Stocks in April staged an impressive rally as investors poured back in following a sell-off in March. The rally was broad and the largest mega caps, while showing significant gains, continued to diverge from each other. Along with positive earnings sentiment, investors are trying to grapple with the impact of continuing geopolitical developments.

Marc Davis, CFA, describes the events of the month and how Sawgrass believes the broadening trend is expected to continue, and stock selection will be of utmost importance going forward.

Geopolitical shocks, AI skepticism, and shifting rate expectations pulled the S&P 500 lower in Q1, even as market leadership broadened beneath the surface. Portfolio Manager, Anthony Brooks, walks through a quarter that felt like an endless bedtime story - full of twists, false endings, and an ever-growing cast of macro surprises reshaping the market narrative.

Liridon Gila, CFA, Portfolio Manager, discusses the S&P 500's decline of -0.8% in February as the market broadening and sector rotation continued, and defensive stocks generally rallied on perceived "safety" from the AI disruption risks. He highlighted three near-term potential catalysts including 1) ongoing concerns over AI-driven disruption, 2) an escalation of geopolitical tensions, and 3) uncertainty over monetary policy and persistent inflationary trends. He expects quality to outperform in 2026 as markets continue to digest the disruptive impact of AI, the Fed continues to ease rates, and the valuation gap between mega-cap growth and the rest of the market remains elevated.

Marc Davis, CFA, Co-Portfolio Manager, discusses the strong start to 2026 and continued market broadening as the AI theme draws greater scrutiny from investors. He sees a challenging path forward with stocks vulnerable to selling pressure on the heels of a tremendous 3-year run. Looking ahead, Sawgrass expects equity returns to be more muted with increased market volatility, however greater variation in universe returns and a better stock picking environment could be supportive of active managers' ability to outperform their benchmarks and peers.

Anthony Brooks, Portfolio Manager, discusses the market's resilience in 2025, with stock prices supported by optimism around potential rate cuts and steady earnings, despite uncertainties around circular AI deals, geopolitical tensions, and political shifts. By year-end, more than 80% of S&P 500 companies beat earnings expectations, as real earnings growth rather than expanding valuations supported the majority of the year's gain. We expect investors' renewed focus on fundamentals to continue into 2026, creating significant potential for high quality stocks trading at below average valuations.

Liridon GIla, CFA, Portfolio Manager, discusses November's market broadening as defensive and value-oriented sectors outperformed the market's YTD leaders. Investor sentiment was tested by the government shutdown and mixed economic signals, however a strong start to the holiday shopping season solidified confidence that household spending power was intact. Looking toward 2026, Sawgrass expects quality companies could continue to outperform as the market broadens further, the Fed stays the course on easing, investors digest AI spending and near-term return expectations, and extreme relative valuations moderate.

Marc Davis, CFA, Co-Portfolio Manager, discusses how investors' fascination with Artificial Intelligence (AI) combined with continued hopes for further Federal Reserve easing has pushed equity markets to new all-time highs. However, valuations in many of these mega-cap companies appear stretched and with markets pricing in lots of good news, there is little room for error in both earnings and economic growth projections, thus increasing the potential for volatility at any time. Overall, despite these stretched valuations and uncertain fiscal and monetary policy, markets have continued to heed momentum, and we expect the continued chase by investors will likely lead equities higher and could keep a bid on any significant pull backs through year end.

Anthony Brooks, Portfolio Manager, discusses the strong third quarter spurred by optimism in Artificial Intelligence (AI) developments and a dovish Federal Reserve. The largest technology companies are set to increase spending and Wall Street is rushing to jump on board the "AI goldrush." Historically, markets tend to do well in the fourth quarter, however stubborn inflation and mixed monetary policy signals could awaken some volatility.