April delivered a powerful reminder of how fast market conditions can shift. The S&P 500 posted its 2nd best April since 1950 according to data from Janney’s ISG. Only the April 2020 rebound from COVID lows surpassed this year. While we remained constructive longer term on the market during the February/March pullback, we did not anticipate the market would rally so much so quickly. As the adage goes, in a bull market, most of the surprises are positive.
Why did the market rally so much? Increased clarity and strong fundamentals. While we are still far from a resolution, news on the conflict in the Middle East became “less bad”, allowing investors to look towards an eventual resolution rather than escalating uncertainty. Markets are inherently forward looking and often anticipate conditions 6+ months into the future. Furthermore, as we have written about and discussed, corporate earnings growth has been exceptionally strong. According to data from Evercore, S&P 500 companies’ first quarter 2026 sales growth is tracking at 10.8% and earnings growth at an outstanding 26.6% over last year. A few technology companies with extremely fast growth skew the earnings number somewhat, but overall earnings growth remains robust and broad across the economy. Once investors saw through the “fog of war”, the resulting picture of the market was quite rosy.
The strength of the underlying economy is notable as well. In our last mid-month market call, we highlighted that unemployment claims have been historically low for the past 4 years (and in the years preceding the COVID pandemic as well). That was further validated as weekly initial jobless claims recently fell to just 189,000. This is the lowest number since 1969; the workforce has roughly doubled since then. Adjusting for workforce size, this is by far the strongest data we have seen since records began in the late 1960s. Such conditions continue to support consumer spending and broad economic resilience.
Between the exceptionally strong labor market, the AI technological revolution, and the ongoing bull market powered by corporate earnings growth, investors are living in the “good old days” right now.
Of course, markets are never without risk. There is a new Fed Chairman, and this is still a midterm election year. Both have been associated with market turbulence in the past. We will not get complacent, and we will continue to monitor our objective indicators to maintain appropriate risk and investment positioning. But the weight of the evidence continues to support our view that we are in a secular bull market with years left to run.
This is being provided solely for informational and illustrative purposes, is not an offer to sell or a solicitation of an offer to buy any securities. The factual information given herein is taken from sources that we believe to be reliable but is not guaranteed as to accuracy or completeness. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors. Employees of Janney Montgomery Scott LLC or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed here.
