Stocks Extend Gains on U.S.-Iran Ceasefire and Improved Risk Sentiment

The U.S. stock market enjoyed a second straight rally last week as geopolitical tensions shifted, at least temporarily, from escalation to diplomacy. After a period of high volatility and risk aversion, investors were encouraged by the announcement of a ceasefire between the U.S. and Iran. Each of the benchmark indexes closed the week with gains, while 10 of the 11 market sectors climbed, with the exception of Energy. Information Technology, Communication Services and Consumer Discretionary outperformed. Crude oil prices, which touched $112 per barrel earlier in the week, fell sharply following the aforementioned ceasefire. Economic data released last week was mixed. The third estimate of gross domestic product was revised down 0.2 percentage point from the second estimate. The monthly government deficit widened and inflationary pressures remained sticky, although consumer spending ticked up. Treasury yields ended the week about where they started, with the yield on 10-year Treasuries rising at the end of last week.

Final Q4 GDP Shows Economy Lost Momentum Late in 2025

The third and final estimate of gross domestic product for the fourth quarter of 2025 revealed that the economy expanded at an annualized rate of 0.5%. In the third quarter of 2025, GDP increased 4.4%. Compared to the third quarter, personal consumption expenditures (PCE), a measure of consumer spending and the largest contributor to GDP, fell from 3.5% to 1.9%. Spending decreased for both goods and services. Gross domestic investment increased from no change in the third quarter to an increase of 2.3% in the fourth quarter. Nonresidential (business) investment rose 2.4% in the fourth quarter, outpacing residential investment, which fell 1.7%. Exports declined from 9.6% in the third quarter to -3.2% in the fourth quarter. Imports fell 1.0% in the fourth quarter after falling 4.4% in the previous quarter. Government spending declined 5.6% in the fourth quarter after rising 2.2% in the third quarter.

Eye on the Week Ahead

This week brings with it the release of multiple reports across several economic sectors. The report on existing home sales for March is available this week. February saw sales increase by 1.7%. The latest data on producer prices is also out this week. For the 12 months ended in February, producer prices have risen 3.4%. The March report on import and export prices follows February data, which showed an increase in both import and export prices. Finally, the Federal Reserve’s report on industrial production for March closes the week. Industrial production ticked up 0.2% in February.