KEY POINTS
The S&P 500 closed at 7,022.95 Wednesday, a fresh all-time high, but the underlying macro environment includes rising Treasury yields, ceasefire uncertainty, and a Fed that remains on hold.
Initial jobless claims fell by 11,000 to 207,000 in the week ended April 11, the biggest weekly decline since February, reinforcing the tight labor market narrative that keeps the Fed patient.
US Treasury Secretary Scott Bessent warned Wednesday that secondary sanctions on institutions doing business with Iran are being prepared, meaning the geopolitical risk has not disappeared despite equity market optimism.
The S&P 500 closed at a record 7,022.95 on Wednesday and the Nasdaq hit 24,016.02, its first new all-time high since October 2025. The equity market is pricing in a world where the ceasefire holds, oil falls toward $90, the Fed eventually eases, and AI earnings justify the multiples. That is a plausible scenario. It is not the only one.
The macro data this week is telling a more nuanced story. Initial jobless claims fell by 11,000 to 207,000 in the week ended April 11, the biggest weekly decline since February. Continuing claims rose slightly to 1.818 million, but the overall picture is of a labor market that remains healthy enough to give the Fed no urgency to cut. A Fed that is not cutting is not the same as a Fed that is hiking, but it is also not the tailwind that equity valuations at current levels fully assume.
Treasury Secretary Bessent's secondary sanctions warning deserves more market attention than it received. Bessent described the measures as the "financial equivalent" of a bombing campaign, targeting financial institutions that continue to do business with Iran. Secondary sanctions of this magnitude would affect banks in China, the UAE, and other countries that have maintained Iranian commercial relationships throughout the conflict. The global economic ripple effects of that kind of enforcement action are not fully priced into markets that are celebrating an equity record.
The 10-year Treasury yield sits at 4.28%, having eased from its conflict-period highs but still well above levels that would make equity valuations at current multiples feel unambiguously comfortable. The Fed's next meeting is April 28-29, and the probability of any action remains near zero. The macro environment supports holding equities with a constructive posture toward the recovery trade. It does not yet support assuming the macro risk has permanently resolved.
