditions, here are some areas we’re watching:

• Mega-cap technology and AI capex beneficiaries. We have highlighted the tech complex for the past few weeks, and it’s encouraging to see some of the sector, particularly prior market leadership, bounce back. To be sure, technology is not a monolith: Last week it saw one of the largest historic divergences on record between software and semiconductor performance. This is a reminder that selectivity matters greatly in this tenuous market environment. We continue to focus on the AI capex beneficiaries where there appears to be the most visibility into the sustainability of earnings and revenue growth. Two major companies tied to semiconductor manufacturing report results this week, and one has already reported record quarterly results despite the war. But we believe the range of potential opportunities extends beyond just the semiconductor beneficiaries to the industrial side of the AI buildout as well as to the power grid supply chain. There is also an increased focus on the physical side of AI — robotics — and the supply chains that will be necessary to support future growth. Aerospace, electrical equipment, construction and engineering, utilities, and battery storage are all parts of the market that have held up well since their fundamental growth has not been meaningfully disrupted by the uncertainty in the Middle East.

• Gold for ballast, gold miners for beta. After the recent volatility, we would treat another pullback in gold as an opportunity to consider adding exposure rather stepping away. That’s because the bigger drivers still appear to be intact: Gold remains a hedge against continuing currency debasement policies in the Group of Seven (G7) nations, and central bank demand remains firmly in place. For investors who need to add equity rather than metal, we view gold miners as an attractive higher-beta expression of the same view. That’s because bullion is still sitting well above industry cost curves. This helps explain why earnings and cash generation for the group could remain well-supported if gold doesn’t fall below its lows from a few weeks ago. That fits our framing of gold as a portfolio ballast from increased geopolitical turbulence and miners as a more pro-risk way to add exposure.

 

What to watch

Data — March Producer Price Index (Tuesday) and US import prices (Wednesday).

Business sentiment — Empire State Manufacturing Survey (Wednesday) and Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey (Thursday), US Federal Reserve Beige Book (Wednesday).

Fed speakers — Federal Reserve Bank of New York President John C. Williams (Thursday) and Governor Christopher Waller (Friday).

Europe — European Central Bank officials, including President Christine Lagarde on Tuesday, could clarify the bank’s reaction function in response to the Middle East war.

 

¹ Matt Orton, CFA, is Chief Market Strategist at Raymond James Investment Management. Joey Del Guercio, CFA, is Research Associate for Market Strategy at Raymond James Investment Management.

² Unless otherwise indicated, all data cited is sourced from Bloomberg as of April 10, 2026.

Risk Information:
Investing involves risk, including risk of loss.

Diversification does not ensure a profit or guarantee against loss.

Disclosures:
Any forecasts, figures, opinions, or investment techniques and strategies set out are for informational purposes only. There is no assurance any estimate, forecast or projection will be realized.

Index or benchmark performance presented in this document does not reflect the deduction of advisory fees, transaction charges, or other expenses, which would reduce performance. Indexes are unmanaged. It is not possible to invest directly in an index. Any investor who attempts to mimic the performance of an index would incur fees and expenses that would reduce return.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature, or other purpose in any jurisdiction, nor is it a commitment from Raymond James Investment Management or any of its affiliates to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical, and for illustration purposes only. This material does not contain sufficient information to support an investment decision, and you should not rely on it in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and make their own determinations together with their own professionals in those fields. Any forecasts, figures, opinions, or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions, and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements, and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

The views and opinions expressed are not necessarily those of the broker/dealer or any affiliates. Nothing discussed or suggested should be construed as permission to supersede or circumvent any broker/dealer policies, procedures, rules, and guidelines.

Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.

Investing in small cap stocks generally involves greater risks, and therefore, may not be appropriate for every investor. The prices of small company stocks may be subject to more volatility than those of large company stocks.

International investing presents specific risks, such as currency fluctuations, differences in financial accounting standards, and potential political and economic instability. These risks are further accentuated in emerging market countries where risks can also include possible economic dependency on revenues from particular commodities or on international aid or development assistance, currency transfer restrictions, and liquidity risks related to lower trading volumes.

Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.

Links are provided for informational purposes only.

Indices
S&P 500 Index — Measures changes in stock market conditions based on the average performance of 500 widely held common stocks. It is a market-weighted index calculated on a total return basis with dividend reinvested. The S&P 500 represents approximately 80% of the investable U.S. equity market.

S&P 500^® Equal Weight Index — An index that includes the same constituents as the capitalization-weighted S&P 500 Index, but each company in the S&P 500 Equal Weight Index is allocated a fixed weight.

Producer Price Index / PPI — A report published monthly by the U.S. Bureau of Labor Statistics that measures the average change over time in the selling prices received by domestic producers for their output.

 

M-916996 Exp. 8/13/2026

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April 6, 2026: Recession vs. resilience

BY MATT ORTON, CFA, AND JOEY DEL GUERCIO, CFA^{1, 2}

Key takeaways

• The uncertainty is real, but the fundamental backdrop still points more toward caution and selectivity than recession.

• Signs of US economic resilience include last week’s jobs report, consumer spending data, and continued strong capital expenditures on projects related to artificial intelligence.

• Despite the war, S&P 500 Index year-over-year earnings are projected to grow by double digits for the sixth straight quarter.

 

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It’s worth pausing to appreciate something genuinely inspiring: the Artemis II mission and the spectacular images from humanity’s first crewed lunar flyby in more than 50 years.

Beyond the symbolism, Artemis II reminds us that long-term investment, disciplined execution, and real progress still matter.

That perspective is useful, because back on Earth the lack of clarity following President Trump’s speech and weekend postings has only added to the uncertainty surrounding the war in the Middle East. In turn, that uncertainty has helped fuel a growing number of calls for a significant growth slowdown, including the risk of recession. While risks to growth have risen as the war continues, the increasing recession calls look misguided. That’s because they:

• Underappreciate the scale of hyperscaler capital expenditures (capex) that remain in place;

• Ignore that the economy entered this period from a position of strength, as Friday’s jobs report again showed; and

• Fail to appreciate other offsets that could help to cushion consumer spending away from the pump.

The uncertainty is real, but the fundamental backdrop still points more toward caution and selectivity than recession. We remain cautious in our approach to the market and flexible in our approach to diversification. This means being tactical with respect to asset allocation, including looking across geographies, sectors, and industries instead of simply asset classes. With nearly half of the S&P 500 Index still in a bear market, there are plenty of potential opportunities for long-term investors.

Economic resilience

The position from which the US economy entered the Strait of Hormuz shock will play an important role in where the economy goes. The strong headline March non-farm payrolls report on Friday supports a more optimistic view of the economy, even adjusting for some anomalies that led to the prior month’s weakness. While employment growth remains heavily tilted toward healthcare, education, and social assistance, we received further confirmation that the low-hire, low-fire environment remains in place and that aggregate income growth remains positive in real terms. Further, tax refunds are running $40 billion to $50 billion above trend in 2026, which may offset some of the dent to consumers from higher gas prices, at least for now.

Perhaps most important to economic resilience is the hyperscaler capex that is set to exceed $650 billion this year. This vast amount of spending contributes meaningfully to the growth of US gross domestic product (GDP) and provides an additional offset to a slowdown in consumer spending. Weekly credit card spending data excluding gasoline purchases has yet to show any worrying signs of deterioration in discretionary purchases, and we’ll hear from the banks next week for a detailed look at their consumers and outlooks. While this doesn’t ignore the consumer impact from the higher gas and input prices, we should not discount the positioning from which the economy is entering this heightened period of uncertainty.

Earnings resilience

Earnings also have remained resilient, which is a key anchor and reason for our optimism. Earnings growth estimates for the first quarter of 2026 have barely budged since the start of the conflict, sitting at 13.2% for the S&P 500. This is higher than the 12.8% growth expected at the start of the year. If these estimates hold up, this will mark the sixth straight quarter of double-digit, year-over-year earnings growth reported by the index. This is inconsistent with a recessionary narrative, or even a meaningful slowdown, and speaks to the resilience of corporate America.

However, most of the increase in earnings expectations for the first quarter over the past few months has been concentrated in the information technology and energy sectors. The information technology sector has the highest number of companies issuing positive earnings per share (EPS) guidance for the quarter. As a result of the pressure on software and semiconductor share prices recently, this has pushed valuations for the tech sector to its lowest level in years — even below where valuations sat at the depths of Liberation Day lows last April. Selectivity is critical, but this highlights potential buying opportunities that have been created amid recent market volatility. Guidance will be critical going forward, and it will be important for investors to pay attention to profit margins and how they are potentially being impacted by higher diesel prices or other dislocations from the bottlenecks around the Strait of Hormuz.

 

Investment Playbook

Near-term risks of further escalation in the Middle East have risen as credible offramps remain elusive. This, however, should be balanced with a view toward seeking long-term opportunities, especially in pockets of the market levered to durable secular growth themes. Oil prices will be key as further increases toward $120 per barrel will keep upward pressure on the dollar and interest rates, which in turn could lead to more pronounced bouts of equity volatility.

That said, it’s worth highlighting some relatively constructive price action across key market bellwethers like industrials, financials, and semiconductors, which remain in an uptrend. Despite the pain across financials, banks — unlike the broader market — haven’t broken below their November lows. We’ll hear from their management teams starting next week as earnings kick off. In the meantime, two important thoughts:

• Remain patient and resist adding too much risk too early. While there have been some goods coming from the Strait of Hormuz (such as Iraq oil getting an exemption), it still largely remains closed and adds to further upside risks to energy prices. Additionally, pre-war energy supply buffers have now largely been exhausted, indicating that any floor for prices is rising and staying higher for longer is more likely. This is particularly acute for Asia where the last of pre-conflict seaborne oil and gas has been delivered. This is perhaps why volatility remains quite elevated across many Asian markets with the direction of oil and natural gas driving these markets. While it’s tempting to start dip-buying, especially for many companies that have been severely discounted due to geographic association rather than fundamentals, the likelihood that we get meaningful clarity in the next few days is small. Tread carefully, even when looking to add to quality parts of the market. Instead, make sure your shopping list is constantly updated and ensure that your portfolios are properly diversified.

• Expect choppy price action ahead of fundamental catalysts. Equity positioning remains light and upside price action last Tuesday and Wednesday highlights how quickly the market can move as important forces like commodity trading advisors (CTAs) flip the switch to buy and shorts are forced to cover. Given the sharp whipsaws in the price of energy and a busy macroeconomic calendar with the first inflationary reads that incorporate the start of the Iran conflict, it’s likely that we continue to see choppy price action that keeps positioning on the sidelines and investors looking for hedging opportunities. We still must wait another week for fundamental catalysts, with first-quarter earnings kicking off April 14. For the mega-caps, the last two weeks of April will be crucial — most S&P 500 companies will report in that period, including six of the Magnificent Seven. Earnings season has the potential to help the market find its footing if bank management teams and technology companies reaffirm their outlooks and continued investment plans.

What to watch

Economic data — US Consumer Price Index for March, Institute for Supply Management Services ISM^® Report on Business^®, and University of Michigan Index of Consumer Sentiment.

Risks increase as the conflict persists and higher energy prices start passing through to food and core prices over several via input costs working through supply chains. Additionally, the University of Michigan survey’s inflation expectations are becoming increasingly important to see how consumers are adjusting their views on the persistence of inflationary pressures as a result of the conflict. Keeping expectations anchored is a key goal for the US Federal Reserve.

Monetary policy — Outside of the US, we’ll hear from the Reserve Bank of India, Reserve Bank of New Zealand, and the Bank of Korea.

 

¹ Matt Orton, CFA, is Chief Market Strategist at Raymond James Investment Management. Joey Del Guercio, CFA, is Research Associate for Market Strategy at Raymond James Investment Management.

² Unless otherwise indicated, all data cited is sourced from Bloomberg as of April 2, 2026.

Risk Information:
Investing involves risk, including risk of loss.

Diversification does not ensure a profit or guarantee against loss.

Disclosures:
Any forecasts, figures, opinions, or investment techniques and strategies set out are for informational purposes only. There is no assurance any estimate, forecast or projection will be realized.

Index or benchmark performance presented in this document does not reflect the deduction of advisory fees, transaction charges, or other expenses, which would reduce performance. Indexes are unmanaged. It is not possible to invest directly in an index. Any investor who attempts to mimic the performance of an index would incur fees and expenses that would reduce return.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature, or other purpose in any jurisdiction, nor is it a commitment from Raymond James Investment Management or any of its affiliates to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical, and for illustration purposes only. This material does not contain sufficient information to support an investment decision, and you should not rely on it in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and make their own determinations together with their own professionals in those fields. Any forecasts, figures, opinions, or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions, and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements, and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

The views and opinions expressed are not necessarily those of the broker/dealer or any affiliates. Nothing discussed or suggested should be construed as permission to supersede or circumvent any broker/dealer policies, procedures, rules, and guidelines.

Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.

Investing in small cap stocks generally involves greater risks, and therefore, may not be appropriate for every investor. The prices of small company stocks may be subject to more volatility than those of large company stocks.

International investing presents specific risks, such as currency fluctuations, differences in financial accounting standards, and potential political and economic instability. These risks are further accentuated in emerging market countries where risks can also include possible economic dependency on revenues from particular commodities or on international aid or development assistance, currency transfer restrictions, and liquidity risks related to lower trading volumes.

Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.

Indices
S&P 500 Index — Measures changes in stock market conditions based on the average performance of 500 widely held common stocks. It is a market-weighted index calculated on a total return basis with dividend reinvested. The S&P 500 represents approximately 80% of the investable U.S. equity market.

 

M-912174 Exp. 8/6/2026

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