Silver Lining
May 4, 2026
April market activity was a stark contrast to what was posted during March. Most notably for equities- both domestic and international. Here at home, the S&P 500 returned +10.49%, and the NASDAQ composite Index returned +15.32%. Looking abroad, the MSCI EAFE Index returned +7.56%, and the MSCI Emerging Markets Index returned +14.74%. While not to the same extreme as equities, debt markets also outperformed the previous month returning +0.11% for April as tracked by the Bloomberg US Aggregate total return unhedged index.
The strong equity returns this month did not arrive smoothly. Much of the month was characterized by volatile performance related to geopolitical developments. In March, the energy sector was a main driver of returns, and the tech sector was a heavy detractor. That narrative was short lived and reversed during April. As tracked by the S&P 500 GICS Information Technology Sector Index, the tech sector returned +17.47% for April, while the energy sector returned -3.46% for the month tracked by the S&P 500 GICS Energy Sector Index. Higher rates for longer periods put more pressure on growth-oriented sectors. Since a peak in mid-October 2025, in Stadion’s analysis there has been an industry rotation out of growth sectors and towards value-oriented sectors. While that rotation is probably not unrelated to the rate environment and the pressures on growth sectors, this month’s equity returns were led by those growth-oriented sectors like technology, communications, and consumer discretionary. It’s difficult to say if this turnaround in equities has yet been reflected in an improving investor sentiment, but historically, positive returns have generally been associated with improvements in consumer confidence, though past relationships are not guarantees of future outcomes.
Fixed income markets were comparatively steady. 10-year treasury yields moved within a narrow 4.25% to 4.35% range throughout the month. Investors weighed moderating inflation data against the risk of renewed price pressures. This was reflected in the Federal Reserve’s decision in late April to once again hold rates.1 The geopolitical scene has continued to fuel some of these renewed pricing pressures. In turn, market participants have priced in no rate action by the Fed through July of 2027 according to Bloomberg’s World Interest Rate Probability function (WIRP). While that is still distant and policy forecasts can be quickly influenced, it is safe to say that monetary policy expectations have adjusted. Adjusting expectations and a long-term trend that still needs work… monetary policy is starting to sound more like Gen Z dating life.
It’s worth mentioning that, excluding energy, each index named above closed out the first quarter of the year with a negative return. Only one month into this second quarter and each of those indexes closed with positive year-to-date returns. It goes without saying that concentration risk, geopolitical developments, and future Federal Reserve action remain important variables, but in Stadion's view, April served as a reminder that markets can continue to climb even when the macro environment remains imperfect. In addition, market downturns don’t have to be a reason for immediate concern, especially for investors with a diversified portfolio.
1https://www.federalreserve.gov/newsevents/pressreleases/monetary20260429a.htm
The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies.
The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices.
The MSCI EAFE Index (Europe, Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.
The MSCI Emerging Markets Index consists of 23 economies including Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates. The MSCI is a float-adjusted market capitalization index.
Bloomberg’s U.S. Aggregate Total Return Value Unhedged Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS(agency fixed-rate pass-throughs), ABS and CMBS (agency and non-agency).
Bloomberg's World Interest Rate Probability (WIRP) function is a chart that shows the probability of different interest rates for the US benchmark rate. The chart is based on interest rate caps and floors, as well as options on Treasury futures.
The S&P 500 GICS Information Technology Sector Index and the S&P 500 GICS Energy Sector Index are market-cap-weighted indices tracking specific sub-segments of the S&P 500. Information Technology includes software, hardware, and semiconductor companies, often featuring high concentration, while Energy focuses on oil and gas industries, often showing cyclical volatility
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