THE WEEK ON WALL STREET
Stocks rallied last week as investor enthusiasm built for an end to the war in the Middle East and hopes of a resumption of normal global trade. The S&P’s 500 Index rose 4.54 percent, while the Nasdaq Composite Index picked up 6.84 percent. The Dow Jones Industrial Average advanced 3.19 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 2.15 percent.
FACT OF THE WEEK
On April 20th, 1979, President Jimmy Carter, fishing in a Georgia pond, fights off a hissing, teeth-baring swamp rabbit trying to get into his boat. Press mocked him mercilessly about the “killer rabbit” and “banzai bunny.”
MARKET MINUTE
Shift to “Risk-On” from “Risk-Off”
Stocks continued to ride the hopeful sentiment of a ceasefire at the start of last week, with all three averages advancing. The S&P 500 has recouped all its losses since the start of the war.
Momentum accelerated through midweek as investors shifted from “risk-off” to “risk-on.” The White House signaled that the war was “very close to over” amid reports that further talks were under discussion.
At Wednesday’s close, the S&P advanced for the 10th time out of the last 11 trading sessions, while the Nasdaq marked its 11th straight close in the green.
Stocks pushed higher again on Thursday, with the Nasdaq recording its longest winning streak since 2009. The week wrapped on a high note after Iran’s foreign minister announced the Strait of Hormuz was “completely open” as negotiations continue. Oil prices dropped by roughly 10 percent on Friday, sparking another solid day on Wall Street.
Record-Setting Week
Last week was one for record-breaking. By midweek, the S&P 500 and Nasdaq hit all-time highs. The S&P broke 7,000 for the first time, while the Nasdaq topped 24,000 for the first time.
The shift from “risk-off” to “risk-on” pushed the S&P over the 7,100 threshold for the first time on Friday. And the Nasdaq ended the week on a 13-day win streak, the longest positive streak since 1992. The Dow Industrials closed at 49,447.43, just below its all-time high set in early February 2026.
FINANCIAL STRATEGY OF THE WEEK
Asset Allocation
If you live in or have visited a big city, you’ve probably run into street vendors – people who sell everything from hot dogs to umbrellas – on the streets and sidewalks. Many of these entrepreneurs sell completely unrelated products, such as coffee and ice cream.
At first glance, this approach seems a bit odd, but it turns out to be quite clever. When the weather is cold, it’s easier to sell hot cups of coffee. When the weather is hot, it’s easier to sell ice cream. By selling both, vendors reduce the risk of losing money on any given day.
Asset Allocation
Asset allocation applies this same concept to managing investment risk. Under this approach, investors divide their money among different asset classes, such as stocks, bonds, and cash alternatives, like money market accounts. These asset classes have different risk profiles and potential returns.
The idea behind asset allocation is to offset any losses from one class with gains in another, and thus, reduce the overall risk of the portfolio. It’s important to remember that asset allocation is an approach to help manage investment risk. It does not guarantee against investment loss.
Determining the Most Appropriate Mix
The most appropriate asset allocation will depend on an individual’s situation. Among other considerations, it may be determined by two broad factors.
Time
Investors with longer timeframes may be comfortable with investments that offer higher potential returns, but also carry a higher risk. A longer timeframe may allow individuals to ride out the market’s ups and downs. An investor with a shorter timeframe may need to consider market volatility when evaluating various investment choices.
Risk tolerance. An investor with higher risk tolerance may be more willing to accept greater market volatility in the pursuit of potential returns. An investor with a lower risk tolerance may be willing to forgo some potential return in favor of investments that attempt to limit price swings.
Asset allocation is a critical building block of investment portfolio creation. Having a strong knowledge of the concept may help you when considering which investments may be appropriate for your long-term strategy.