While the stock market reached new highs in May, many Americans felt less confident about the economy. The University of Michigan Consumer Sentiment Index, which measures how people feel about their finances and the economy, fell to its lowest level in more than 70 years.

Since the Global Financial Crisis, U.S. equities have experienced a historic run. From the market bottom in March 2009, the S&P 500 has delivered cumulative returns exceeding 1,200%. However, these gains have not been driven solely by underlying earnings growth. In fact, a significant portion of the market’s appreciation has come from valuation expansion, investors willing to pay higher prices for each dollar of earnings. Over the past 30 years, the market’s average price-to-earning (P/E) ratio has been around 17x, falling below 10x during the crisis, but today it sits closer to 21x.

Hope won out over fear last week as investors set their sights on a Middle East ceasefire holding and optimistic prospects for the Strait of Hormuz reopening. The Standard & Poor’s 500 Index rose 3.56 percent, while the Nasdaq Composite Index picked up 4.68 percent. The Dow Jones Industrial Average advanced 3.04 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 4.52 percent.1,2

Over the past several days, global markets have responded to renewed geopolitical tensions in the Middle East following coordinated U.S. and Israeli strikes on Iranian military and nuclear-related infrastructure. As expected, headlines have introduced short-term volatility across equities, energy markets, and currencies. I would like to provide perspective — and more importantly, reaffirm how your portfolio is positioned.

Following the recent State of the Union address, many clients have asked how the economic messaging compares with the underlying economic data. Below is a straightforward, fact-based summary to help provide clarity.

Stocks ended last week with modest losses after a volatile five days of market-moving economic data, geopolitics, and Fed drama. The Standard & Poor’s 500 Index slid 0.38 percent, while the Nasdaq Composite Index skidded 0.66 percent. The Dow Jones Industrial Average edged down 0.29 percent. By contrast, the MSCI EAFE Index, which tracks developed overseas stock markets, rose 1.41 percent.