Market Insights 4/6/26
Observations & Insights – April 6, 2026
Stocks Stage Relief Rally
The major U.S. indexes finished the week 3% to 4% higher as stocks regained traction following five consecutive weekly declines. Conflict in the Middle East continued to drive the market, resulting in a rally on Tuesday and sizable intraday swings in a holiday-shortened trading week.
Key Points
- Volatility around the war in Iran continues, but historically, most years have had scary moments, and the market has still finished higher.
- Earnings and profit margins continue to suggest higher equity prices may be ahead this year.
- The average year has historically fallen more than 10% peak-to-trough at some point, putting this year's volatility in perspective.
- A viral AI crash scenario rattled markets in late February, but we believe the macro assumptions behind it do not hold up under scrutiny.
- We think AI may lead to a productivity boom that benefits workers and the broader economy, leading to an inflationary growth scenario.
Observations: Oil & Stocks Rise
After two weeks of relative calm in global oil markets, geopolitical tensions escalated again, raising fresh concerns about prolonged disruptions to oil shipments in the Persian Gulf’s Strait of Hormuz. U.S. crude was trading around $112 per barrel on Friday, the highest since mid-2022, and well above the $90 to $100 level that oil had traded in through most of March.
The U.S. economy generated 178,000 jobs in March, well above economists’ consensus expectations and rebounding from the previous month’s revised net loss of 133,000 jobs. The report—issued on Friday as the stock market closed for a holiday observance—also showed that the unemployment rate slipped to 4.3% from 4.4% the previous month.
The S&P 500 and the NASDAQ in March fell for the second month in a row, with both dropping around -5%. The Dow fell more than -5%, snapping a 10-month positive streak for that index. Over the first three months of 2026, all three indexes sustained their biggest quarterly declines in nearly four years.
Yields of U.S. government bonds slipped, snapping a four-week string of increases that had lifted the yield of the 10-year U.S. Treasury to its highest level in more than eight months. The 10-year yield finished the week around 4.30%, down from 4.43% at the end of the previous week. Nevertheless, the yield remained well above a recent low of 3.96% on February 27.
Gold prices recovered some of the ground they had lost in March, though they remained well below the precious metal’s record high of around $5,500 per ounce set in late January. On Friday, gold was trading around $4,700, up nearly 4% for the week.
With initial first-quarter earnings reports scheduled to begin coming out in mid-April, analysts are expecting that companies in the S&P 500 will report double-digit earnings growth for the sixth consecutive quarter. As of Thursday, analysts surveyed by FactSet were forecasting an average earnings growth rate of around 13.2%. Just a couple of weeks earlier, earnings were expected to rise just 12.5%.
Insights: Will AI Lead to a Productivity Boom AND an Economic Crash?
Switching gears from the current volatility, we want to address a topic that rattled markets in late February and remains relevant: the possibility that AI could simultaneously create a productivity boom and an economic crash.
In late February, Citrini Research published a thought experiment titled “The 2028 Global Intelligence Crisis” that imagined a world in which abundant artificial intelligence led to mass displacement of workers, collapsing consumer demand, and a severe market drawdown, all while productivity growth surged. The piece went viral, and many stocks sold off meaningfully on the day it was published, and in the weeks since.
It was a fascinating piece of scenario analysis. But we believe the macro assumptions underpinning the scenario do not hold up under scrutiny. Here is why.
The Macro Math Doesn’t Add Up
The scenario posits surging productivity growth alongside collapsing real wages and a 10% unemployment rate, with nominal GDP still running at 5-10%. We think these assumptions are internally inconsistent.
Productivity growth is essentially the sum of real wage growth and margin expansion. Historically, during periods of above-trend productivity growth, such as 1996-2004 and 2023-24, real wages also rose faster than in other periods. In other words, firms have not historically captured all of the productivity gains through margin expansion. A significant share has passed through to workers, especially in tight labor markets, creating a positive feedback loop of strong income growth, strong demand, and strong profit growth.
Source: FRED
If nominal GDP were really running at 5-10% with deflation (as the scenario assumes), real GDP growth would have to be even higher. Workers’ compensation accounts for just over 50% of Gross Domestic Income. For corporate profits (currently less than 10% of GDI) to absorb all that growth while worker compensation fell, profits would need to surge by more than 80%. And if aggregate profits surged at that pace, it is hard to explain why the stock market would be in a steep drawdown, unless interest rates surged, which does not square with a deflationary environment.
The scenario underestimates the policy response. Should the unemployment rate surge to 10% amid persistent deflation, it is reasonable to expect the Fed to take rates back to zero (or below) and for Congress to pass some form of fiscal relief. One person’s spending is another person’s income, and a policy response of that magnitude would meaningfully alter the trajectory.
Stuff Still Has to Get Made
The Citrini piece is not really arguing that AI will produce goods and services in lieu of humans. Rather, it is about taking out the middlemen, reducing friction and associated costs. But we believe that is a good thing. If consumers pay less for intermediation, they have more money in their pockets to spend on other goods and services, which still need to be produced by someone. For businesses, cost savings from reduced friction may translate into better and more efficient processes, including further augmentation with AI tools.
We should also not underestimate the role of personal interaction and confidence in transactional relationships. A lot of what may look like friction is actually about working with people and institutions you have faith in, whether it is a team of advisors helping you sell your business or a financial advisor helping you plan for retirement.
Where the Real Risk May Lie
None of this implies things will go smoothly. We may see worker displacement, perhaps akin to the manufacturing downturn following the China shock after that country entered the WTO in 2001, and we are likely to see significant capital reallocation and rotation, which may cause volatility.
The historical parallel we think is more instructive is the pattern we have seen across past technology and investment booms, railroads in the 1870s, the internet in the late 1990s, housing in the mid-2000s, and energy in the 2010s. In each case, the promise of transformative technology or assets drove massive investment, stock prices soared and, ultimately, demand failed to keep up with supply. Overcapacity led to lower prices, investment spending reversed, and economic growth took a hit.
We think the real risk with AI-related job losses may lie on the other side of a potential capex bust, possibly a “jobless” recovery in which companies employ more AI tools and do not rehire as many workers. But we do not think that is a 2026 story, or even necessarily a 2027 one. Right now, AI demand is clearly rising, and there may not be enough supply (including for components like memory chips and energy), which could be inflationary.
Final Thoughts
That is essentially why investors will want to stay positioned for an inflationary growth scenario, as we discussed in our 2026 Outlook. We want to ride the AI boom, but do not want to overextend ourselves on that theme with concentrated positioning.
It is our aim at Asbury Wealth Partners that you find the market commentary we provide informative and useful. As our success grows mainly through referrals from our clients, we encourage you to share this weekly newsletter with your friends, family, and colleagues. If you are a client, we thank you for your business and your confidence. If you are not yet a client, we encourage you to contact us today and explore how our team may be able to add value to your unique financial situation.
Thank You,
Jeff
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Jeffrey S. Markewich
Wealth Advisor
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