The U.S. equity market—measured by the S&P 500—pushed through the 7,000 level in April, notching multiple record highs and its strongest monthly gain since 2020. Markets largely looked past the ongoing conflict in Iran, instead doubling down on the AI-driven growth narrative, with technology and semiconductor stocks leading the charge.
Early evidence suggests AI is beginning to translate into meaningful productivity gains across global firms, reinforcing the case for hyperscalers’ aggressive infrastructure spending. This earnings season has reflected that momentum: S&P 500 EPS growth is tracking near 30%, with information technology, consumer discretionary, and communication services sectors delivering roughly 50% growth. Earnings, at the moment, feel almost like a force of nature.
That said, not all record highs are created equal. Today’s gains are unfolding against the backdrop of war in Iran, constrained energy supply, and a growing recognition that this conflict—like most—may persist longer than initially expected. The implication is clear: inflation risk continues to linger just beneath the surface.
A durable bull market is typically supported by broad-based participation, particularly from cyclical sectors. While we’ve seen some rotation, leadership remains concentrated in growth—technology, communications, and consumer discretionary—suggesting the rally is not yet as robust as it could be.
If the geopolitical backdrop stabilizes sooner rather than later, and productivity gains begin to broaden beyond the growth complex, the foundation for a more durable and expansive bull market would be firmly in place. For now, the market appears to have earned the benefit of the doubt.
Have a great weekend and be well,
Be well,
Mike
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