Executive Summary 

April 2026 was a study in markets looking through geopolitical noise to focus on fundamentals. Despite the Strait of Hormuz remaining severely disrupted, Brent crude pushing back above $110 per barrel, and ceasefire negotiations breaking down repeatedly, global equities staged one of the most powerful risk-on rallies in years. The S&P 500 and Nasdaq closed the month at all-time highs, decisively reversing the war-driven sell-off of March and continuing the rotation back into artificial intelligence and the broader technology supply chain. 

The S&P 500 returned approximately 10.0%, its best month since November 2020, while the Nasdaq Composite gained 14.0% for its strongest monthly performance since April 2020. The rally was driven by an unusually strong Q1 earnings season, with 84% of reporting S&P 500 companies beating consensus and blended earnings growth running at 13.2% year-over-year, alongside renewed conviction in the AI capex cycle following standout reports from Alphabet, Microsoft, Meta, and Caterpillar. Emerging markets outside China were the standout performers globally, with Taiwan and South Korea delivering extraordinary gains as the AI semiconductor supply chain captured the bulk of incremental capital flows. Energy, the lone winner of March, became April’s only laggard as investors aggressively rotated back into growth. 

Equity Markets Performance 

U.S. indices rallied across the board in April, fully reversing March’s losses. The S&P 500 gained 10.0% and the Dow Jones added 6.0%, driven by a powerful combination of strong corporate earnings and a sharp rotation back into mega-cap technology. The Nasdaq Composite returned 14.0%, leading large-cap indices, as the AI capex cycle reasserted itself and the Philadelphia Semiconductor Index rose nearly 40% over the month. The Russell 2000 advanced 10.0%; small-caps participated meaningfully in the rally, supported by the rotation into cyclical exposures, although the index continued to face headwinds from elevated yields weighing on more leveraged balance sheets. 

International markets were broadly positive but lagged the United States. The MSCI EAFE returned 3.6% as European earnings recovered from March’s energy shock, although gains were muted by the region’s heavier energy and defensive exposure. The UK’s FTSE All-Share was a clear laggard, weighed down by its energy and financials concentration and by UK CPI rising to 3.3%. China’s CSI 300 returned 8.0% as Beijing benefited from cheaper alternative oil sourcing from Russia and Central Asia, and as domestic AI hardware names participated in the regional supply chain rally. India’s Nifty 50 rose 4.5%, recovering from March’s drawdown as the rupee stabilized, although IT services continued to lag on AI-driven outsourcing concerns. 

Sector Performance 

April produced the inverse of March’s sector dispersion. Ten of the eleven S&P 500 sectors finished higher, led by Information Technology, Consumer Discretionary, Industrials, and Real Estate, each posting double-digit gains. Energy was the sole decliner. The earnings season provided a powerful fundamental backdrop, with the Information Technology sector reporting 29.2% year-over-year revenue growth, led by semiconductors at 51%. 

• Information Technology (XLK): +25.10% – The decisive leader by a wide margin. Strong reports from Alphabet, Microsoft, and Meta, combined with Qualcomm’s 16% post-earnings surge and continued enthusiasm for AI infrastructure spending, drove broad-based gains across semiconductors, hardware, and software. The Philadelphia Semiconductor Index rallied nearly 40% in the month, the dominant single driver of the broader index advance. 

• Consumer Discretionary (XLY): +12.01% – Amazon’s positive earnings surprise and a broader rotation into cyclical growth supported the sector. Auto and homebuilder stocks recovered as the energy shock partially unwound and Treasury yields stabilized. 

• Industrials (XLI): +11.47% – A sharp reversal from March’s sector-worst performance. Caterpillar’s 10% post-earnings surge after raising annual guidance underscored the AI-driven construction and data center buildout theme. The sector benefited from both the unwind of March’s war-trade pessimism and structural demand from AI infrastructure deployment. 

• Real Estate (XLRE): +10.42% – Strong outperformance as the bond-proxy characteristics that hurt the sector in March became a tailwind. The 10-year yield’s stabilization, combined with the data center REIT exposure to AI infrastructure capex, drove broad-based gains across the sector. 

• Communication Services (XLC): +7.92% – Alphabet and Meta led the sector higher despite Meta’s 9% post-earnings drop on raised capex guidance. The broader theme of AI monetization through advertising and search drove sustained inflows. 

• Energy (XLE): -3.73% – The sole sector in negative territory. Profit-taking after March’s 10.8% surge, combined with the broader rotation out of war-trade winners and into growth, pressured integrated majors and E&P names. Earnings revisions for the sector turned negative through April despite Brent remaining above $110. 

Fixed Income 

Treasury yields rose modestly across the curve in April as inflation concerns persisted and the Federal Reserve held rates steady. The 2-year yield closed near 3.88%, the 10-year yield at 4.39%, and the 30-year at 4.97%. While yields remained elevated, they were materially below the intra-March peak that accompanied the height of the oil shock, reflecting the partial easing of the most acute war-trade premium. 

The Federal Reserve’s late-April meeting was the most divided FOMC vote since 1992, with Chair Powell concluding his eight-year tenure by holding rates steady amid acknowledged uncertainty around oil prices. Regional presidents Kashkari and Hammack publicly dissented against the post-meeting statement’s forward guidance, arguing that current uncertainty made directional signaling inappropriate. The probability of a near-term rate cut effectively collapsed during the month as headline CPI and PCE printed above 3% year-over-year, well above the Fed’s 2% target. Markets are now pricing an extended hold, with some outlier speculation around the possibility of a hike if oil prices re-accelerate. 

Commodities 

Metals 

Gold consolidated in April after March’s sharp decline, ending the month near $4,615 per ounce as competing forces offset one another. A weakening U.S. dollar and continued central bank buying provided support, while elevated nominal yields and aggressive risk-on positioning capped upside. The metal recouped a modest portion of March’s losses but failed to retake its February highs. 

Silver rebounded meaningfully, ending April near $75.36 per ounce. The advance was driven by both the broader risk-on environment and renewed industrial demand expectations as the AI hardware buildout reaccelerated, with silver’s role in semiconductors, solar, and high-end electronics drawing renewed attention. 

Energy 

Brent crude ended April near $113 per barrel, remaining elevated and reflecting the continued disruption of the Strait of Hormuz throughout the month. Although intra-month volatility was substantial, with prices oscillating on alternating ceasefire reports and blockade signals, the contract failed to break decisively below $100 and ended April near its highs as Iran’s response to U.S. terms via Pakistani mediators failed to produce a durable resolution. 

California gasoline prices hit $6.01 per gallon at the AAA national-survey peak, a 30% increase since the war began in late February, keeping the inflationary pass-through highly visible to U.S. consumers. The IEA continued coordinated SPR releases through the month, providing a partial supply buffer. Natural gas remained relatively stable as European storage levels and LNG flows normalized. 

Cryptocurrency 

Bitcoin posted its strongest monthly performance in a year, gaining approximately 11.87% in April to snap a five-month losing streak. The rally was driven by the broader risk-on environment, weaker dollar, and renewed retail interest, although CryptoQuant flagged that the move was disproportionately futures-driven rather than spot-based, suggesting some structural fragility. Bitcoin remained roughly 38% below its October all-time high of $125,100. 

International Markets 

• MSCI EAFE (Developed): +3.60% – European equities rebounded as Q1 earnings exceeded depressed expectations, although gains lagged the U.S. given the region’s heavier energy exposure. The ECB held rates at 2.0%, looking through the supply-driven inflation spike. The UK’s FTSE All-Share was the clear developed-market laggard, weighed down by its energy and financials concentration and by UK CPI rising to 3.3%, which prompted markets to price in additional Bank of England tightening. 

• MSCI Emerging Markets: +14.7% – The standout global index of April. Gains were overwhelmingly concentrated in the AI semiconductor supply chain, with Taiwan returning 26.2% and South Korea returning 38.2%. The MSCI EM Asia Index recovered all of its February-March war-related losses and then some, as investors who had rotated out during the conflict aggressively re-entered. 

• China (CSI 300): +8.00% – A solid recovery from March’s drawdown. Cheaper alternative oil sourcing from Russia and Central Asia eased input cost pressure, while domestic AI hardware names participated in the regional supply chain rally. 

• India (Nifty 50): +4.50% – India recovered modestly from March’s drawdown as the rupee stabilized and oil pulled back from its intra-month peaks. The IT services sector continued to lag, however, as concerns over AI-driven outsourcing displacement weighed on heavyweights. 

Outlook: May 2026 

May volatility will be dictated by three primary themes. First, the Iran conflict and the Strait of Hormuz remain the dominant risk variable. Iran’s late-April response to U.S. terms via Pakistani mediators created a window for de-escalation, but the Trump administration has signaled preparation for an extended blockade. With Brent still at $113, the energy supply premium is fully priced into oil markets but only partially reflected in equities. A confirmed reopening of the Strait would likely produce a sharp deflationary reaction in oil and trigger further rotation out of energy. A breakdown back into active conflict would re-engage the March playbook of rising yields, falling equities, and surging oil. 

Second, the Fed transition. Chair Powell’s term concludes in May, and the divided April vote signals genuine uncertainty about the policy path under his successor. Markets will scrutinize every speech from Governor Warsh and the regional presidents for clues on whether the bar for a hike has meaningfully risen. Sticky CPI and PCE prints in May would substantially raise the probability of a rate hike for the first time in this cycle, which would pressure both growth equities and the long end of the curve, where the 30-year already sits near 5.0%.