The Markets

It’s all about how you slice the index pie.

Last week, the Standard & Poor’s 500 Index (S&P 500) closed at a new record high even though 329 of its 500 stocks lost value, reported Connor Smith of Barron’s.

How is that possible? The S&P 500 is a capitalization-weighted index.

Imagine the S&P 500 as a pie. Each stock in the index is one slice of that pie, and all of the slices are different sizes. The size of each company’s slice is determined by its market capitalization. (Market capitalization is a stock’s share price times the number of shares outstanding). For example, if:

• Company A has a stock price of $50 and 100 shares outstanding, then it has a capitalization of $5000.
• Company B has a stock price of $100 and 1000 shares outstanding, then it has a capitalization of $100,000.

If both companies were in the S&P 500, Company B would be a bigger slice in the index pie.

One of the companies with the largest slices of S&P 500 pie is a chipmaker with a share price of about $200 and more than 20 billion shares outstanding. Its capitalization was recently more than $5 trillion.

A company of this size is called a mega-cap company because it’s so large. When mega-cap company stocks gain value, they can pull the entire S&P 500 up, even when smaller companies are flagging, reported Adam Hayes of Investopedia.

In contrast, if the S&P 500 was equal-weighted, every company’s slice would be the same size. As a result, every stock would have equal influence, so the index’s performance would reflect the performance of all of the companies. If most stocks were falling, then an equal-weighted index would probably move lower.

From a practical perspective, when a capitalization-weighted index is rising, and most of its stocks are falling, then a handful of sizeable companies are performing exceptionally well. Last week, a small group of companies in the S&P 500 did exceptionally well.

It’s still early in earnings season, which is the time when companies let investors know how they performed in the previous quarter. With 28 percent of S&P 500 companies reporting actual results so far, the index is on track to report its highest net profit margin (+13.4 percent) in more than 15 years. The Information Technology sector is leading the way with profits for the companies that have reported so far up 29.1 percent in the first quarter of 2026 compared to up 25.4 percent in the first quarter of last year, according to John Butters of FactSet.

“Semiconductor stocks are in the midst of a historic run, a winning streak that is every bit as impressive as Joe DiMaggio’s famous stretch of 56 straight games with a hit,” reported Paul R. La Monica of Barron’s.

Last week, the S&P 500 and Nasdaq Composite finished the week higher, while the Dow Jones Industrial Average lost value. In addition, yields on longer maturities of U.S. Treasuries moved higher over the week.

RETIREMENT CONFIDENCE FALLS. Stock markets have been climbing higher, but many Americans are feeling less optimistic about retirement. In fact, retirement confidence in the United States dropped significantly in 2026 on worries about Social Security, Medicare and inflation, according to the 2026 Retirement Confidence Survey conducted by the Employee Benefits Research Institute and Greenwald Research.

In 2026, American workers are less confident than they were in 2025 that they’ll have enough money to pay for basic expenses in retirement. Just 58 percent of workers and 71 percent of retirees are confident they will have enough money to keep up with inflation and cost of living in retirement. People who participated in the Retirement Confidence Survey were:

Alicia Munnell and Gal Wettstein of the Center for Retirement Research at Boston College reported on a survey that found Americans across the wealth spectrum have become more concerned about the impacts of potential changes to Social Security and Medicare on their retirement plans. The concerns have led some to begin saving more for emergencies, delaying retirement, and/or investing more conservatively.

Decisions like these should not be made lightly. For example, investing more conservatively may be a sound choice or it could a choice that makes it more difficult to reach a comfortable retirement. It depends on individual circumstances and goals. Investing conservatively can reduce short-term ups and downs, but it also can limit long-term growth potential and the benefits of compounding.

If you have questions about retirement, please get in touch. We’re happy to review your plan or help you build one.

WEEKLY FOCUS – THINK ABOUT IT

“Plans are nothing; planning is everything.”

―  Dwight D. Eisenhower, Former U.S. President

Sources:

https://www.barrons.com/livecoverage/stock-market-news-today-042426/card/the-s-p-nasdaq-hit-fresh-highs-market-breadth-is-terrible--LSnyu8Ofaq3jG05pVN45 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/04-27-26-Barrons-The-S&P-Nasdaq-Hit%20-%201.pdf

https://www.investopedia.com/terms/c/capitalizationweightedindex.asp

https://finance.yahoo.com/quote/NVDA/key-statistics/

https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_042426.pdf

https://www.barrons.com/articles/semiconductor-stocks-rally-take-profits-now-28e9edb6?mod=hp_LEDE_C_2_B_1 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/04-27-26-Barrons-Semiconductor-Stocks-Winning-Streak%20-%204.pdf

https://www.barrons.com/market-data?mod=BOL_TOPNAV r go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/04-27-26-Barrons-DJIA-S&P-Nasdaq%20-5.pdf

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2026

https://www.ebri.org/docs/default-source/rcs/2026-rcs/2026-rcs-release-report.pdf?sfvrsn=1229022f_1 (Page 4 and charts)

https://www.ebri.org/docs/default-source/rcs/2025-rcs/2025-rcs-release-report.pdf?sfvrsn=f5e3042f_5 (Page 4 and charts)

https://crr.bc.edu/the-impact-of-financial-advisors-since-the-uptick-in-policy-risk/

https://www.fidelity.com/learning-center/wealth-management-insights/risks-of-investing-conservatively

https://www.brainyquote.com/quotes/dwight_d_eisenhower_149111

The Markets

The market completes a 180.

One of the most exciting driving sequences in movies may be the scene from Baby Driver when “Baby” (a reluctant getaway driver) slings a red Subaru into a narrow 180-degree turn, slides backward between obstacles, and immediately pivots into another 180-degree turn, all while perfectly in sync with the beat of his music.

Since mid-February, the U.S. stock market has offered a similarly exciting ride.

The Standard & Poor’s 500 Index (S&P 500) was closing in on a record high level (7,000) in late February. Then the U.S. military conflict with Iran began and markets drifted lower. The S&P 500 hit bottom in late March when talk of a ceasefire inspired a 180 in outlook and U.S. stocks headed in the other direction. The index recovered lost value incredibly quickly. On Tax Day, it closed above 7,000 for the first time, reported Martin Baccardax of Barron’s.

There were three main drivers behind the remarkable recovery. These included:

1. Enthusiasm about the prospect of peace. Investor optimism surged on the possibility of an end to the Middle East conflict. “The stock market has now delivered a year’s return in about two weeks. While that might not be quite as impressive as all summer in a day, it’s been enough to provide a genuine reset for investors. The ‘end’ of the Iran war spurred a market celebration this week, even if the conflict is nowhere near officially over,” reported Teresa Rivas of Barron’s. 

Over the 12 trading days of April through last Friday, the Nasdaq Composite Index had a double-digit gain, while the S&P 500 was up more than 8 percent, reported Rivas.

1. Excitement – again – about artificial intelligence (AI). Concerns about AI capacity being overbuilt and worries that data centers might not prove profitable, have faded amid rising demand, reported Joe Weisenthal and Tracy Alloway of Bloomberg.

“…AI can just do more as the models get better (not just cheaper), and obtain new capabilities, and this improvement should also be seen as a source of new demand. If, for example, [a new AI product] is as amazing at cybersecurity as all the hype says, then I’d expect we’ll see a big surge in AI consumption from people who work on securing computer networks.”

Investors’ appetite for AI is reflected in the performance of the S&P 500. Forty percent of its recent gains are owed to five of the biggest tech companies in the index, all are members of the Magnificent Seven, reported Baccardax.

1. A strong start to earnings season. Just 10 percent of the companies in the S&P 500 have reported on their performance during the first quarter. Among that group, more than 80 percent have reported positive revenue and earnings surprises. A positive surprise occurs when a company does better than analysts expected. In the first quarter of 2026, many of the companies that have reported took in more money and were more profitable than analysts anticipated, according to John Butters at FactSet.

Last week, major U.S. stock indices finished the week higher. In addition, yields on most maturities of U.S. Treasuries moved lower over the week.

THE INFRASTRUCTURE TEST. Recently, heavy storms in the Midwest and elsewhere have severely tested aging U.S. infrastructure. There have been significant failures in flood defenses, power grids, and transportation networks, reported Anna Skinner of Newsweek.

 Since 1998, the American Society of Civil Engineers (ASCE) has evaluated infrastructure in the United States every two years. The authors of the 2025 Report Card for America’s Infrastructure explained why the analysis is important:

“America’s infrastructure is the foundation on which our national economy, global competitiveness, and quality of life depend. While often taken for granted when it is working properly, every American household or business immediately feels the impact of just one inefficiency or failure in our built environment.”

Poorly maintained infrastructure is costly. The ASCE found that “potholes damaging our vehicles, traffic delays leading to lost productivity and increased costs for products, aging water lines leading to spiking water rates, etc. – costs each American household $2,700 per year.”

How well is the United States maintaining its infrastructure?

The most recent Report Card for America’s Infrastructure graded 18 categories of infrastructure, and the grades weren’t good. The lowest marks were for systems that affect millions of Americans: a D- for transit and a D for stormwater.

Overall, U.S. infrastructure earned a ‘C’, meaning mediocre condition; requires attention. Here’s how America’s infrastructure fared:

For investors, deteriorating infrastructure can weigh on local economies, raise business operating costs, and (when spending accelerates) create opportunities for growth in industries that benefit.

WEEKLY FOCUS – THINK ABOUT IT
“Always do what is right. It will gratify half of mankind and astound the other.”
― Mark Twain, Author