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Market Commentary and Trade Rationale
At BlueStem Wealth Partners it is important to us that you are well informed about how we are managing your portfolio. The written commentary below is for the time period ending April 30th, 2026.
A powerful earnings season and receding market fear drove equities to fresh record highs in the second half of April, even as the U.S.-Iran conflict continued to roil energy markets and complicate the Federal Reserve’s path forward. Two forces competed for dominance: AI-driven corporate strength on one side, and an unresolved oil supply shock on the other. Investors sided with fundamentals, betting that the conflict’s economic damage would prove manageable, and that diplomacy would eventually restore oil flows through the Strait of Hormuz. The result was a broad, conviction-driven rally that erased the geopolitical discount built up in March and carried major indexes to new all-time highs.
First-quarter earnings proved stronger than expected, with 84% of S&P 500 companies topping estimates and blended growth tracking at 15.1%, a sixth consecutive quarter of double-digit expansion1. Technology led the advance, powered by continued strength in AI, cloud computing, and digital infrastructure. Mega-cap reports reinforced that momentum, with Alphabet, Microsoft, Meta, and Amazon all delivering results that exceeded expectations and helped validate investor confidence in the AI-led growth cycle. Encouragingly, earnings strength was not confined to technology, as select industrial and cyclical companies also posted solid results and upbeat outlooks, suggesting the expansion retained some breadth despite macro uncertainty.
The Consumer Price Index (CPI) for March rose 0.9%, pushing annual inflation to 3.3%, its highest level since May 2024. Gas prices drove nearly three-quarters of the increase, surging 21.2%, while core CPI, which excludes food and energy, rose a more contained 0.2% for the month and 2.6% year over year, slightly below forecasts and suggesting underlying price pressures remained relatively stable2. Against that backdrop, the Federal Reserve left rates unchanged at Chair Powell’s final meeting, signaling patience as markets priced in no rate changes through year-end3. First-quarter GDP came in at a 2.0% annualized rate, below expectations but a meaningful acceleration from the fourth quarter’s 0.5%, supported by an 8.7% increase in business investment tied partly to AI-related spending4.
The bottom line: Investors enter May facing a market defined by tension: equities are at record levels and earnings momentum remains strong, but Brent crude oil above $100, stalled U.S.-Iran negotiations, and a leadership transition at the Federal Reserve are keeping levels of uncertainty elevated. Incoming Chair Kevin Warsh is set to take over in mid-May, putting any shift in policy tone under close scrutiny. With the April CPI report and May jobs data ahead, the rally’s durability will hinge on whether the war-driven inflation impulse proves temporary or begins to pressure the consumer spending and business investment that have kept the expansion intact.
Recent Trade Rationale: If you would like to see a high-level recap of recent changes to the model portfolios, please click on the link to read the May 2026 Trade Rationale. As a reminder, we utilize quantitative techniques to manage the models. Level Elements are designed to manage your model’s equity and fixed income exposure over time. This changes as fundamental, quantitative, and economic data changes. Style Elements are designed to manage what is in those equity and fixed income exposures.
All opinions expressed in this commentary are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable; however, BlueStem Wealth Partners cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments or planning strategies may be appropriate for you, consult your financial advisor or other industry professional prior to investing or implementing a planning strategy. This commentary is not intended to provide investment, tax or legal advice, and nothing contained in these materials should be taken as such. Investment Advisory services are offered through BlueStem Wealth Partners are only offered where BlueStem Wealth Partners and its representatives are properly licensed or exempt from licensure. No advice may be rendered unless a client agreement is in place. The material provided is for informational purposes only and is not meant to be a solicitation or recommendation to buy/sell any security. BlueStem Wealth Partners is an investment advisory firm registered with the Securities and Exchange Commission (“SEC”). SEC registration does not imply a certain level of skill and or expertise.