Published April 17, 2026
Delta Research thinks so. The stock market’s historic move over the past 10 days has caught many investors off guard. For the first time in many moons, retail investors did NOT buy March’s sharp dip in stocks. As we’ve noted in other articles, the specter of private credit defaults, AI rampaging through the software industry, and, lastly, a war that brought oil and gas transport to a near halt were a combination of fears that pummeled the psyches of investors. It was, then, remarkable that the stock market was down only -10%. Are there more shoes to drop in the future? Or was this, like last year’s “tariff tantrum” a quick flush of bearishness in an upward sea of bullish market behavior? Time will tell.
In the meantime, Delta Research offers the following observations of the market’s “irrational pessimism?”:
“In 1996, then-Fed Chairman Alan Greenspan warned of “irrational exuberance.” He worried stock valuations were being driven more by optimistic emotions than economic fundamentals. Irrational exuberance implied the stock market was vulnerable to a sharp downside move once fundamentals once again superseded emotions. In 2000, we suffered the dot.com bubble burst when the S&P 500 fell roughly 50% from peak to trough.
Today, consumer sentiment is at the lowest level ever (47.6), dating back to 1952.
In the chart above, consumer sentiment was near all-time highs in 1996, almost the opposite of today. Are we seeing irrational pessimism rather than exuberance? And if so, does that imply the stock market is at risk of a sharp upside move when fundamentals once again supersede emotions?
The S&P 500 is at a new all-time high. High-yield spreads, a measure of how the bond market views risk, are lower than where they were at the start of the war. Over the 10 trading days ending Wednesday of this week:
- Semiconductor Index is +29.2%.
- Nasdaq Composite is +13.7%.
- Vanguard Mega-Cap Growth ETF (MGK) is +13.5%.
- Russell 2000 is +12%.
- WTI crude futures dropped by -11.3%.
From the major bank earnings reports, we learned that consumers remain resilient. The reasons cited for ongoing strength include healthy cash and credit backdrop, a relatively small share of spending devoted to energy/fuel, and a boost from tax refunds.
For example, JPMorgan said on its earnings call:
- “The [Energy] cost is something like 3% of the typical consumer’s expenditure, at least in our portfolio. So, it’s not nothing, but it’s not overwhelming.”
- “Notwithstanding the recent volatility in market and gas prices based on our data, Consumers and small businesses remain resilient with consumer spend growth continuing above last year’s pace.”
- “We looked at it through every angle, early roll rates, delinquency rates, cash buffer, spend, discretionary spend, non-discretionary spend, it all looks consistent with prior trends and fundamentally healthy.
The basic inputs to economic growth include labor (people working), capital (machines, factories, money), technology (productivity), natural resources (energy, land, water, oil), and institutions (laws, property rights, regulation).
We know the labor market remains solid (unemployment rate around 4.3%). We know capital is plentiful (consider the scale of AI investment by the largest technology companies). We know technology/productivity is high (roughly 2.2% = output/hours worked = 2.2% more output). There were some quarters in 2025 when productivity was 4-5% annualized. And policy changes, including changes in the tax code regarding writing off depreciation and lower regulations, are broadly pro-growth.
Assuming those variables remain stable or improve and isolating just one factor – energy demand – it’s reasonable to expect the economy to continue showing robust growth.
Goldman Sachs “now projects global power demand from data centers to grow 220% by 2030 relative to 2023 levels, up from 175% previously.
Rising power demand strongly suggests a growing economy. End users have to consume and pay for this increase in power.”
Market Update
After slumping at the market open after failed peace talks over the weekend, markets reversed higher in the afternoon to close with solid +1% gains. Strong earnings and positive words from software maker Oracle sent the company’s shares sharply higher to breathe new life into the AI trade. The company had been beaten down in recent months on concerns about its aggressive use of debt to finance massive AI-related spending. Another +1% move Tuesday on a benign inflation report as investors continued to pour back into tech shares, which had led the market downward only a few weeks ago. Improvement in talks between Lebanon and Israel furthered the rally effort Wednesday. Stock indexes closed mixed, but the Nasdaq added another +1.5%. And again on Thursday with investors believing that peace is all but assured at this point. An Iranian announcement that the Strait of Hormuz was completely open for transport affirmed investor bullishness Friday. Oil prices tumbled sharply leading interest rates lower and paving the way for a further upward tilt for equities. Stocks posted a 13th consecutive winning session closing with indexes adding more than +1%.
A non-stop bullish train lifted stocks to record highs this week. The S&P 500 (SPY) vaulted +4.52% to cross 7000 for the first time. The Nasdaq 100 (QQQ) jumped +6.18%. Small cap stocks (IWM) gained +5.54%.
Warm wishes and until next week.