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ECONOMIC UPDATE

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May 2026 | Monthly Economic Update

Source: FactSet

Global markets delivered strong returns in April, led by equities, as U.S. and international stocks advanced meaningfully. The rally was supported by resilient economic data, strong corporate earnings, and continued momentum in AI-driven investment. Markets also showed a willingness to look through geopolitical headlines, focusing instead on fundamentals, even as the interest rate backdrop remained higher for longer. Despite the strong headline performance, returns varied across asset classes and regions.

U.S. equities were the primary driver of returns, with the S&P 500 gaining approximately 10.5% and reaching new highs. Performance was led by growth-oriented sectors, particularly Information Technology, as strong earnings reinforced investor confidence in AI-related demand. In contrast, Energy lagged as markets looked past geopolitical developments.From a style perspective, growth outperformed value. By size, small caps performed roughly in line with large caps for the month but continued to outperform year-to-date, suggesting broader participation as economic conditions remain stable.

International equities also advanced, with meaningful regional variation. Developed markets gained approximately 7.6% in April, while emerging markets led globally with gains of 14.7%. Emerging markets benefited from strength in Asia and commodity-linked economies, supported by global demand for technology and infrastructure inputs. Fixed income returns were subdued. U.S. core bonds were essentially flat (~0.1%), while high-yield bonds posted modest gains (~1.7%). Elevated yields and persistent inflation pressures continued to weigh on interest rate-sensitive assets, as markets reduced expectations for near-term policy easing. Investors are now pricing in no rate cuts for 2026, reinforcing the higher-for-longer rate backdrop.

Commodities delivered 4.2% in April, with performance mixed beneath the surface. Energy led gains, while gold and silver declined, reflecting consolidation after a strong year-to-date performance.

A diversified 60/40 portfolio benefited from strong equity returns, gaining approximately 6.6% in April. However, the combination of strong equity performance and muted bond returns highlights a less balanced return environment.

Dispersion across asset classes and regions remains elevated, reinforcing the importance of diversification and selectivity.

Source: FactSet

The Monthly Riddle

What flies without wings?

LAST MONTH’S RIDDLE:

What exists once in soccer, twice in football, but never in baseball?

ANSWER: The letter “O”

Tip of The Month

As summer plans start to take shape, consider setting a travel or entertainment budget before expenses pick up. A little planning now can help keep seasonal spending in check.

Important Information
This is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax advice. The information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed, and is subject to change. Investors seeking more information should contact their financial advisor. Financial advisors may seek more information by contacting AssetMark at 800-664-5345.

Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss. Actual client results will vary based on investment selection, timing, market conditions, and tax situation.

It is not possible to invest directly in an index. Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. Index performance assumes the reinvestment of dividends.

Investments in equities, bonds, options, and other securities, whether held individually or through mutual funds and exchange traded funds, can decline significantly in response to adverse market conditions, company-specific events, changes in exchange rates, and domestic, international, economic, and political developments.

Bloomberg® and the referenced Bloomberg Index are service marks of Bloomberg Finance L.P. and its affiliates, (collectively, “Bloomberg”) and are used under license. Bloomberg does not approve or endorse this material, nor guarantees the accuracy or completeness of any information herein. Bloomberg and AssetMark, Inc. are separate and unaffiliated companies.

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