Stocks Join Bonds Higher as Oil Falls Below $90

The macro environment looks decent, but earnings growth is highly concentrated in a few mega-cap names. While the AI story has broadened into materials and industrials, only ~20% of S&P 500 constituents are outperforming the index. Over 100 stocks have better price performance than Nvidia, but their smaller size means less index impact. The biggest concern among seasoned investors remains the debt and deficit, though it has never been a market issue as long as Treasury buyers show up.

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Liz Ann Sonders 9.0

Stocks Join Bonds Higher as Oil Falls Below $90

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Earnings are driving the market and estimates for 2026 have risen sharply, but the rally is highly concentrated in a few mega-cap names, suggesting caution on the broader index.

rut

Only 20% of S&P 500 constituents are outperforming the index, and the AI story has broadened into materials and industrials, but there is no explicit bullish call on small caps or the Russell 2000.

Liz Ann Sonders

We are not market timers, but the macro environment looks decent. Neither side of the Fed's mandate suggests they should consider easing policy.

The most fascinating thing will be the first meeting and what Warsh says about how he will run the Fed.
Liz Ann Sonders

Earnings are driving the market, but there is concentration risk. The AI story has broadened into materials and industrials, but a small handful of names sit behind the huge surge in first-quarter earnings.

Full-year earnings estimates for 2026 have jumped from the teens to 25%.
Liz Ann Sonders

Only about 20% of S&P 500 constituents are outperforming the index over the past couple of months. There is incredible concentration in performance.

Nvidia is the fifth largest contributor to S&P 500 returns but is not even in the top 100 in terms of price performance. Over 100 stocks are performing better than Alphabet and Nvidia, but they are large contributors by virtue of their market cap multiplier.
Liz Ann Sonders

The number one question from seasoned investors is on debt and deficit. It has never been an issue as long as people keep showing up to buy Treasury debt.

The investor class cares deeply about this, but the average constituent does not vote based on it, so Washington continues to kick the can down the road.

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