Our Monthly Business Commentary
April, 2026
U.S. equities staged a sharp recovery over the first half of April, with the S&P 500 climbing over 7% from its early-month lows to close at a new all-time high on April 15. The index had entered April down almost 5% for 2026, weighed down by the Iran conflict and surging energy costs. Ceasefire optimism and technology-sector strength then carried the index past the previous January 28 record. The Nasdaq Composite extended its recent rally, while the Dow Jones Industrial Average climbed back into positive territory for the year. Mega-cap technology names did much of the heavy lifting, as investors gravitated toward companies best positioned to weather higher oil prices and slower growth.
Under the surface, the rally’s evolution told a more nuanced story. The Volatility Index (VIX) dropped below 20 on April 9 for the first time since the war began, after peaking above 35 in March, signaling a rapid repricing of risk. Energy led the market through the first quarter as elevated oil prices flowed directly to the bottom line, though that momentum reversed quickly in April. Technology reclaimed leadership in the second week of April, with software and semiconductor names driving the Nasdaq’s rally. Market breadth remained thin, however, with just five sectors powering the April 15 record close.
The economic data painted a split picture. The March jobs report showed payrolls rising 178,000, about three times the consensus, rebounding from February’s 133,000 decline tied to a healthcare strike1. Unemployment edged down to 4.3% from 4.4%1. Wage growth slowed to 3.5% year-over-year, the weakest since May 2021, and real hourly earnings fell 0.6% as inflation outpaced pay1. The March Consumer Price Index (CPI) reinforced that pressure, with headline inflation rising 3.3% year over year from 2.4% in February, as gas prices surged 21%, the largest monthly increase on record2. Core CPI, which excludes food and energy, rose just 0.2% month-over-month and 2.6% year-over-year, suggesting underlying price pressures remained contained2.
The bottom line: The mix of firmer inflation and a resilient labor market complicates the Fed’s path to rate cuts. The Fed is widely expected to hold rates steady at its April 28–29 meeting while assessing whether the recent inflation pickup, driven largely by energy, proves temporary. The March minutes suggest officials still expect to cut rates this year but remain data dependent. Whether the market advance can broaden beyond a handful of mega-cap leaders may depend on how quickly energy costs recede and how long the Fed can afford to stay patient.
Sources:
- Bureau of Labor Statistics, https://www.bls.gov/news.release/empsit.nr0.htm
- Bureau of Labor Statistics, https://www.bls.gov/news.release/cpi.nr0.htm
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