Key Highlights
Market Movers & Shakers
  • Major indices surged to record highs last week as headlines regarding a potential nuclear deal and the reopening of the Strait of Hormuz sparked a historic V-shaped recovery in stocks.
  • Technical divergences suggest the rally may be on narrow footing, as the S&P 500 reached overbought levels on thin volume while the advance/decline line remains below its February peak.
Updates & News
  • Market weakness in late March and subsequent single-stock volatility in early April opened the door for Tandem to incept two new positions across our strategies: Cintas and Rollins.
  • Dividend hikes from Costco, Procter & Gamble, and Johnson & Johnson extend their multi-decade track records of dividend increases.

Market Movers & Shakers

Major U.S. equity indices were sharply higher last week driven by headlines about a possible nuclear deal between the United States and Iran and a reopening of the Strait of Hormuz. The S&P 500, Nasdaq, and Russell 2000 each logged fresh all-time highs. The Nasdaq closed out the week on a 13-day winning streak, the longest since 1992 and the fifth-longest winning streak on record. Both the S&P 500 and the Nasdaq finished higher by more than 3% for the third-straight week. The Mag7 and Big Tech led the move higher, with notable strength in semiconductor and memory chip names. Signs of life emerged in software stocks that had remained under pressure since early January on AI disruption fears. Shares of the iShares Expanded Tech-Software Sector ETF (IGV) traded higher by nearly 14% last week, trading above its 50-day moving average for the first time this year and closing at a one-month high. At the sector level, Information Technology, Consumer Discretionary, and Communication Services outperformed the index, while Energy, Utilities, and Materials were the largest underperformers.



Source: FactSet

Signs of de-escalation between the U.S. and Iran provided a tailwind to stocks while simultaneously pushing down Treasury yields, oil prices, and equity volatility to their lowest levels in weeks. While the U.S. continued a naval blockade of the Strait of Hormuz to maintain pressure on Iran, optimism grew after Iran’s Foreign Minister declared the Strait open to commercial traffic for the duration of the ceasefire. Reports of a proposed deal to release $20 billion in frozen assets in exchange for Iran surrendering its enriched uranium also signaled progress. WTI Crude Oil prices slid nearly 10% down to $83 a barrel, while the global benchmark, Brent Crude, closed near $90 a barrel. The U.S. Treasury curve steepened marginally last week as the yield on the 2-Year U.S. Treasury note declined by 10 basis points to close at 3.70% while the yield on the 10-Year U.S. Treasury note fell 8 basis points to end the week at 4.24%. The VIX closed below 18 for the first time since early February, down from over 30 at the end of March.



Source: FactSet

From a technical perspective, the recovery in stocks off the March 30th bottom has been nothing short of historic. The S&P 500’s RSI (Relative Strength Index) went from 27.5 (oversold) on March 30th to 70.5 (overbought) by April 15th. In other words, in just 11 trading sessions the market went from oversold conditions to overbought conditions – one of the fastest transitions in history. In a recent note to investors, Warren Pies, co-founder of 3Fourteen Research, compared the rally to the peak of the dot-com bubble, pointing out that the only other time the S&P 500 rallied 10% in 10 days and ended at or near all-time highs was in March 2000. He also pointed out that the rally in March 2000 was led by just a few stocks. When the S&P 500 hit its record high last Wednesday, only 12 stocks (roughly 2.4% of the index) were actually at 52-week highs. Other notable bearish divergences have emerged. While the S&P 500 has surged to new highs, its advance/decline line—which bottomed ten days ahead of the index on March 20th—remains stuck below its February peak. This suggests that the current rally is being driven by a narrowing group of stocks rather than widespread market participation. Furthermore, the swift, V-shaped recovery in the S&P 500 occurred amid surprisingly thin trading volumes. The three lightest volume days of the year occurred in early April following the March 30th bottom. Sharp, low volume rallies represent a classic bearish divergence, signaling that the upward move may lack the conviction necessary for a sustained breakout.

In a move that feels like a classic dot-com bubble throwback, sustainable footwear brand Allbirds is trading sneakers for silicon. The company recently announced a total rebrand to NewBird AI, pivoting its entire business model toward leasing GPUs. Now positioning itself as a “GPU-as-a-service and AI-native cloud solutions provider”, the brand effectively swapped its eco-friendly wool sneakers for every high-tech buzzword in the book. Allbirds shares surged nearly 600% the day of the announcement. Sign of the times?

A major pillar of the current bull case for stocks is the combination of an aggressive earnings outlook and a wave of positive revisions. According to FactSet, analysts are predicting year-over-year earnings growth of 18% for 2026 – more than double the 10-year average annual growth rate. 18% earnings growth is remarkable and quite a high bar to clear. However, looking beneath the surface reveals a surprisingly narrow foundation. Micron Technology, whose shares have benefitted from a surge in memory chip demand stemming from the AI buildout, has accounted for 51% of the growth in S&P 500 earnings expectations since the beginning of the war. That’s right, one company is responsible for half of the increase in full year S&P 500 earnings expectations since early February. Reviewing estimates for Q1 earnings tells a similar story of narrowness. Roughly half of the year-over-year S&P 500 earnings per share growth in Q1 2026 is expected to come from two companies: Micron and Nvidia. Both of these companies are benefitting from chip shortages that are, in time, likely to prove temporary rather than lasting. The temporary nature of the shortage can be seen in Micron’s forward earnings multiple. Despite a 550% share price increase over the last year, Micron currently sports a forward P/E of 4.9x. You read that right, 4.9x earnings not 49x (analysts forecast EPS of $93 and the stock closed last week at $455 a share), insanely cheap compared to the market and the Mag7, right? Well, Micron’s forward P/E is a textbook application of the Molodovsky Effect. The Molodovsky Effect describes a situation where a highly cyclical stock appears to have a cheap P/E at the peak of its earnings cycle and an expensive P/E at the bottom of its cycle. Ultimately, that single-digit multiple likely is not a signal of a massive bargain, but rather a warning from a market that suspects these record profits are nearing a cyclical cliff.



Source: FactSet, Goldman Sachs Global Investment Research

Updates & News*

Market weakness in late March and subsequent single-stock volatility in early April opened the door for Tandem to incept two new positions across our strategies.

At the end of March, we incepted a position in Rollins (ROL) in our Large Cap Core, Equity, and Mid Cap Core strategies. Rollins is the world’s leading provider of pest control services. Rollins owns more than 60 brands, including Orkin, HomeTeam Pest Defense, and Critter Control. Because pest control is considered an essential service, nearly 80% of Rollins’ revenue is recurring in nature, resulting in a consistent and predictable business model. Bugs don’t care about the economy!

More recently, we had the opportunity to incept a position in Cintas (CTAS) in our Large Cap Core and Equity strategies. Cintas is the largest provider of uniforms and business services in North America, helping over one million customers maintain clean, safe, and professional work environments. If you see a mechanic, a hotel receptionist, or a quick-service restaurant worker wearing a crisp, branded uniform, there’s a good chance Cintas provided it. Cintas is the logistics engine that provides the clothes, the cleaning, and the safety gear that keeps North American businesses running smoothly.

On the transition front, new manager-traded accounts and accounts with recent deposits that have been under Tandem’s management for two weeks are approximately one-third of the way invested in our strategies. By the one-month mark, new money is just over half of the way in line with our strategies, and by the three-month mark new accounts and deposits are nearly ~80% of the way transitioned.

In portfolio news, several companies within Tandem’s strategies recently announced dividend hikes, further extending their long histories of consistent dividend growth. Costco announced a 13.1% increase to its dividend, increasing the quarterly payment from $1.30 to $1.47 a share. Costco has raised its quarterly dividend for 23 consecutive years, and in addition to these annual increases, is well-known for its occasional special cash dividend, with the last coming in at a whopping $15 per share paid in January 2024. Elsewhere, Procter & Gamble announced a 3% dividend increase, marking 70 consecutive years of increases, while Johnson & Johnson announced a 3.1% dividend increase, marking 64 consecutive years of increases.

Source: Source of all data is FactSet, unless otherwise noted.

*The transition level activity taken by Tandem is applicable to new manager-traded accounts and new money in manager-traded accounts, not the composite or firm-wide level. New manager-traded accounts and new money in manager-traded accounts are not automatically invested on the first day. Rather, they are transitioned into our strategy over a longer time period that is dependent upon market conditions, this process differs from Tandem’s model-provided strategies, where money is invested on the day the account opens. Strategy level activity is applicable to the composite and action is taken at the firm-wide level.

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