Higher

 

Equities rose to new highs on the back of positive news in the Middle East. That may be tested this week as the conflict remains unsettled heading into the expiration of the two-week ceasefire. For the week, the S&P 500 Index was +4.5%, the Dow Jones Industrials +3.2%, and the NASDAQ +6.2%. The Technology, Consumer Discretionary, and Communication Services sectors led the S&P 500 Index for the week, while the Energy, Utility, and Materials sectors lagged. The 10-year U.S. Treasury note yield was 4.244% at Friday’s close versus 4.319% the previous week.

The March Producer Price Index (PPI) showed headline inflation +0.5% month/month and core PPI (ex food and energy) was +0.2% month/month. On a year/year comparison, PPI was +4.0% and core PPI was +3.6%.The main item causing the steep monthly rise was energy which was 8.5% higher month/month.

Confirmation hearings for the next Federal Reserve chairman begin this week. The Federal Reserve is likely to take no action on interest rates at its April policy meeting, but the policy path for the year could be shaped once a new chairman takes the helm. Current CME Fed funds futures show no changes to short-term interest rates for the remainder of the year.

The quarterly earnings reporting period begins this week with 93 companies in the S&P 500 Index scheduled to report earnings results. First quarter earnings are expected to grow by 13.2% and quarterly revenue growth is expected at 9.9%. Full-year 2026 earnings are expected to grow by 18.0% with revenue growth of 9.2%.

In our Dissecting Headlines section, we look at the forecasts for global economic growth.

 

Financial Market Update

 

Dissecting Headlines: Global Economic Growth

The International Monetary Fund (IMF) recently cut its 2026 global growth forecast to 3.1% from 3.3% primarily due to the ongoing U.S. – Iran conflict and resulting energy price spikes and supply disruptions on global markets.

The current 3.1% baseline growth forecast assumes a short-lived, limited-scope conflict with moderate (approx. 19%) rise in energy prices and disruptions fading by mid-year. It expects global headline inflation to rise modestly to 4.4% in 2026 before declining in 2027.

A more adverse scenario with a sharper energy price surge, rising inflation expectations, and some tightening of financial conditions would reduce growth to 2.5% and raise inflation to 5.4%. A severe scenario with energy dislocations persisting into 2027, unanchored inflation expectations, and a resulting sharp financial tightening would drop growth to 2.0% in both 2026 and 2027 and inflation exceeding 6.0%. The IMF noted that every additional day of energy supply disruptions moves the outlook closer to the weaker 2.5% growth path.

While the outlook remains uncertain, neither the current baseline scenario nor the more adverse potential outcomes put the global economy at risk of extreme contraction as seen during the 2020 COVID-19 pandemic’s 3.1% economic contraction or the 0.1% contraction in 2009 from the global financial crisis.

Current major country and regional outlooks for economic growth are the U.S. at 2.3%, Europe at 1.1%, Japan at 0.7%, China at 4.4%, India at 6.5%, Russia at 1.1%, Brazil at 1.9%, and Saudi Arabia at 3.1%. Perhaps some of the underlying strength in the U.S. equity market can be attributed to strong underlying growth despite the current headline risk of the U.S. – Iran conflict.

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Want a printable version of this report? Click here: NovaPoint Weekly April 20, 2026

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