Smart Investor: What a Fed Rate Hike Could Mean for Stocks, Inside the Coming Giant AI IPOs, and Q2 Stock Outlook
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This week’s highlights:
Five weeks of war with Iran and five weeks of losses in the stock market. The stock declines have been orderly and more of an erosion than a steep selloff. But the atmosphere of “This will be transitory” is fading. True, there are still big winners among energy stocks, but a growing number of industries have taken hits. Here are the stocks that have seen the largest declines since the war began.
Expectations of Federal Reserve interest rate cuts had buoyed the US stock market coming into 2026. This has been turned on its head. The bond market is now pricing in the possibility of a rate hike this year, which had not been on just about anyone’s bingo card two months ago. Leslie Norton looks at what kinds of stocks could be vulnerable should the Fed move toward raising rates.
Those dialed-back expectations for rate cuts and some safe-haven buying have helped the US dollar move higher after a steep decline in 2025. That drop was responsible for US investors enjoying outsized gains on foreign stock and bond funds. But will the dollar’s strength continue after the war’s end? Find out why currency watchers are skeptical.
One surprise is the big drop in gold prices during the war. Like the dollar, gold can be seen as a safe haven, as well as protection against inflation. Instead it’s down 18% since the war started. Valerio Baselli explains.
Against this backdrop, Morningstar chief US strategist David Sekera offers his opinions on where investors should look to harvest gains, and where to redeploy cash.
Lastly, even as many markets are beset by the fog of war, it looks like some mega-sized IPOs are still on their way–namely SpaceX, OpenAI, and Anthropic. As we noted a few weeks back, SpaceX is likely on its way to going public with a massive valuation. But as PitchBook analyst Franco Granda writes, investors will also have to contend with the potential for big volatility, courtesy of the Elon Musk factor.
As for OpenAI, Anthropic, and another big AI IPO, Databricks, investors will need to dig deep into business models and financials to determine whether to buy shares. That’s not easy while all three firms are still private, but PitchBook senior analyst Harrison Rolfes has a framework for evaluating them based on revenue quality and valuation, offering his opinions of which could be worth adding to a portfolio. And with hundreds of billions heading to these IPOs, could that wave swamp the rest of the market? Kyle Stanford investigates.
As always, be sure to visit our Markets page for our latest coverage and live stock market updates, along with our full weekly calendar of key upcoming data and events.
