Overview
- U.S. stocks have stumbled in recent weeks, with the Dow and Nasdaq briefly entering correction and the S&P 500 nearing a 10% slide.
- Fighting involving Iran led to a near-shutdown of the Strait of Hormuz, curbing about one-fifth of global oil shipments and driving crude prices sharply higher.
- Rising fuel costs are passing through to households and companies, and a Cleveland Fed nowcast points to inflation climbing from 2.4% in February to about 3.6% in April.
- Valuations remain extreme, with the S&P 500’s CAPE near 38 to 40; the CAPE compares prices to 10 years of inflation-adjusted earnings, and past readings above 40 were followed by large losses.
- Nobel laureate Robert Shiller says only a few AI-linked leaders are likely to endure over time, which could drag on broad index returns in the years ahead.