April was the strongest month for the S&P 500 since November 2020.

Equities registered large gains across major indices in April.  Some of the key drivers included dampening geopolitical risks around the US-Iran war, less volatile energy prices, and strong earnings.  Following a return of -4.98% in March (total return), SPX (the S&P 500) returned 10.49% (total return) in April.  After returning -4.81% (total return) in March, NDX (the Nasdaq-100) returned 15.66% (total return) in April.  The Russell 2000 returned 12.29% (total return) in April after a total return of -5.01% in March.  SPX & NDX reclaimed their 200-day moving averages in April, which we will illustrate later in this note. 

High Yield, International, Real Estate and Bitcoin were all positive in April.  Following a return of -1.18% in March (total return), High Yield (Bloomberg US Corporate High Yield Total Return Index) returned 1.69% (total return) in April.  Following a return of -10.18% in March (total return), the MSCI EAFE Index returned 7.56% (total return) in April.  Following a return of -6.34% in March (total return), Real Estate (Dow Jones US Real Estate Capped Index) returned 8.53% (total return) in April.  Bitcoin returned 12.74% in April (Bloomberg Bitcoin Index) after returning 3.33% in March.  Additionally, both MLPs and Ethereum were higher in April.  Following a return of 3.03% in March (total return), MLPs (MerQube North America MLP & Infrastructure Total Return Index) returned 3.79% (total return) in April.  Following a return of 9.03% in March (total return), Ethereum (CME CS ETF-USD Ref Rate) returned 7.92% (total return) in April.

During April, fixed income markets were mostly driven by the war in Iran, inflation reports, and volatile expectations of monetary policy.  Treasuries sold-off modestly across the curve for the month, and the short-end slightly underperformed.  The 10-yr closed at roughly 4.38% to end April, up from 4.32% at the end of March, and above the key 4.20% technical level.  The 30-year Treasury yield ended April at roughly 4.96%, up from 4.91% at the end of March.  Credit spreads tightened in April.  Over the past several months and years, the correlation between equities and fixed income has been notably high – and likely will remain so.  Additionally, the 2/10 Treasury yield spread slightly narrowed in April.  The 2/10’s record-long inversion came to an end in the second half of 2024.

In April, the FOMC kept rates unchanged, once again, after last lowering its policy rate to a range of 3.50% – 3.75% in December.  The next Fed meeting will take place on 6/16-6/17.  Looking ahead, and as of the end of April, the market has priced-out a rate cut and has priced-in a possible hike in 2026.  The Fed continues to target 2% inflation as its goal, and incoming inflation reports will likely continue to drive the dot plot.  However, the Fed has cut rates multiple times despite inflation remaining above the 2% target.  Furthermore, the shaky employment picture will play a role in future policy.

Another notable datapoint from April was the release of March’s inflation data: CPI printed 0.9% M/M, matching the consensus.  Core CPI printed 0.2% M/M, below the 0.3% the consensus.  PPI printed 0.5% M/M, well below the 1.1% consensus.  PCE printed 0.4%, matching the consensus.  Core PCE printed 0.4%, also matching the consensus.  Additionally, and according to FactSet, the trailing 12-month P/E ratio for SPX is 29.0 which is above the 5-year average (24.6), and above the 10-year average (23.3).  The forward 12-month P/E ratio for SPX is 21.0, which is above the 5-year average (19.9), and above the 10-year average (18.9).  Additionally, per FactSet, SPX is reporting Y/Y earnings growth of 27.7% for Q1 2026, which is the highest earnings growth rate since Q4 2021.  Finally, per FactSet, SPX is reporting revenue growth of 11.3% for Q1 2026, which is the highest revenue growth rate since Q2 2022.

Within commodities and currencies: WTI Crude Oil rose in April by roughly 3% to close near $107/bl.  Gold fell by roughly 1% in April and closed out the month near $4615/oz.  Finally, the USD/DXY fell M/M and closed out April near 98.10.  2025 was one of the weakest years for the USD in several decades, and the first four months of 2026 have registered a flat dollar.

VOLATILITY UPDATE

After closing out March near 25.25, the VIX Index finished April near 17 as volatility fell with calmer geopolitical risks and rising equity markets.  The 12-month high of the VIX Index was registered on 3/9/26 at 35.30.  In 2022, the VIX averaged over 25.  In 2023, the VIX averaged near 17.  In 2024, the VIX averaged near 15.50.  And in 2025, the VIX averaged near 19.

The MOVE Index calculates the future volatility of US Treasury yields implied by current prices of options on Treasuries of various maturities.  It is thought of as “The VIX Index of the Bond Market.“  After closing out March near 96, the MOVE Index closed out March near 72.  Interest rate volatility fell with optimism around the war possibly winding down, among other factors.  The 12-month high of the MOVE Index was registered on 3/26/26 at 115.02.  Traders will continue to monitor this index to gauge potential future bond and equity volatility.  Equities tend to favor a subdued MOVE Index – and a low MOVE Index has been the majority of the story over the past 8 months.

Source: Morningstar Direct

LOOKING AHEAD

Among other factors, the market will be adjusting to and watching US-Iran war headlines, US trade policy headlines, employment data, inflation, earnings, yields, and monetary policy.  On the inflation front, April’s CPI will be released on 5/12, and PPI will be released on 5/13.  Finally, the next FOMC meeting will take place on 6/16-6/17, and the market is expecting no change.