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The Real Reason Growth Stocks Have Struggled

The Macro Institute's Weekly Economic Primer

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The Macro Institute
April 20, 2026

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Don’t have time to watch the whole video? Here’s 5 Key Takeaways:

🔹 Growth Stocks Struggled In The First Quarter: All three growth sectors contracted in the first quarter of 2026. Tech (-9.3%), Discretionary (-9.3%), and Communication Services (-7.1%) only trailed Financials (-9.8%) as the worst performing sectors during the period.

🔹 The Mag 7 Are Mainly Growth Stocks: When growth is struggling that generally means the Mag 7 is struggling. All seven companies were negative on the quarter. Their performance ranged from Nvidia (-6.5%) to Microsoft (-23.5%).

🔹 Growth Stocks Are Allergic To Higher Rates: The main reason for growth’s pullback was the increase in interest rates during the quarter. The S&P Pure Growth index generally contracts when interest rates rise, and this quarter was no different.

🔹 Oil Driven Inflation Spike Was Main Culprit: Interest rates largely rose during the quarter due to the oil shock. The price of oil and U.S. CPI have a tight relationship, so investors started pricing in increased inflation, and therefore higher interest rates.

🔹 The Market No Longer Expects Rate Cuts In 2026: At the start of the year the market expected at least two interest rate cuts in 2026, but the U.S.-Iran War has completely shifted the narrative. The market now implies a ~70% chance of zero cuts or rate hikes.

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The Macro Week Ahead

📆 Last Week’s Data Key Takeaways

🔹 PPI Better Than Feared While Import Prices Surged: March PPI rose +0.5% M/M (vs +1.1% forecast) and +4.0% Y/Y, which was the highest annual rate since February 2023, but well below the consensus of 4.6%. March import prices jumped on petroleum (+2.5%) and natural gas (+24.7%), with nonfuel imports +1.1%.

🔹 The Empire & Philly Fed Both Surged: The Empire index jumped to 11.0 in April (vs -0.5 forecast), a five-month high. New orders surged to 19.3, shipments to 20.2, and employment to 9.8. The Philly Fed blew past expectations at 26.7 (vs 10.3 forecast), the highest since mid-2025 and the fourth straight month of expansion.

🔹 Existing Sales Slid & Builder Confidence Dropped: March existing home sales fell to 3.98M, near the 2023 trough when mortgage rates peaked. Mortgage rates have rebounded to ~6.3%, undermining affordability improvement. NAHB builder confidence fell to 34 in April (vs 37 forecast), the lowest since September 2025. Current sales dropped to 37, future expectations plunged 7 points to 42, and buyer traffic fell to 22.

🔹 NFIB Dropped Below 52-Week Average: The NFIB fell 3.0 points to 95.8 (vs 97.9 forecast), dropping below its 52-year average of 98 for the first time since April 2025. Uncertainty surged 4 points to 92 and profit trends collapsed 11 points to -25%. Capital spending plans hit the lowest since November 2009. Oil prices cited as the primary catalyst as inflation rose to the third-ranked concern at 14%.

🔹 Claims Dropped Back Near The Cycle Lows: Initial claims fell 11,000 to 207,000 for the week ending April 11 (vs 213K forecast), the biggest weekly drop since February. Continuing claims rose 31,000 to 1.818M. The labor market continues to show the "low-hire, low-fire" pattern.

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