In the spirit of this week’s State of the Union address, I thought it would be timely to share with you my view of the financial markets now. For our part, we believe the State of our Market is characterized by a “Great Rotation,” writes John Gardner, founder and principal of Blackhawk Wealth Advisors’ Market Insights.
Here's my “State of The Market” address to you…
We find ourselves at a crossroads in the financial markets. The “Union” of our economy is currently a tale of two realities: a resilient consumer base that continues to defy gravity, and a structural slowdown that suggests the easy money era has officially left the building.
S&P 500 Index (^SPX)
I. The Economic Union: Resilience vs. Reality. The headline figures are a study in contrast. While we celebrate the Dow Jones Industrial Average climbing above 50,000 for the first time and the S&P 500 Index’s (^SPX) recent conquest of the 7,000 level, the underlying economic engine is cooling.
Much of this friction can be traced back to the six-week federal government shutdown that stalled the gears of commerce. Yet, like any resilient union, the American consumer has kept the lights on. Consumer Confidence ticked up to 91.2 this month, proving that while the State may pause, the Market of individual choice does not.
II. The Price of Progress. We must be honest about the cost of living. Inflation remains the primary “insurrectionist” against our domestic prosperity. With the Fed’s preferred gauge hovering stubbornly around 2.7%, the path to lower interest rates is not a straight line; it is a marathon.
III. The Market Breadth: A More Perfect Union. For years, a handful of mega-cap titans carried the weight of the entire market. These are the mega-cap, heavy weight tech stocks. Today, however, we see the early stages of a broadening union.
The equal-weighted S&P 500 is beginning to challenge the dominance of the market-cap-weighted giants. This is healthy. A market that relies on a few names is a fragile one. A market that gains strength from industrials, energy, and materials — the “real economy” — is a market built to last.
The State of our Market is cautiously robust. We face high interest rates, trade policy uncertainty (following the recent Supreme Court rulings on tariffs), and a cooling global backdrop. But the foundation — innovation in AI and a “low hire, low fire” labor market — remains intact.
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