Patchwork growth meets resilient market sentiment

Hi, this is market weekend review for the week ending April 23rd, 2026. I'm Chris Nelson, senior portfolio manager and head of sustainable investing at Russell Investments. Against geopolitical currents and a volatile market, we continue to look for indications of economic health. And this week's macro data story is best described as patchwork, pockets of resilience with a shorter line of sight. Let's start with the S&P Global Flash PMI surveys. In the US, the index rose from 50.3 in March to 52 in April. That would be consistent with modest growth, but there are important qualifiers. The same surveys show a split between manufacturing and services. Manufacturing activity looks stronger in part because firms have been pulling forward purchasing and rebuilding inventories, a pattern described as preemptive buying. that can lift the near-term prints, but durability hinges on whether services and new orders follow through. Europe underscores that point. In the Euro zone, services activity has been notably softer down to multi-year lows with respondents pointing to war- rellated disruption, policy uncertainty, and affordability pressures. In fact, goods activity is holding up better than services in several places, which is a less comfortable mix for a broad-based upswing. So globally the PMI message is pockets of expansion but a composition that bears watching. Turning to the US retail sales show spending but the composition is distorted by energy prices. March retail sales rose 1.7% month overmonth and 4% year-over-year. The strongest monthly gain in more than 3 years. That's supportive for near-term US growth because it says households are still spending. But zooming in, a meaningful share of the increase was driven by gasoline purchases as fuel prices moved higher. Excluding gas stations, sales rose just 6%. And the underlying picture looks more steady than surging once you strip out categories most affected by price swings. So the consumer is still contributing, but the signal is noisy. So the next best cross check is what companies are saying in real time. And this week we got another batch of earnings reports. First, we can look to American Express as a higher income consumer and travel proxy. Management commentary suggested affluent spend remained firm and credit remained well- behaved, consistent with a consumer that has room to spend, at least at the upper end. Second, looking to airlines where demand is one of the cleanest discretionary stress tests, United indicated passenger demand has not yet declined even as fairs and fees are being adjusted to offset fuel pressure. American American Airlines echoed that message. Strong topline demand indicators even as fuel prices pressure margins. Turning to the market, price action has been more confident than the data. US equities are again near record highs supported by corporate earnings and the US's relative insulation from the energy shock. Outside the US, equities have also recovered. Emerging markets sold off in m March on the oil spike but rebounded sharply in April as energy stabilized and AI linked supply chains remained a tailwind. In short, markets are leaning optimistic pricing in durability rather than disruption. With that quick read on the tape, I need only add a final policy note on the Fed. Kevin Worsh hearings began Tuesday. As expected, Worsh emphasized that he would be independent from administrative influence while generally avoiding comments that would signal a direct break from the president. Notably, he was pointed in his criticism of the Fed's balance sheet, framing it as fiscal policy in disguise. He floated a shift toward alternative inflation measures like trimmed mean inflation, which strips outliers, and that has been running closer to 2%. Why does that matter? If policymakers place more weight on a measure that's already near to the inflation target, it could create room to cut without needing a clear victory on the headline inflation number. In the near term, though, the baseline still looks like a hold at next week's Fed meeting as officials assess how energy-driven price increases ripple through the economy. And the market signal is reflected in in futures, which imply less than even odds of a cut by year end. So returning to our market recap, the macro story remains patchwork. PMIs show expansion in places but a less comfortable mix. Retail sales show headline strength but a fuel driven distortion. And earnings suggest the consumer is steady while costs and confidence are the swing factors. Thanks for watching. See you next week. Hi, I'm Sophie Antal, head of portfolio and business consulting at Russell Investments. If you liked what you just saw and heard, consider subscribing to our YouTube channel or check us out on LinkedIn. Thanks for tuning in.