Monday, May 4, 2026
This year’s first quarter was a wild ride.
It started off well after a strong 2025, reaching new market highs in January. But then global disfunction arose due to the escalating conflict in the Middle East. It led to a severe downturn and the S&P 500 dropped almost 9%. An $8 trillion loss in world stock market capitalization took place in March.
Ah, but more twists were ahead as the rumors of a ceasefire led the market back. It was probably one of the quickest rallies we’ve ever seen. And then we hit new all-time highs shortly after.
With all these ups and downs, we ought to keep an eye on the U.S. economy. The $38 trillion national debt is mixing with resurging inflation from high oil prices, creating a macro trap for the Federal Reserve.
The central bank can’t cut interest rates to help service the debt if inflation is climbing. If that happened, the Fed could need to keep rates high during a slowdown. That risks stagflation, which is a combination of stagnant economic growth and high inflation.
This scenario has created a K-shaped economy. High income earners continue to spend every day. Lower earning consumers feel the pinch.
Perhaps making matters worse, the U.S. stock market has become historically concentrated. Today, the top 10 stocks make up almost 41% of the S&P 500.
This level of concentration means your investment portfolio’s success is heavily tied to the fortunes of a few tech giants. You might think you’re diversified, but maybe not.
And all of that could lead to a continuation of the rollercoaster in the second quarter. Only time will tell.
Daniel A. White is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Daniel A. White & Associates and CoreCap Advisors are separate and unaffiliated entities.