April2026 Market Update

April, 2026

Macroeconomics

Economic data was solid for the month. First quarter U.S. GDP grew below expectations at an annualized rate of 2.0 percent, due to softer consumer spending partially offset by business investment in AI related categories. Core PCE (excluding food and energy) rose at an annualized rate of 4.3 percent in March, which is above the Fed’s preferred 2 percent inflation target. The March BLS jobs report was stronger than anticipated, with payrolls increasing by 178,000, while prior months were reduced by a combined 7,000 jobs.   

The Conference Board Consumer Confidence Index survey climbed a bit in April to 92.8 as pessimistic expectations eased. The ISM U.S. Manufacturing Purchasing Manager Index (PMI) remained steady in April at 52.7, which was the fourth straight month of expansion, with mixed results for underlying components with increasing new orders and prices, mostly related to technology, but slowing production.

At the Fed April meeting that is likely the last one featuring Jerome Powell as Chair, they held the benchmark rate steady at 3.5-3.75 percent for the third consecutive month. The decision revealed the most divided Federal Open Market Committee in over three decades with a vote of 8-4.  One member supported an interest rate cut while three members voted against a reduction bias statement. In the end they voted to hold rates steady as they weigh future risks to both inflation and employment stemming from the Iran conflict.

Equity markets

Markets rose in April as the S&P 500 gained 10.5 percent, reaching seven record highs during the month and closing at 7209 on the final day. Sector performance varied, with Communication Services (+18.5 percent) and Information Technology (+17.5 percent) leading, while Energy (-3.5 percent) and Healthcare (-0.5 percent) were the only sectors with negative returns. All major indices were positive during the month; small-capitalization stocks outperformed large- and mid-cap stocks on a relative basis. Growth outperformed value on a relative basis, while the equal‑weighted index underperformed the cap‑weighted index.

International equity markets underperformed the U.S. this month but were nonetheless positive  Emerging markets (EM) were up +14.7 percent and developed markets (EAFE) up +7.5 percent. EM performance by region was led by Asia (+19.1 percent), followed by Eastern Europe (+10.7 percent) and Latin America (+3.2 percent). EAFE performance by region was led by Asia (+8.3 percent), followed by Europe (+7.3 percent). Japan (+9.2 percent) led major developed market economies, while Korea (+38.2 percent) led emerging economies.

Fixed income markets

Fixed income markets experienced heightened volatility with the Bloomberg U.S. Aggregate Index barely positive at +0.1 percent. The U.S. Treasury yield curve steepened as yields rose across the spectrum from 2- to 30-years amid mounting global risks and forthcoming changes to Fed leadership. Global bond yields rose following the surge in energy prices as central banks signaled possible interest rate action to curb related inflationary pressures. Investment-grade (IG) corporates and asset-backed securities spreads tightened on reduced issuance and resilient fundamentals, while mortgage-backed security spreads widened as Treasury yields rose and high yield spreads remained stable.    

Looking ahead

This month's market losses reflected escalated uncertainty about energy prices, inflation trajectories, and global growth. With key inflation data still pending and geopolitical risks elevated, future direction will likely depend on further developments in the Middle East and central bank responses to energy-driven price pressures and resulting economic headwinds. While equities remain highly sensitive to headline news and ongoing volatility is anticipated over the near term, resilient corporate earnings and consumer sentiment, along with a Fed that is highly focused on price stability, provides some positive perspective.