Zacks Investment Management

In today’s market, headlines move fast, but the data tells the real story. In this week’s Steady Investor, we break down what matters most for investors right now:

• Markets rally on two-week ceasefire deal
• Central banks repricing rate expectations
• Jobs data becoming less predictable

Markets Rally on Two-Week Ceasefire Deal – A two-week ceasefire between the U.S. and Iran sparked a broad relief rally across global markets, with equities rising and oil prices pulling back from recent highs. The agreement, which includes provisions tied to reopening the Strait of Hormuz, offered investors a temporary reprieve after weeks of escalating conflict that had disrupted energy markets and rattled sentiment. As many readers understand, the deal as it exists today is tenuous, and as we write, oil is not flowing freely through the Strait. But forward-looking traders and market participants are anticipating that the direction of travel is positive.

Indeed, the immediate reaction was swift. Oil prices dropped below $100 per barrel, which while still elevated relative to pre-war levels marks a notable step down from recent peaks. Stocks climbed across regions, which we think reflected optimism that the worst-case scenario for global energy supply may be avoided. A key takeaway for equity investors, however, actually took place last week. A closer look reveals that markets had already begun stabilizing before the ceasefire was formally announced (see chart below). A bounce off the bottom several days before the cease-fire suggests investors were increasingly looking past the most extreme outcomes, even as conditions on the ground remained uncertain. Reports of continued disruptions to shipping flows and lingering risks in the region did little to reverse the broader shift in asset prices, underscoring a key dynamic: markets tend to move ahead of definitive resolution.¹

Source: Federal Reserve Bank of St. Louis²

2026 Tax Changes Could Impact Your Strategy

With 2025 taxes nearly behind us, now is the time to shift focus to 2026. Recent Federal legislation has introduced meaningful changes to the tax landscape, making proactive planning more important than ever for your long-term financial strategy.

To help, we’ve created our free guide, 10 Things to Know About Tax Planning in 2026³. In this guide, you’ll get the key information you need about these updated tax rules to optimize your finance and tax decisions, including:

• New, higher Federal income tax brackets
• The increased standard deduction for 2026
• Increased 2026 retirement contribution limits
• New tax exemptions for tips and overtime
• Working Families Savings Accounts offer a new savings option
• Plus, many more Federal tax updates for 2026!

If you have $500,000 or more to invest and want to learn more, click on the link below to get your free copy:
 
Download 10 Things to Know About Tax Planning in 2026³

That doesn’t mean risks have disappeared. The agreement is temporary, and key details, particularly around enforcement and shipping access, remain fluid. Energy prices are also likely to stay structurally higher than pre-conflict levels, reflecting ongoing supply concerns and precautionary stockpiling. We think the U.S. economy can sustain solid growth levels even with “higher for longer” crude prices, however, as evidenced by recent history and the fact that S&P 500 earnings estimates went up in Q1, not down.

How Global Central Banks are Responding to the War’s Second Order Effects – As readers have noticed in financial news and first-hand at the gas pump, rising energy prices have flowed through to costs for oil-related products like gasoline and fertilizer. This sharp rise in global energy prices—which we argued above may be sustained for some time—has triggered a rapid repricing across interest rate markets, with investors now anticipating a far more aggressive response from central banks than previously expected. In the U.S., expectations have swung dramatically. At the end of February, markets were pricing in roughly 2.4 rate cuts from the Federal Reserve in 2026. Today, that has flipped to a small net expectation of rate hikes by year-end. Similar shifts have taken hold in Europe, where expectations for modest easing have turned into multiple hikes priced for both the European Central Bank and Bank of England. This would be a net negative for markets, in our view, because of the implications on liquidity. But the market’s reaction may also be getting a little ahead of itself.While higher oil and gas prices can push inflation higher in the short term, central banks tend to look through energy-driven shocks unless they begin to influence longer-term inflation expectations. So far, that hasn’t happened. Market-based measures like the 5-year, 5-year forward inflation rate remain near ~2.1%, well below the peaks seen during the 2022 inflation surge. And looking historically, the Fed has generally avoided raising rates in response to energy shocks, often leaning the other direction if growth risks intensify. What we’re left with is rate markets pricing a sustained inflation problem, while underlying inflation expectations remain relatively anchored. We think the central bank response will prove more benign than markets currently appear to fear, and we’re still expecting a rate cut by the Fed later this year.⁴

Why Wall Street Economists Keep Getting Jobs Forecasts Wrong – Economists have been dead wrong in making payroll data predictions lately. Through the first three months of 2026, forecasts for monthly job creation have missed actual results by an average of 112,000 jobs, which marks a nearly 200% increase in wrongness from the previous year.In fairness to economists, however, the disconnect reflects a labor market that has become far more volatile and harder to model.Several factors are at play. Slower population growth tied to immigration policy is lowering the underlying pace of job creation, meaning monthly gains can now swing more easily above or below zero. At the same time, temporary disruptions like severe winter weather and large-scale strikes have created unusual month-to-month swings in hiring.

There are also more technical challenges. Government surveys are seeing lower response rates, making early estimates less representative, while recent changes to statistical models have increased short-term variability in the initial data. In the first two months of the year alone, these modeling adjustments contributed to swings of roughly 100,000 jobs more than usual. For markets, the takeaway is to keep in mind that individual data releases may carry more noise than usual. As a result, it’s likely wise to look through short-term reactions to headline numbers.⁵

How 2026 Tax Changes Could Impact You – Tax rules don’t just change; they create new opportunities and potential blind spots. Heading into 2026, understanding what’s different could make a meaningful impact on how much you keep and how effectively you plan.

Our free guide, 10 Things to Know About Tax Planning in 2026⁶, is built to help you identify what matters most this year and how to adjust your strategy accordingly. Inside includes information regarding:

• New, higher Federal income tax brackets
• The increased standard deduction for 2026
• Increased 2026 retirement contribution limits
• New tax exemptions for tips and overtime
• Working Families Savings Accounts offer a new savings option
• Plus, many more Federal tax updates for 2026!

Disclosure