May 6, 2026

Stocks Surge Higher in April

Equity markets staged a powerful rebound in April, closing out one of the strongest months in years. The S&P 500 gained 10.4% for the month, while the Nasdaq surged 15.3%, both finishing at all-time highs. This sharp move higher came on the heels of March’s volatility and reflects a market that continues to respond to improving fundamentals despite an increasingly complex geopolitical backdrop.

In fact, the 12.5% gain in the S&P 500 over the final four weeks of April marked the 20th largest four week advance since 1950, according to Goldman Sachs. What makes this rally particularly notable is that it occurred alongside ongoing conflict in Iran and elevated oil prices, with Brent crude briefly exceeding $120 per barrel. Markets were able to look through these risks as underlying economic and corporate fundamentals continued to strengthen.

April’s rebound was led by growth stocks, with the technology heavy Nasdaq 100 delivering its best monthly performance since 2002, according to the Nasdaq Market Intelligence Desk. The Mag 7 once again drove a significant portion of returns, supported by exceptional earnings results and continued investment in artificial intelligence.

According to FactSet, the blended earnings growth rate for the S&P 500 in the first quarter rose to 27.1%, which would mark the strongest year over year growth since the fourth quarter of 2021 if sustained. Notably, approximately 84% of companies have exceeded earnings expectations, with 81% beating revenue estimates, both well above historical averages.

Big Tech remains at the center of this strength. Microsoft, Amazon, Meta, and Alphabet alone spent a combined $131 billion in capital expenditures during the first quarter, a 71% increase from a year ago.

Essentially, the most profitable companies in the world are in a race to see who can inject the most cash back into the US economy by building hard assets. This dynamic continues to serve as a key driver of both equity prices and economic growth.

Importantly, the strength in April was not limited to large cap technology stocks. Small cap equities and the Russell 2000 also reached new highs, signaling a gradual broadening of the market. This is a healthy development and suggests that improving economic conditions are supporting a wider range of companies.

The economic backdrop remains supportive. The U.S. economy grew at a 2.0% annualized rate in the first quarter despite weather related disruptions. Capital spending continues to accelerate, particularly in intellectual property and equipment tied to semiconductors and data infrastructure. The labor market also remains exceptionally strong, with initial jobless claims falling to their lowest levels since 1969, reinforcing the resilience of employment trends. According to Schwab, the unemployment rate has remained between 4% and 4.5% for 21 consecutive months.

Inflation remains an area we are monitoring closely. Headline inflation moved higher in March, largely driven by energy prices, while core inflation continues to run above the Federal Reserve’s long-term target. While this may keep policy restrictive in the near term, it has not derailed the current expansion.

So why does the market continue to push higher? The answer remains “Earnings”. The chart below does a good job of showing how the market figured out that fundamentals were getting better while stock prices were pulling back during March.

As forward earnings expectations continue to rise, and over time, stock prices tend to follow. As long as corporate profits are growing and the economy avoids a meaningful slowdown, the foundation of this bull market remains intact.

Looking ahead, we continue to see a constructive environment for equities. Investor sentiment, while improved, is still far from euphoric, leaving room for further upside. Valuations have also moderated compared to where they stood at the end of last year. According to Ed Yardeni, the forward price to earnings ratio on the S&P 500 is currently 20.9, below the recent 23.0 peak reached at year end 2025.

There will inevitably be periods of volatility, particularly given geopolitical risks and the path of inflation. However, pullbacks within a bull market are both normal and healthy. At this stage, the combination of strong earnings growth, resilient economic data, and continued investment in long-term secular trends like AI supports the view that this market has further room to run.

As always, we will continue to monitor developments closely and ensure portfolios remain positioned to participate in the opportunities ahead while managing risk appropriately.