Key Highlights
Market Movers & Shakers
  • Markets rallied for a fifth straight week despite rising oil prices and Treasury yields, with large-caps significantly outpacing the equal-weight index and low volatility stocks.
  • Semiconductors dominated market performance last month, with the Philadelphia Semiconductor Index surging ~47% in 18 sessions, but concentration has reached levels not seen since the dot-com bubble peak, raising concerns about index vulnerability.
Updates & News
  • The narrow market rally presented Tandem with the opportunity to add a chip stock to our Large Cap Core strategy in late April: PepsiCo.
  • PepsiCo is far more than a soda company, with a dominant snack portfolio through Frito-Lay plus a growing beverage lineup and 54 consecutive years of dividend increases.

Market Movers & Shakers

Stocks continued to rally last week in the face of rising oil prices and higher Treasury yields. The S&P 500 and Nasdaq both logged their fifth straight weekly gain, while the Russell 2000 recorded its sixth consecutive weekly advance. The Nasdaq finished the week higher by 1.12%, while the S&P 500 notched a 0.91% gain, outpacing the equal-weight S&P 500, which closed higher by 0.40%. From a sector standpoint, Communication Services, Energy, and Consumer Staples were the top performers while the Materials sector was the lone sector to finish in the red for the week. WTI crude oil prices climbed 8.0% last week, adding to the prior week’s 14% surge as the timeline for reopening the Strait of Hormuz slips into mid-to-late summer. Treasury yields continued to creep higher last week. The yield on the 10-Year U.S. Treasury note is now nearing 4.50%, while the yield on the long bond (30-Year U.S. Treasury bond) surpassed 5.0%.

Big tech earnings were broadly supportive of markets, with positive reactions in shares of Apple, Amazon, and Google’s parent company, Alphabet, following results, while shares of Microsoft and Meta lagged the pack. Results were robust across the board. In fact, the blended earnings growth rate for the S&P 500 for the first quarter increased to 27.1% from 15.0% last week alone. Positive EPS surprises from Amazon, Alphabet, and Meta were the largest contributors to the increase in the earnings growth rate. According to FactSet, combined, these three companies accounted for 71% of the net dollar-level increase in earnings for the S&P 500 over this period. These three companies all reported a massive jump in GAAP earnings that included one-time bumps that are not necessarily reflective of core operational growth. Alphabet’s GAAP EPS number included a net gain of $37.7 billion primarily due to net unrealized gains on its stakes in Anthropic and SpaceX. Amazon’s GAAP EPS number included pre-tax gains of $16.8 billion from its Anthropic investment. Meta’s GAAP EPS number included an $8.0 billion income tax benefit stemming from the “One Big Beautiful Bill Act.” Without these one-time adjustments, the year-over-year earnings growth rate for the S&P 500 would be closer to the mid-teens for Q1, still impressive by most measures.



Source: FactSet

Since the start of the Iran conflict, the market has been led higher by a narrow group of stocks. The chart above displays the dispersion in performance well. Low volatility stocks, measured by SPLV, are actually lower by 3.89% over this time frame, while the equal-weight S&P 500 (RSP) is essentially flat. Meanwhile, the cap-weighted S&P 500 (SPY) is higher by 5.28%, buoyed by the largest stocks in the market, like the Magnificent Seven (MAGS) who are up 8.54%. Semiconductor stocks are by far the biggest driver of the S&P 500’s performance of late. The Philadelphia Semiconductor Index (SOX) surged roughly 47% over 18 trading sessions from March 31st through April 24th for the longest winning streak in the index’s history. Semiconductor stocks snapped an 18-day winning streak last week following a Wall Street Journal report that OpenAI missed its internal revenue and user growth targets last year – a significant development given the company’s role as a primary consumer of high-end compute. This rare sign of friction in the AI space was enough to spook the markets and halt the record run, at least for one trading session. Mirroring the lead-up to the dot-com crash, the SOX just posted its best one-month performance since February 2000’s record 50% rally. Further underscoring this parallel, the index’s distance above its 200-day moving average is currently at its widest level since mid-2000.

Memory chip stocks in particular have seen stunning moves in both share prices and earnings estimates. Take Sandisk for example. Sandisk shares are up more than 3,500% over the last year, rising from $33 a share in May 2025 to over $1,250 a share today. What is arguably more remarkable than a 35 bagger in twelve months is Sandisk is now projected to earn nearly $33 per share in earnings this quarter. In other words, a stock that was trading at $33/share a year ago is now expected to earn the same, or potentially more, in earnings per share in the current quarter alone. Moves in share prices and estimates like that have investors falling over each other for exposure. The Roundhill Memory ETF (DRAM) launched on April 2nd, surpassed $1 billion in assets in just 10 trading days, and according to FactSet, has attracted $3 billion in flows in the past month. In a notable reversal, Intel shook off its “boring” legacy incumbent reputation with a 90% surge in April, a move so aggressive it is now outperforming Nvidia in a significant manner on a two-year trailing basis. Historically, memory stocks (DRAM and NAND) have been the textbook definition of a cyclical industry as memory has behaved like a high-tech commodity characterized by periods of supply shortages and gluts. Proponents argue that the memory market is transitioning away from a boom-and-bust commodity to a mission-critical AI component and that “this time is different.” Skeptics would quote Sir John Templeton and say that the four most dangerous words in investing are “this time is different.” Either way, semiconductor stocks now account for more than 15% of the S&P 500’s total market cap, a concentration that poses a threat to the index if the thesis does not pan out as anticipated.



Source: FactSet

In the April 20th edition of Notes from the Trading Desk, we highlighted how the recovery in stocks off the March 30th bottom has come amid narrow market breadth. One of the technical indicators we reviewed at the time was the S&P 500 advance/decline line, which had not yet made a new high despite the index hitting fresh highs. The A/D line has since put in a double-top, seen above. Other notable double-top charts in the market worth keeping an eye on are the equal-weight S&P 500, which failed to surpass its late-February highs, and Nvidia, which failed to decisively breakout from its October 2025 highs. The chart below from Goldman Sachs Investment Research calculates market breadth as the distance of the S&P 500 from its 52-week high less the distance of the median S&P 500 constituent from its 52-week high. When the line drops, it indicates that while the headline index is trading near all-time highs, the average stock is lagging behind. The current reading has plunged below the -1 standard deviation line, reaching levels of concentration not seen since the peak of the dot-com bubble in 2000.



Source: Goldman Sachs Investment Research

Updates & News*

Most stocks have not participated in the recent market rally, particularly stocks in the low volatility space. As a result of this dispersion in performance, Tandem had the opportunity to add a chip stock to our Large Cap Core strategy at the end of April. However, not the semiconductor kind of chip, but rather, potato chips.

Most people know PepsiCo (PEP) for its namesake soda. PepsiCo is a global powerhouse of brands that dominates two distinct aisles of the grocery store: beverages and snacks. While its rival Coca-Cola focuses almost exclusively on drinks, PepsiCo’s strength lies in its diversified portfolio, with over half of its revenue coming from the food and snack divisions. Through PepsiCo’s Frito-Lay division, the company owns six chip brands that generate more than $1 billion in annual sales each: Lay’s, Doritos, Cheetos, Tostitos, Ruffles, and Fritos. The company also owns brands in the “better-for-you” snack market, including SunChips, Miss Vickie’s, Smartfood, and Siete Foods. PepsiCo’s beverage portfolio includes Gatorade, Propel, Aquafina, Pepsi-Cola, Mountain Dew, Mug Root Beer, Sierra Mist (now Starry), and recently acquired prebiotic soda brand, Poppi. PepsiCo products are enjoyed by consumers more than one billion times a day in more than 200 countries and territories around the world. Earlier this year, PepsiCo announced its 54th consecutive annual dividend increase.

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.

Print
Back to Archives

Disclaimer: Tandem Investment Advisors, Inc. is an SEC registered investment advisor.

This audio/writing is for informational purposes only and shall not constitute or be considered financial, tax or investment advice, or an offer to sell, or a solicitation of an offer to buy any product, service, or security. Tandem Investment Advisors, Inc. does not represent that the securities, products, or services discussed in this writing are suitable for any particular investor. Indices are unmanaged and not available for direct investment. Please consult your financial advisor before making any investment decisions. Past performance is no guarantee of future results. All past portfolio purchases and sales are available upon request.

All performance figures, data points, charts and graphs contained in this report are derived from publicly available sources believed to be reliable. Tandem makes no representation as to the accuracy of these numbers, nor should they be construed as any representation of past or future performance.

This document was originally written/recorded in English. Tandem does not guarantee the accuracy, completeness, or reliability of any translated materials, and shall not be held responsible for any discrepancies, errors, or misinterpretations arising from the translation process.