Market Insights

Quarterly Market Insights: April 2026

U.S. and Canadian Markets

Stocks fell in the first quarter as investors grew unsettled by concerns that AI could disrupt certain industries and ongoing geopolitical tensions.

The Dow Jones Industrial Average lost 3.58% while the Standard & Poor’s 500 Index fell 4.63%. The Nasdaq Composite declined 7.11%. By contrast, the S&P/TSX Composite gained 3.33%.

A Choppy January

Stocks trended higher in January as upbeat economic data offset geopolitical tensions. The S&P 500 traded above the 7,000 level for the first time during the month.5 Investors liked what they heard about December’s inflation rate, which was followed by a solid retail sales report. However, the evolving geopolitical situations and mixed results from money center banks put some pressure on stock prices.

February’s Focus on AI

As the month wore on, stocks came under pressure as AI disruption fears spread across several industry groups. Traders grew concerned that AI could disrupt certain business models, prompting some to reassess valuations in affected sectors.

But markets rebounded modestly following a Consumer Price Index (CPI) reading that showed the pace of inflation slowed in January.

A Volatile March Finishes Strong

Volatility increased in March as investors focused on the day-to-day updates from the Middle East. But stocks closed the month on a high note. A powerful last-day-of-the-month rally clawed back some losses for the quarter as fresh news offered renewed hope for an end to the conflict.

U.S. Sectors

Despite the disappointing Q1, an in-depth review shows six of the 11 S&P 500 Index sectors finished in the green. Energy (+37.91%) was the clear standout. Materials (+10.68%) were a distant second but still managed a double-digit gain. Utilities (+8.26%), Consumer Staples (+6.12%) and Industrials (+4.55%) all posted solid gains, while Real Estate (+1.87%) joined the winners.

Technology (-7.57%) was under steady pressure during Q1. Consumer Discretionary (-8.55%) and Financials (-9.40%) were also under pressure, while Health Care (-4.90%) and Communication Services (-5.53%) trended lower.

Canada Recap

Canada’s S&P/TSX Composite Index carried over its 2025 momentum into the first quarter, setting multiple record highs early in January. Mining and materials groups were among the best performers, while financial names also contributed to the rally.

The MarketsIn February, Canadian markets benefited from global uncertainty. Investors sought safe-haven assets, which led to continued strength in the materials sector. 

The S&P/TSX Composite was under pressure in March amid uncertainty over the Middle East conflict, which disrupted global oil supplies. But a last-day rally tempered losses for the month.

Market/Index	Mach 2026 Change	Q1 2026 Change	YTD Change
S&P 500	-5.09%	-4.63%	-4.63%
NASDAQ	-4.75%	-7.11%	-7.11%
Russell 2000	-5.17%	0.58%	0.58%
S&P/TSX Composite	-4.58%	3.33%	3.33%
10-Year Treasury Notes	4.31	0.15	0.15
Fed Funds Rate	3.50-3.75	3.50-3.75	3.50-3.75

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance doesn't guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

World Markets

The MSCI EAFE Index slid 1.87% in the first quarter.14 In Europe, the United Kingdom was a standout, picking up 2.47% during Q1. Meanwhile, Germany (-7.39%), France (-4.08%), Spain (-1.49%), and Italy (-1.41%) were under pressure for the three-month period.

Other global markets had mixed performance for the quarter. China’s Hang Seng index lost 3.29% Australia's ASX 200 fell 2.67%, but Japan’s Nikkei rose 1.32% for the three months ended March 31, 2026.

World Market Recap

Emerging Markets	March 2026 Change	Q1 2026 Change	YTD Change
Hang Seng (China)	-6.92%	-3.29%	-3.29%
KOSPI (Korea)	-19.08%	19.89%	19.89%
Nikkei (Japan)	-13.23%	1.32%	1.32%
Sensex (India)	-11.49%	-15.57%	-15.57%
EGX 30 (Egypt)	-7.91%	8.35%	8.35%
Bovespa (Brazil)	-0.70%	16.35%	16.35%
IPC All-Share (Mexico)	-3.91%	6.69%	6.69%
ASX 200 (Australia)	-7.79%	-2.67%	-2.67%
DAX (Germany)	-10.30%	-7.39%	-7.39%
CAC 40 (France)	-8.90%	-4.08%	-4.08%
IBEX 35 (Spain)	-7.14%	-1.49%	-1.49%
FTSE 100 (United Kingdom)	-6.73%	2.47%	2.47%
IT40 (Italy)	-6.14%	-1.41%	-1.41%

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance doesn't guarantee future results. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Indicators

• Gross Domestic Product (GDP). The U.S. economy grew 0.7% on an annualized basis in Q4, based on the Commerce Department’s first revision of GDP. Economists initially expected 2.5% annualized GDP growth in Q4. For the full year, GDP grew 2.1%, down from 2.8% in 2024. The slowing pace of economic growth reflected a drop in consumer spending, business investment, federal spending and international trade.

The Canadian economy expanded at an estimated 0.2% rate in February, ahead of expectations. February would mark the third straight month of economic expansion.

• Employment. Economists expected a net addition of 50,000 jobs, but U.S. employers shed 92,000 jobs in February. Unemployment rose slightly to 4.4% in February, up from 4.3% in January. Wage growth rose 0.4% month over month and 3.8% year over year—ahead of expectations and faster than January’s annualized 3.7% rise.

Economists expected a net job gain of 10,000, but Canadian employers shed a net 83,900 jobs in February. And, the Canadian unemployment rate rose to 6.7% from 6.5% in January.

• Retail Sales. In February, consumer spending rose 0.6% over the prior month—slightly better than economists expected. February’s rise was mainly due to strong sales of autos, clothing and personal care. Year over year, sales increased 3.7% in February and 3.2% in January—progressive increases from December’s 2.4% annual rise.

• Industrial Production. Industrial output in February rose 0.2% over the prior month, slightly better than an expected 0.1% rise but less than January’s 0.7% increase. Manufacturing output—which accounts for about 78% of industrial production—rose 0.2% and drove most of February’s overall increase.
• Housing. In January, housing starts rose 7.2% over the prior month, marking the third straight monthly increase. The multifamily segment rose an eye-catching 29.1% month over month. By contrast, single-family starts fell 2.8%. Year over year, overall starts rose 9.5% in January.

Economists expected a 1.3% decline but in February, sales of existing homes rose 1.7% over the prior month. Mortgage rates dipped below a key level, which may have brought sellers off the sidelines. The median existing home sales price was $398,000, 0.3% higher than a year ago. The supply of unsold homes rose 2.4% month over month to 3.8 months of supply at the current sales rate.

In January, sales of newly built homes fell 17.6% from the prior month, a steeper decline than expected. Regionally, sales in the Northeast (-44.0%) and the Midwest (-33.9%) were hit hard by winter weather. Sales also slowed in the West (-21.6%) and the South (-8.1%). The median new home sales price was $400,500, down 6.8% from a year earlier. At the latest pace of sales, the inventory of homes for sale rose to 9.7 months of supply in January—up from 8 months of supply in December.

• Consumer Price Index (CPI). In February, consumer prices in the U.S. rose 0.3% over the prior month, which was in line with expectations. Core inflation, which excludes volatile food and energy prices, rose 0.2% month over month and 2.5% year over year. Both were in line with expectations.

Consumer prices in Canada rose 1.8% in February. It marked the first time in six months that Canada’s CPI dropped below the central bank’s 2% target.

• Durable Goods Orders. Orders of manufactured goods designed to last three years or longer were flat in January (the latest available federal data), falling short of expectations of a 1.1% rise. Excluding transportation, which includes motor vehicles and parts, durable goods orders rose 0.4%.

The Federal Reserve

The Federal Open Market Committee (FOMC) voted 11-1 to keep interest rates steady at its March 18 meeting. So, the Federal Funds Rate remains at a target range of 3.5 to 3.75 percent. This marks the second consecutive Fed meeting at which the FOMC held rates steady.

In late March, Fed Chair Powell said inflation expectations "appear to be well anchored beyond the short term," despite concerns about the Middle East conflict's potential inflationary effect.

The Federal Reserve next meets April 28–29.

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