New Highs For Equity Markets Despite Iran And Oil Prices

The S&P 500 reached a new all-time high on April 30 despite the ongoing conflict with Iran and oil prices exceeding $100. The large-cap equity benchmark generated a 10.5% total return in April, a 2x reversal of its March slump. This might seem like irrational exuberance on the part of investors with gas prices on a steady rise, but there are ample tailwinds for the U.S. economy, most notably the massive digital infrastructure buildout occurring as part of the artificial intelligence (AI) sprint.

The latter was clear in the first quarter GDP report. Business investment contributed 1.5 percentage points to the top-line GDP growth rate of 2% quarter-over-quarter (annualized), and it was entirely driven by AI infrastructure spending. In real nominal terms, business investment rose $92.6 billion in the first quarter, including an increase of $110 billion in information processing equipment and software. Yes, this means all other investment was down $17.4 billion.

Lower non-AI business investment ties into another of our 2026 economic themes. Heading into the pivotal midterm elections, we expected things to be quieter on the policy and political front. Initially, we thought this would potentially spark broader business investment that had been lacking over the prior year amid heightened uncertainty (tariffs, immigration, etc.).
Although things have been quieter regarding trade and immigration, the Iran conflict and consequential rise in oil prices have introduced a new layer of uncertainty for business investment outside of the AI buildout. If we’re doing early scoring, that first theme would appear to be a fail, but the year’s not over yet.

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Jason Haley joined ALM First in 2008 and is the firm’s chief investment officer. He heads ALM First’s Investment Management Group (IMG), which is responsible for leading the investment process and investment theme development. Haley also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firm’s depository clients. He holds an MBA with a concentration in finance and a BBA with a concentration in marketing, both from The University of Mississippi.

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